EMCC European Monitoring Centre on Change

Luxembourg: ERM comparative analytical report on emerging forms of entrepreneurship

  • Observatory: EMCC
  • Topic:
  • Published on: 21 March 2011



About
Country:
Luxembourg
Author:
Guy Castegnaro & Ariane Claverie
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

In Luxembourg, promotion of entrepreneurial mindset is a challenge that stakeholders made their mind to overcome. In the craft sector, employment has constantly increased over the past twenty years and the average size of entities has almost duplicated. (See the statistical report issued by the Chamber of Trade in March 2010). Although entrepreneurship is not a recent concern in their agenda, it is undeniable that the country tends more and more to provide entrepreneurship with a broader space and consideration in public debate and policies conception. From Legislator’s notable interventions to private initiatives not forgetting joint partnerships between public and private actors, efforts to enhance entrepreneurship attractiveness are not about to slacken.

The questionnaire

Rate of annual enterprise creation 2004-2007

TIME/GEO

Luxembourg (Grand-Duché)

2004

9,15

2005

9,54

2006

10,50

2007

10,38

Source : Eurostat, SBS

Part I: Public/policy discussion

General policy discussions and policy approach

Do the public/policy discussions specifically deal with the different forms of business activities, since when and for how long?

Generally speaking, public discussions deal with entrepreneurship as a whole. No specific focus is done on the different forms of entrepreneurship and notably, not on the forms as split for the purpose of the present ERM CAR. Plus, in the national economic history there is no particular memorable change in entrepreneurship matter dealing.

In December 2006, the national statistical institute of Luxembourg, STATEC conjointly with the Public Research Center CRP Henri Tudor, carried out an analyze of the outcomes resulting from a “Factor Of Business Success” survey conducted earlier at European level.

This work strove to outline a typology of entrepreneurs in Luxembourg and subsequently drew six “typical profiles” of entrepreneurs where was included the “serial entrepreneur”.

However, punctual and isolated events deal with certain typical forms of entrepreneurship. This is the case for the Days for Business Startup and Growth event during which conferences and workshops consider a given form of entrepreneurship such as the ones on business transfer in November 2009.

Also relevant to quote, the contribution of the Chamber of Commerce and notably its request for the implementation of a status similar to the French “auto entrepreneur”. This form of entrepreneurship would therefore provide for a softer status allowing the running of an independent activity whether punctual or regular, even in parallel to an activity governed by an employment contract.

Table 1: Presence of the different emerging forms of entrepreneurship in the public debate
 

Yes, continuously since xx year? (Please indicate year)

Yes, on and off in the last 10 years

(Please indicate yes where it applies)

Yes, has been on the public agenda, but since xx year it is no longer part of the agenda (Please indicate year)

No, it has never been part of the public agenda

(Please indicate X where it applies)

One-person enterprises /self-employed      
Part-time entrepreneurs      
Parallel entrepreneurs      

No. According to the Director of the Luxembourg Confederation of Commerce, CLC.

Serial entrepreneurs      

No. According to the Director of the Luxembourg Confederation of Commerce, CLC.

Business transfers and successions  

Yes. According to the Director of the Luxembourg Confederation of Commerce, CLC

   

For each of the entrepreneurship/business activities covered by policy discussions, which policy domains are they covered in? Please indicate with an ’X‘ where relevant.

Innovation and research are two aspects of entrepreneurship that are particularly considered by policy-makers and stakeholders. An Economic Interest Grouping (EIG) with public and private partners was set up in 1998 giving birth to the National Agency for the Promotion of Innovation and Research, Luxinnovation. Hence, the EIG provides Luxembourg enterprises and entrepreneurs with a huge range of services among which training activities to foster creativity and investments in innovation.

Moreover, the geographic context of the Grand Duchy of Luxembourg encourages interregional initiatives also supported by the Government promoting policy.

Indeed the Ministry of Economy and External Trade is represented in the Board of the non-profit organization Business Initiative asbl which intervenes in the Greater Region to promote entrepreneurial mindset and support innovative projects.

