Luxembourg: Latest developments in working life Q2 2019
The potential end of tripartite agreements in the steel sector, restructuring in the financial sector and the introduction of the final phase of a minimum wage increase are the main topics of interest in this article. This country update reports on the latest developments in working life in Luxembourg in the second quarter of 2019.
Potential end of tripartite agreements in steel sector
In February 2019, steel production company ArcelorMittal informed representative trade unions the Confederation of Independent Trade Unions of Luxembourg (OGBL) and the Luxembourg Confederation of Christian Trade Unions (LCGB) that it would be restructuring its production sites in Luxembourg through the ‘Score’ project. This project will be launched once the 2017–2019 tripartite steel sector agreement ends and it has been developed in the context of a broader European strategy to reduce steel production.
The launch of the Score project means that the sector’s tripartite agreement will not be renewed, affecting around 4,000 steel workers. ArcelorMittal sees the restructuring project as critical in order to transform its sites in Belval and Differdange over the next five years. The overall objective of Score is to enhance the competitiveness of the company and extend its core business by offering project-related services to clients. Staff who retire or face early retirement schemes over the next few years will not be replaced under the scheme.
The OGBL and LCGB voiced their reservations about the project and the potential loss of the tripartite agreement in the sector. They also shared their concerns about the fact that ArcelorMittal does not label this situation as a ‘crisis’. If it was considered a crisis, then the sectoral steel tripartite process would have to be launched. This would compel the government to cover the costs for incidental early retirement schemes and require ArcelorMittal to make significant investments in Luxembourg.
After four decades of finding joint solutions to cushion economic crises in the steel sector, there are now signs that ArcelorMittal intends to abandon the mechanism of sectoral tripartite negotiations. Trade unions also expressed their doubts about the willingness of ArcelorMittal to invest in its Luxembourg sites and regretted the loss of at least 260 jobs. According to Dan Kersch, Minister of Labour, Employment and the Social and Solidarity Economy, ArcelorMittal emphasised that the steel sites will remain operational. However, some observers took a more critical stance and called the situation a ‘semantic battle’ between the government and ArcelorMittal.
Developments in industrial relations and restructuring
Restructuring in the financial sector continued in the second quarter of 2019. On 14 June, the Luxembourg Association of Banking and Insurance Employees (ALEBA), OGBL Finance Sector (OGBL Secteur financier) and the LCGB Union of Employees of the Financial Sector (LCGB-SESF) signed a social plan involving 32 wage earners working for HSBC Private Bank in Luxembourg. As a big player in the financial sector, the Luxembourg branch proceeded to restructure services by reallocating these wage earners to different branches within the same group. The negotiated social plan included support measures for these workers and financial packages.
Long-standing negotiations in the aviation sector over a new collective labour market agreement between Cargolux and the trade unions reached an impasse. In an attempt to overcome this, the OGBL and LCGB approached the National Conciliation Office for assistance. According to the OGBL, the main reason for the impasse is that the trade unions feel that the concessions they agreed to when the company was in economic turmoil are no longer justifiable. They also voiced their concern that long working hours had a negative impact on the health of workers and said that the new agreement should consider more favourable working conditions.
Final phase of minimum wage increase
Parliament enforced draft legislation No. 7416 on 25 June, which implemented the final phase of the minimum wage increase. A 0.9% increase has now been applied retroactively from 1 January 2019.
This increase complements the previous increase of 1.1% in 2018. It is also complemented by the regressive tax credit of up to €3,000 for workers earning the minimum wage (this measure was introduced in April 2019). Considering that the increase represents 5.7% of the net minimum wage, the government decided to cover every increase above 2% by a tax credit. The government also emphasised that these measures represented the first significant increase of the minimum wage in a long time.
The social partners had a different perspective on the measures. Both the Chamber of Wage Earners and the Chamber of Civil Servants underlined that using a tax credit was the equivalent of taxpayers financing most of the increase by themselves, and said that employers would only have to take on a small share of the incurred costs. Trade unions and the Chamber of Wage Earners therefore claimed that further minimum wage increases were required.
Employer organisations warned that increasing the minimum wage could have a negative impact on the competitiveness of companies and that administrative expenses might lead to job losses in Luxembourg.
- Chamber of Deputies of the Grand-Duchy of Luxembourg: Draft law amending Article L. 222–9 of the Labour Code
- Chamber of Deputies of the Grand-Duchy of Luxembourg: Draft law on the budget of receipts and expenditure of the State for the 2019 financial year
The overall picture regarding industrial relations over the last months has remained unaltered. While the government continues to foster social legislation, there have been signs that the decentralisation of social dialogue and the challenging of traditional bargaining arenas are establishing themselves as integral parts of social relations in Luxembourg.