Background information

The Employment fund is a legal financial support instrument in the context of restructuring of companies, or within the field of activation policies. The Employment Fund is a special fund under the supervision of the Ministry of Employment. The Employment fund is financed by a solidarity tax, which has been a 7% surcharge on personal income (9% if the personal income is over €150,000 per year) and 7% on corporation tax, a contribution from local authorities and an advance from the government funds. The solidarity tax has remained unaltered.

The Employment Fund includes a special section to promote practical training in companies and the professional integration/reintegration of job seekers.

Content of measure

The Employment fund covers the reimbursement for employers of social contributions provided that they recruit older or long-term jobseekers registered at the National Employment Agency ADEM. The Employment fund also grants re-employment assistance for employees affected by dismissals for economic reasons and pays wages to employees for a period of up to 6 months after the bankruptcy of a company. Its main tasks are:

• To reimburse private sector employers for the employer's and insured's share of social security contributions, provided that they take on older or long-term unemployed people, whether or not they are receiving compensation.
• To grant, under certain conditions, re-employment aid to employees who are dismissed for economic reasons, as well as to unemployed persons receiving compensation.
• To pay employees, in the event of their employer's bankruptcy, the salary arrears resulting from the last 6 months of work.

In the context of the current COVID-19 crisis and legislation, the fund plays a crucial role in the context of short-time working schemes. If the company can mobilise short-time working, the fund can take charge of the 80% of the normal salary capped at 250% of the minimum social salary for an unskilled employee. The fund also compensates those employees whose salary risks to fall under the social minimum wage.

Use of measure

According to the  Annual report 2019 of the Ministry of Labour, Employment and the Social and Solidarity Economy , total expenditures by the Employment fund mobilised for the various initiatives amount to €795.5 million. In the context of the COVID-19 crisis, this amount is likely to increase as a series of COVID-19 measures are financed by the Fund. Data on total expenditure are yet not available. 

The Employment fund is an efficient support instrument in the case of company restructuring and jobseeker activation policies, as it contributes to avoid mass redundancies. This is well reflected in the amound mobilised in 2019 for the various initiatives, as well in the current COVID-19 context, where part-time unemployment is financed through the Fund.

Target groups

Workers	Businesses	Citizens
Employees in standard employment	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government	Companies Employees National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Unknown	Unknown
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

Unknown

Views and reactions

Union des entreprises luxembourgeoises (UEL) and Chambre des métiers question the fact that the Fond pour l'Emploi could not compensate the self-employed who have lost their activities because of the pandemic.

Sources

• 31 July 2006: Loi du 31 juillet 2006 portant introduction d'un Code du Travail. (legilux.public.lu)
• 03 April 2020: Annual report 2019 of the Ministry of Labour, Employment and the Social and Solidarity Economy (gouvernement.lu)