Table 2: Policy domains engaged in the policy discussion of the emerging forms of entrepreneurship
 

Labour policies

Educational policies

Economic/Industrial policies

Innovation policies

Regional policies

Other (please specify)

One-person enterprises /self-employed

X

X

X

X

X

Social Security

Part-time entrepreneurs            
Parallel entrepreneurs            
Serial entrepreneurs            
Business transfers and successions      

X

X

 

In which media and forum do the public debate and policy discussions about the different types of entrepreneurship take place?

Please indicate whether they are implicitly (e.g. publications are covering entrepreneurs in general with implicit implications for the different forms of entrepreneurs/business activities) covered and/or explicitly mentioned (for instance parallel entrepreneurs are explicitly mentioned in publications) in these publications

Entrepreneurship is a topic that has been for years the main theme of the Ministry of the Middle Classes policies partially formalized and addressed in the action plans for SMEs. Nevertheless, the topic is regarded under a global perspective and not specifically split within different forms of entrepreneurship.

Meanwhile, there could be articles released in the specialized press or specific surveys carried out by corporative bodies that mention or focus on one form of entrepreneurship .

For instance, PricewaterhouseCoopers (PwC) addressed the business transfer and succession issue in a survey on Luxembourg family-owned companies released in 2007. This document highlights the trends in such companies regarding business transfer perspectives and strategies as well as related recurrent concerns and improvement proposals.

It might be relevant to mention that a huge on-going research project is carried out on the status of Independents in Luxembourg.

This work which is supervised by the public research center CRP Henri Tudor is aimed at providing the Government and social partners with a comprehensive insight of the situation of entrepreneurship in the Grand Duchy permitting this way to hold enlightened debates and afterwards, the implementation of efficient policies.

The second phase of this research project issued in 2009, emphasized the necessity to reach a shared position on the meaning of “entrepreneur” and “entrepreneurship” before going further into the process. No date has been disclosed for the release of the third part of this study.

Another big channel for discussions on entrepreneurship are the forums organized by business development promoters. The kind of events such as the one abovementioned “Days for business creation” - organized by the Chambers of Commerce and of Trade -, often stand for an opportunity to brainstorm on entrepreneurship and its different forms, notably on self-entrepreneurship.

Table 3: Media and forums discussing the emerging forms of entrepreneurship
 

Public media such as newspapers and magazines incl. electronic media

Policy documents and analysis

Proposed legislation and/or business support schemes

Others, please specify

One-person enterprises/self-employed  

X

X

Forums

Part-time entrepreneurs        
Parallel entrepreneurs        
Serial entrepreneurs  

X

   
Business transfers and successions

X

X

X

 

Specific topics to describe the different types of entrepreneurship

What has motivated the public debate?

Please specify for each of the five forms of entrepreneurship:

Table 4: What has motivated the public debate of the emerging forms of entrepreneurship

Type of Entrepreneurship

Motivator

One-person enterprises/self-employed

Lobby from employer organizations to have the regulation governing access to the profession amended.

According to the Director of the Luxembourg Confederation of Commerce, CLC

Part-time entrepreneurs  
Parallel entrepreneurs  
Serial entrepreneurs  
Business transfers and successions

The difficulty to align demand and offer. The Chamber of Commerce created the Bourse d’entreprises to introduce transferors and potential candidates for succession.

Needless to say that initiatives at European scale and specifically the Lisbon Strategy play a key role in the dynamic that surrounds public discussions on entrepreneurship in Luxembourg. Thus, the Action Plan 2008 for SMEs explicitly refers to the European objectives as a guidance for the implementation of efficient measures at national level.

But, entrepreneurs associations, such as the CLC, actively take part in public debate to urge their negotiating partners to take into consideration entrepreneurship actual needs in terms of development and attractiveness.

As for the identification of dysfunctions, the aforementioned analysis from the STATEC in December 2006 showed that 71% of entrepreneurs experienced difficulties while starting their business and in particular while fulfilling the administrative steps required as prerequisites for setting up a company. (See section 4.1 p.19). Among others can be listed the costs relative to companies settlement or even the delay to get the authorisation of establishment.

