Labour market measures in the National Action Plan for employment

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Luxembourg's National Action Plan for Employment, approved in April 1998, provides for various new employment and training measures to help unemployed workers to start, or return to, work. The social partners have agreed to do everything within their power in the next 18 months to achieve EU objectives, through the creation of 1,800 new job opportunities.

All the EU Member States have drawn up National Action Plans (NAP s) for employment in line with the Employment Guidelines which arose from the special Employment Summit in Luxembourg in November 1997 (EU9711168F). The Guidelines set out a a framework for national action under the four "pillars" of employability, adaptability, entrepreneurship and equal opportunities. The NAPs were to be considered at the Cardiff European Council meeting in June 1998. The Tripartite Coordination Committee (Comité de Coordination Tripartite) adopted Luxembourg's National Action Plan on 18 April 1998, following 11 meetings lasting over 50 hours altogether (LU9803151N).

The Plan, which is some 50 pages long, provides for a range of measures designed to achieve the objectives established by the Employment Guidelines. Here we examine the measures directly related to the labour market and managed by the Employment Administration (Administration de l'Emploi, ADEM) Further details of the provisions on the modernisation of work, part of the "adaptability" pillar, are provided in LU9805157F.

Employment in Luxembourg

Although marked by some conjunctural and structural crises, employment in Luxembourg has experienced almost uninterrupted growth over a period of many years (LU9803150N). Average unemployment for 1997 stood at 3.6%, compared with 3.3% for 1996. Unemployment is fairly low among young people compared with older workers, and currently stands at 6.2%. Turnover among unemployed workers is very high, with about 42% getting a job within three months and 60% finding work in the course of the first six months.

The Luxembourg economy is in good health, but a number of weaknesses are evident:

  • unemployment has doubled since 1985, jumping from 1.7% to 3.6% in 1997;
  • the female participation rate of 38% is one of the lowest in the European Union (average 45%); and
  • the participation rate among people aged over 50 is only 20%, compared with 28% for the EU.

Measures put forward by the Tripartite Coordination Committee

The government and the social partners have agreed that quantified objectives set out in the Employment Guidelines must be achieved in the next 18 months. For example, one measure targets young workers who have been registered unemployed for three months; the aim is to enable them to commence, or recommence, employment. A similar provision will apply to adults who have been unemployed for up to six months. The government has set at 25% the proportion of unemployed workers training who will receive training

The Standing Committee on Employment (Comité permanent de l'emploi), a tripartite labour market monitoring unit set up in 1996, has instructed the National Institute for Continuing Vocational Training (Institut national de formation professionnelle continue, INFPC) to undertake an "employment profile" study; the aim is to provide ADEM and employers with a sophisticated tool for identifying the profiles and skills of registered unemployed workers and of vacancies.

Measures for promoting youth employment

The tripartite committee's proposals are based on existing measures, but they rely substantially on contributions from the Fund for Employment (Fonds pour l'Emploi); the latter is in turn largely financed by a solidarity tax on employers, individuals and organisations, whose objective is to cover expenses arising out of the implementation of measures for promoting employment.

A new "job-start" contract (contrat de stage-initiation) schemes gives unemployed people under the age of 30 a practical "introduction to work" with a private sector employer, during working hours and for a period of 26-52 weeks. The aim is to help them bridge the gap between the education they have received and the world of employment. People on the scheme receive preferential treatment when the employer takes on new recruits. The employer pays a training grant equivalent to 85% of the national minimum wage (salaire social minimum). The Fund for Employment pays the employer's social security contributions (approximately 15% of gross salary) and refunds to the employer a sum equivalent to 50% of the training grant paid out to young men, and 65% in the case of young women. Prior to this proposal from the tripartite committee, the Fund's contribution was 25%.

