Luxembourg: Latest working life developments Q3 2018

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The reform of the guaranteed minimum income and developments in sector-level bargaining in the bus transport and construction sectors are the main topics of interest in this article. This country update reports on the latest developments in working life in Luxembourg in the third quarter of 2018.

Minimum income reform focuses on social inclusion

In July 2018, the national parliament voted to replace the guaranteed minimum income (Revenu Minimum Garanti – RMG) scheme with the social inclusion income (Revenu d’Inclusion Sociale – REVIS) scheme. This fundamental social reform amends the structure of the allowances system by splitting up the overall management of the eligible target population.

Prior to the reform, the Social Action Service (SNAS), under the umbrella of the Ministry of Family Affairs, Integration and the Greater Region, managed all RMG beneficiaries. The SNAS arranged for beneficiaries to participate in employment measures in order to prepare them for reintegration into the labour market, and organised social inclusion activities for those not yet ready to enter the labour market.

Putting the emphasis on labour market integration and avoiding inactivity traps, the introduction of REVIS makes the National Employment Agency (ADEM) the primary contact for beneficiaries. Beneficiaries are then put under the supervision of ADEM or the National Office of Social Inclusion (ONIS), which replaces the SNAS.

This transition of responsibilities constitutes a difficult task for ADEM, according to the Ministry of Labour, Employment and the Social and Solidarity Economy. [1]The Minister emphasised that the reform will need increasing levels of investment, training and supervision.

More than 10,000 households fall under the REVIS assistance scheme, which consists of two main components.

  • The first household member receives an inclusion allowance of around €700, as well as around €700 for housing costs (every additional adult household member receives €400).
  • If a beneficiary participates in labour market integration measures, they receive an activation allowance of around €700.
  • Other components include:
    • Children in the households benefit from extra allowances.
    • Single-parent households receive an additional allowance.
    • 25% of other incomes are no longer included in the determination of allowances.
    • Households with multiple members can participate in activation activities (training, working for a public utility, employment measures) for more than 40 hours per week.

The reform was subject to criticism during the legislative process. [2]The activation principle that underpins the new legislation was criticised for focusing on the presumption that REVIS beneficiaries do not want work and would prefer to receive social aid instead of engaging with the labour market.

Other comments emphasised that REVIS does not provide sufficient income for a family with two children and that the reform will not reinforce the fight against poverty as claimed (because having a job does not always protect against poverty). Whether the inclusion allowance would be reimbursed if a beneficiary experienced a change in fortune (e.g. received an inheritance) was also raised as a concern.

Sector-level bargaining brings mixed results

While negotiations for a number of major sector collective labour agreements were successfully concluded during the third quarter of 2018, social partners in the bus sector continued to disagree. Despite this, both the Luxembourg Confederation of Christian Trade Unions (LCGB) and the Luxembourg Federation of Bus and Coach Operators (FLEAA) reaffirmed their commitment to pursuing the negotiation process and signing a collective agreement. [3]

Negotiations in the construction sector also ran into difficulties. After the Confederation of Independent Trade Unions of Luxembourg (OGBL), the LCGB and the Groupement des Entrepreneurs du Bâtiment et des Travaux Publics were unable to come to an agreement, the issue was referred to the National Conciliation Office. [4]

A collective labour agreement for the sector was finally signed on 20 October, with the social partners agreeing on a pay increase of 2.4% over the next three years, the right for all wage earners to access vocational training schemes, two additional days of leave and an annual bonus for all wage earners covered by the agreement.

Commentary

The new REVIS legislation implies that ADEM will need to mobilise additional capacity in order to efficiently manage a larger number of beneficiaries with a specific profile. Whether the agency has sufficient resources to accomplish this remains to be assessed. In terms of sector collective bargaining, a series of intricate bargaining negotiations are expected in the coming months and the outcomes are difficult to anticipate.

 


[1] Le Quotidien (2018), Luxembourg : le ministre du travail revient sur le chômage et la formation des jeunes , 30 July.

[2] Woxx (2018), Revenu d’inclusion sociale : Wie die Armut bekämpfen ?, 16 July.

[3] LCGB (2018), CCT secteur Bus – Conférence des délégués décide de reprendre les négociations , 21 September.

[4] LCGB (2018), Conciliation CCT du bâtiment : Un pas en arrière !, 20 September.

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