What has been the focus of the policy discussion?

Supportive policies to entrepreneurship at national level take many forms.

One key focus was on the administrative burden. Hence, actions were undertaken by the Government to soften in and the National Committee for Administrative Simplification for Enterprises, (CNSAE), was created in 2004 and became the Administrative Simplification Department, (DSA) in 2009, with a scope widened to all citizens.

The purpose was to remove the administrative step from the list of the impediments that might hold potential candidates off the decision to set in entrepreneurship.

Another form of implication of policy discussion is the promotion of entrepreneurship and moreover the awareness campaigns and actions towards specific groups of people.

As underlined in the STATEC analysis of December 2006, the average entrepreneur in Luxembourg is a male, between 30 and 55 years old and lives in the country. (See section 4.1.2. p.15). Therefore, young people, women or even female students are now specifically targeted by tailored policies to spark off interest in independent activities and business creation.

For instance, following the official launching of the European Commission co-financed project named Female Entrepreneurship Ambassadors, FAME, Luxembourg decided to intensify its own promotion for female entrepreneurship.

As follows was constituted the European Network of Luxembourg Female Entrepreneurship Ambassadors sponsored by the Ministry for Equality of Fair Opportunity and supported by the Ministry of the Middle Classes and Tourism, the Ministry of Economy and External Trade, two professional chambers and by the Federation of Luxembourg Female Entrepreneurs, (FFCEL), which primary purpose is to attract and mentor potential entrepreneurs among graduate, unemployed or even innovative female project carriers.

As for young people, in 2007, the Luxembourg Young Chamber of Commerce started a major rewarding program called Creative Young Entrepreneur Luxembourg Award, CYEL, which rewards the most creative young entrepreneurs, namely who are between 18 and 40 and established in Luxembourg.

Education is actually one of the main focus points addressed by the public debate. Indeed, stakeholders are aware of the fact that education could be a cornerstone in the promotion of entrepreneurial mindset.

Please specify for each of the five forms of entrepreneurship:

Table 5: The policy focus in the public debate within each of the emerging forms of entrepreneurship

Type of Entrepreneurship

Policy focus

One-person enterprises/self-employed

- promote entrepreneurship;

- ease access to information and funding;

and according to the Director of CLC :

- administrative simplification process to facilitate access to business creation;

- education : create courses aimed at developing and enhancing entrepreneurial skills;

- access to funding and lightening of the administrative burden to create a business, wind up and liquidate in case of business cessation, bankruptcy, business transfer and so on

- tailored tax regimes to foster start-ups and investment in Research & Development (R&D)

- attractive social benefits for entrepreneurs (pensions, health, inactivity and so on)

- prevention against illegal businesses

Part-time entrepreneurs

Promote entrepreneurship

Ease access to information and funding

Parallel entrepreneurs

Promote entrepreneurship

Ease access to information and funding

Serial entrepreneurs

Promote entrepreneurship

Ease access to information and funding

Business transfers and successions

Promote entrepreneurship

Ease access to information and funding

Has the public discussion resulted in a concrete outcome/impact?

Yes:

If yes, pleased specify what outcome/impact and in relation to which of the five forms of entrepreneurships/business activities:

Public discussions have doubtless participated to reach concrete outcomes. The University of Luxembourg and the Chamber of Commerce joined their strengths to build up a partnership and created the Master in entrepreneurship and innovation in 2007. The first academic year was successful as numerous students found a job once graduate. (See Merkur, p.17)

More recently, in June 2010, the DSA (see above) presented a report on the reforms undergone to lighten the administrative burden. The delay to get the authorization of establishment was reduced to an average of 11 days thanks to the introduction of a more performing computer system.

The simplification was made possible by the amendment of the regulatory framework and notably the reform of the amended law of 28 December 2008 on the right of establishment.