The "preparatory in-company placements" scheme (stages de préparation en entreprise) involves alternating periods of practical and theoretical training to unemployed workers under 30, with ADEM acting as the employer. While on the scheme, the trainee receives a sum equivalent to 70% of the minimum wage from ADEM. The employer's contribution to the total payment is 50% in the case of young men, and 35% for young women. Under the previous provisions, there was a flat rate of 50%. The employer is also obliged to pay young unemployed workers an additional grant of 10% of the minimum wage.

The "temporary staff unit" (division d'auxiliaires temporaires, DAT) initiative seeks to create temporary job opportunities for unemployed workers under 30 in activities and services "of common interest", and at the same time respond to real collective needs. The young people concerned may be temporarily assigned to work on any jobs of public or social social usefulness or in the cultural sphere, which are offered and undertaken by the state, local authorities, public service departments, and any other not-for-profit bodies, institutions or groups of people. The maximum duration of this measure has been cut to 12 months in order to get young people into work more quickly; it used to last 18 months. Promoters of such temporary back-to-work programmes are obliged to pay young trainees the same allowances as provided under the "job-start" scheme (see above). The allowance is net of social charges and tax, and the employer's social security contributions are paid by the Fund for Employment. The latter refunds to non-state employers 85% of the allowance; the contribution used to be 50%.

Measures to help older and long-term unemployed workers

In addition to existing measures known as "recruitment aids", the focus is on stepping up additional training provided to meet the specific needs of private sector companies, and at the same time working closely with them in an attempt to enable ADEM-registered unemployed workers to enter or re-enter the labour market. This measure is intended to lead to guaranteed jobs for unemployed workers who complete the training satisfactorily.

A "back-to-work training" scheme (stage de réinsertion), lasting a maximum of one year, is to be introduced. It seeks to achieve the objective set by the EU Employment Guideline on registered unemployed adults who are in danger of entering long-term unemployment, and to help them renew contact with the world of employment and thereby have a better chance of restarting a career.

Under the scheme, unemployed workers in receipt of unemployment benefit are allowed to keep it. However, those who do not receive benefit are (after minimum registration of three months) paid by ADEM on the basis of the minimum wage. In both cases, 50% of the training grant is reimbursed to the Fund for Employment by the employer. To encourage employers to take on women, their contribution has been temporarily reduced to 35%. When recruiting staff, employers are obliged to give priority to former trainees whose training period is about to run out.

Contributions from the social partners

The conclusions of the Employment Summit stressed the responsibility that the social partners have for achieving the agreed objectives.

In the reform of Luxembourg collective bargaining law now under way, the whole of that section of the EU Employment Guidelines dealing with partnership will be incorporated into the list of issues that all collective agreements must cover if they are not to be declared void.

Luxembourg's social partners have agreed to do everything possible through collective bargaining policy to create about one third of the 1,800 planned new job opportunities for young people and for those in danger of becoming long-term unemployed, and to expand training opportunities substantially in order to reach the NAP's target of training for 25% of unemployed people over the next 18 months.

It will be obligatory for collective agreements to lay down the number of places to be provided on the new employment and training schemes and other similar integration packages available to companies. The places provided will be examined regularly, and the scheme will be monitored by the Standing Committee on Employment.

Lastly, when the NAP was adopted, social partner organisations undertook to call on their members to conclude agreements quickly at appropriate levels, and/or substantially increase the number of places available for training, placements, vocational experience and lifelong learning. For example, the crafts sector has agreed to put pressure on enterprises to make 350 additional apprenticeships available in 1998 to young workers studying for diplomas. This represents a 60% increase on 1997.

The cost to the state of the new schemes will be partly covered by an increase in the tax on petrol.


The employment policy embodied in the National Action Plan is not intended to tackle mass unemployment, but rather to consolidate existing jobs while targeting groups at risk; these include young and long-term unemployed people. The total number of unemployed workers amounts to only 10% of the cross-border workers working in Luxembourg. The problem is thus not so much one of job creation as one of assistance and introducing "made-to-measure" initiatives. The social partners have achieved this objective with considerable success (Marc Feyereisen, ITM).

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