Successive reforms took place in 2004 and 2005 and positive impacts were reported for the craft sector. Thus, since the enforcement of the grand ducal regulation of 4 February 2005, new activities are likely to be run under the status of entrepreneur as funeral and make-up professions (see the Chamber of Trade report on the reform, p.10.). The Chamber of Trade reports that, within the year following the new regulation, 52 enterprises were created straight away. Besides, another contribution to the craft sector development is the merging of certain professions, solving this way the question of multi-authorizations requests to undertake in connected domains. For instance, heating and sanitary professionals can, from then on, run a business that covers both professions with either a right of establishment for heating or for sanitary.

Public debate and, more particularly, employer organizations lobbying, has led to an additional step deeper into the regulatory framework reforming process.

On 8 July 2010, the bill n°6158 on the right of establishment for craft, commercial, industrial and certain liberal professions was introduced to the Chamber of Deputies. The new provisions are about to abrogate the current applicable law of 28 December 1988 (see above) and to adjust the requirements in order to encourage more people to step into entrepreneurship.

One illustration could be the adoption of the “implied consent” principle - provided by the Directive 2006/123/EC - when the Administration does not provide for a formal decision on submitted authorization of establishment requests within a given delay. Moreover, access conditions for craft and commercial professions would from then on take into account professional background and practical experience. Education and related diplomas or certificates would therefore no longer be the only way to enter a profession.

The Director of the CLC (see Table 1), reported that this bill globally satisfies entrepreneurs’ demand for smoother processes, aid and supportive tools for businesses creation and sustainability. One particularly satisfying point is the review of the policy on mutual credit guarantee which is expected to open access to funding to a wider scope of new entrepreneurs. (See also the Action plan 2008 for SMEs, p.9)

Besides, punctual success stories or encouraging tendencies illustrate some positive incomes that might be linked to proactive policies or actions.

For instance, the non-profit organization, Business initiative asbl (see above), created an interregional network for entrepreneurs named 1,2,3, GO which is claimed to have enabled the creation of 230 companies over its ten years existence through the Greater Region territory.

Besides, the Chamber of Commerce noticed an obvious and growing interest in business transfers. In 2009, the “Bourse d’entreprises” program welcomed 20 new transferrable companies while 239 potential successors joined the network. (see the annual report for 2009, p.16 in fine).

Please specify for each of the five forms of entrepreneurship:

Table 6: Outcome or impact of the public debate of the emerging forms of entrepreneurship

Type of Entrepreneurship

Outcome/Impact

One-person enterprises/self-employed

Increase in craft businesses creation.

And according to the Director of the CLC : the Confederation is quite satisfied with the bill on the right of establishment that takes into account the focus points of the public debate listed in table 5.

Another reported outcome is the review of the policy applied by the mutual credit guarantee for commercial entrepreneurs, Mutualité de cautionnement et d’aides aux commercants, and which is described as more dynamic.

Part-time entrepreneurs  
Parallel entrepreneurs  
Serial entrepreneurs  
Business transfers and successions  

Within the last couple of years, to which extent has the public and policy discussion been more focused on the following different types of entrepreneurship compared to the business policy/entrepreneurship debate in general?

Assessment not available.

Table 7: Increased focus at the emerging forms of entrepreneurship?
 

To a low degree To a high degree

 

1

2

3

4

5

One-person enterprises/self-employed          
Part-time entrepreneurs          
Parallel entrepreneurs          
Serial entrepreneurs          
Business transfers and successions          

Please list the main sources of information in the search for the above

  • Typologie des entrepreneurs, CRP Henri Tudor et Statec
  • Rapport de la phase II du projet de recherche sur le statut d’Indépendant au Luxembourg portant sur la définition-cadre de l’Indépendant et de l’Entrepreneur et de la mesure de l’Entrepreneur et de l’activité entrepreneuriale au Luxembourg, Gilbert McNeill, PhD, sous la direction de : CRP Henri Tudor, Observatoire de la Compétitivité, Statec
  • Plan d’action 2008 en faveur des PME, Ministère des Classes Moyennes
  • Ministère de l’Egalité des Chances : soutien à l’entreprenariat féminin
  • http://www.mcm.public.lu/fr/index.html
  • http://www.mega.public.lu/actualites/actu_min/2004/12/fcel/index.html?highlight=entreprenariat
  • Projet de loi du 8 juillet 2010 réglementant l'accès aux professions d'artisan, de commerçant, d'industriel ainsi qu'à certaines professions libérales
  • Simplification administrative – Etat des lieux, Département de la Simplification Administrative, 10 juin 2010
  • L’entreprise 2.0., Chambre de Commerce, juin 2009
  • Dossier spécial : réforme du droit d’établissement – 1ère partie, Chambre des Métiers

Part II: Standardised structural data

Which standardised business statistics are available covering the different forms of entrepreneurship/business activities (explicitly or implicitly, i.e. also data that could be used to describe these forms of entrepreneurship without being published with this specific objective/heading)?

Data not available

Table 8: Availability of business statistics about the emerging forms of entrepreneurship
 

Type of data available

Indicate access to data by an ‘X’ in the first column

First published

Indicate year

Time series of data

(Biannually, annually, quarterly, monthly, once only, other)

Data source for the data

One-person enterprises/ self-employed

Number of enterprises

X

2006

annually

National statistic survey , p.8

Enterprises by branch (please specify which NACE code digit level is available)

X

2006

annually

National statistic survey , p.8

Availability of regional data (please specify)

       

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

X

2006

annually

National statistic survey , p.8

Economic performance e.g.:

Turnover

       

Exports

       

Employment

       

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

       

Number of discontinued enterprises, incl. bankruptcies –

       

survival rate of enterprises

       

Others, specify:

       
Part-time entrepreneurs

Number of enterprises

       

Enterprises by branch (please specify which NACE code digit level is available)

       

Availability of regional data (please specify)

       

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

       

Economic performance e.g.:

Turnover

       

Exports

       

Employment

       

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

       

Number of discontinued enterprises, incl. bankruptcies –

       

Survival rate of enterprises

       

Others, specify:

       
Parallel entrepreneurs

Number of enterprises

       

Enterprises by branch (please specify which NACE code digit level is available)

       

Availability of regional data (please specify)

       

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

       

Economic performance e.g.:

Turnover

       

Exports

       

Employment

       

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

       

Number of discontinued enterprises, incl. bankruptcies –

       

survival rate of enterprises

       

Others, specify:

       
Serial entrepreneurs

Number of enterprises

       

Enterprises by branch (please specify which NACE code digit level is available)

       

Availability of regional data (please specify)

       

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

       

Economic performance e.g.:

Turnover

       

Exports

       

Employment

       

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

       

Number of discontinued enterprises, incl. bankruptcies –

       

survival rate of enterprises

       

Others, specify:

       
Business transfers and successions

Number of enterprises

       

Enterprises by branch (please specify which NACE code digit level is available)

       

Availability of regional data (please specify)

       

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

       

Economic performance e.g.:

Turnover

       

Exports

       

Employment

       

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

       

Number of discontinued enterprises, incl. bankruptcies –

       

survival rate of enterprises

       

Others, specify:

       

Is it possible to crosstab or merge the demographic data identifying the individual persons running any of the five forms of entrepreneurships/business activities with the company data specified in question 9 in a common database for analytical purpose?

No:

Table 9: Availability of demographic statistics about the entrepreneur within the emerging forms of entrepreneurship
 

Type of data available

Indicated access to data by an ‘X’ in the first column

First published

Indicate year

Time series of data

(Biannually, annually, quarterly, monthly, once only, other)

Data source for the data

One-person enterprises/ self-employed Number of enterprises held by each entrepreneur/owner        
Gender        
Ethnicity        
Civic status (married, single, children)        
Age        
Geographical location        

Educational background (last registered education)

       
Current/previous employment of entrepreneurs (business experience)        

Sector familiarity of the entrepreneur – branch/NACE

       
Working hours of the entrepreneur        
Income of the entrepreneur        
Other types of data (Specify):        
Part-time entrepreneurs Number of enterprises held by each entrepreneur/owner        
Gender        
Ethnicity        
Civic status (married, single, children)        
Age        
Geographical location        

Educational background (last registered education)

       
Current/previous employment of entrepreneurs (business experience)        

Sector familiarity of the entrepreneur – branch/NACE

       
Working hours of the entrepreneur        
Income of the entrepreneur        
Other types of data (Specify):        
Parallel entrepreneurs Number of enterprises held by each entrepreneur/owner        
Gender        
Ethnicity        
Civic status (married, single, children)        
Age        
Geographical location        

Educational background (last registered education)

       
Current/previous employment of entrepreneurs (business experience)        

Sector familiarity of the entrepreneur – branch/NACE

       
Working hours of the entrepreneur        
Income of the entrepreneur        
Other types of data (Specify):        
Serial entrepreneurs Number of enterprises held by each entrepreneur/owner        
Gender        
Ethnicity        
Civic status (married, single, children)        
Age        
Geographical location        

Educational background (last registered education)

       
Current/previous employment of entrepreneurs (business experience)        

Sector familiarity of the entrepreneur – branch/NACE

       
Working hours of the entrepreneur        
Income of the entrepreneur        
Other types of data (Specify):        
Business transfers and successions Number of enterprises held by each entrepreneur/owner        
Gender        
Ethnicity        
Civic status (married, single, children)        
Age        
Geographical location        

Educational background (last registered education)

       
Current/previous employment of entrepreneurs (business experience)        

Sector familiarity of the entrepreneur – branch/NACE

       
Working hours of the entrepreneur        
Income of the entrepreneur        
Other types of data (Specify):        

Is the data freely accessible or does it require registration, payment and/or a special effort to access the data? Please explain the accessibility for each of the forms of entrepreneurs/business activities and datasets referred to above.

When available on website such as on the statistic portal, access to data is free. Nevertheless, there are no accessible data split by form of entrepreneurship.

Table 10: List of statistical sources about the emerging forms of entrepreneurship

List data source/dataset

Explain the accessibility

National statistics portal

Access is free and data available for one-person enterprises

Part III: Research

Please describe studies and research available nationally for each of the forms of entrepreneurs/business activities.

There are no dedicated research on each kind of entrepreneurship but the aforementioned research project on the Independents status can be quoted here.

The research project is expected to provide for a comprehensive definition of entrepreneurship so that targeted and efficient policies can be rolled out.

The Chamber of Commerce has developed the “Bourse entreprises” platform to ease the meeting between transferors and potential entrepreneurs in the context of business transfers.

As for the other forms of entrepreneurship, the proposition issued by the Chamber of Commerce to implement in Luxembourg the French “auto entrepreneur” status would probably be subject to upcoming discussions. This might be the opportunity to discuss potential declensions of entrepreneurship such as serial, partial or even parallel entrepreneurship.

Table 11: List of studies and research about the emerging forms of entrepreneurship
 

List the references (author’s name, title of publication etc, year of publication, organisation)

A short summary of the contents (e.g. topic covered, methodology applied)

One-person enterprises/self-employed    
Part-time entrepreneurs    
Parallel entrepreneurs    
Serial entrepreneurs    
Business transfers and successions    

Commentary

Even though no split could have been provided for each form of entrepreneurship, it cannot be denied that the topic is high on national stakeholders’ agendas.

In the light of the Lisbon Strategy, the Grand Duchy of Luxembourg strives to foster entrepreneurial mindset and people awareness of opportunities lying under entrepreneurship.

The outcomes of the on-process research project on the Independent’s status (please see above) is expected to be the starting point to better framed exchanges and according actions to reach these objectives.

Besides, the topic is all the more essential with regard to the relative size and situation of the country which is surrounded by three borders and as much threats in terms of economic competitiveness.

Guy Castegnaro & Ariane Claverie, Castegnaro Cabinet d'avocats, member of Ius Laboris

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