Factsheet for measure
LU-2022-14/2247
–
Updated
– measures in Luxembourg
Wage indexation advanced to address rise in prices
Indexation des salaires
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Country
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Luxembourg
, applies nationwide
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Time period
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Open ended, started on 31 March 2022
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Context
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War in Ukraine
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Type
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Tripartite agreements
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Category
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Responses to inflation
– Increasing income in general
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Author
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Patrick Thill (LISER) and Eurofound
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Measure added
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12 May 2022 (updated 19 June 2023)
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Background information
Wages in Luxembourg are indexed to inflation. This indexation is triggered as soon as the cumulative inflation over a six-month period is equal to or higher than 2.5% of the cost of living index (consumer prices). Art. L. 010-1. (Loi du 11 avril 2010) & Titre II, Chap II, Art L-222-3 of the Labour Codel stipulate this.
Content of measure
The rise in food and energy prices (6.2% in March 2022) has led the government to bring forward the indexation of wages (+2.5%) to April 2022 instead of August 2022, according to the latest STATEC forecasts. This indexation was validated at a Tripartite meeting held on 31 March 2022.
Wages will therefore increase by 2.5% from 1 April. This means a qualified minimum social wage of €2,776.05 gross per month (instead of €2,708.35), and a minimum social wage of €2,313.37 (instead of €2,256.95) for unskilled workers.
In addition, to postpone a possible additional indexation bracket in 2022 by 12 months, in order to guarantee more predictability for companies. In this context, compensation for the loss of purchasing power should be provided for those suffering from a loss of purchasing power through a
tax credit
. For example, "for salaries and pensions between €936 and €44,000 per year, this credit will amount to €84 per month".
Updates
The following updates to this measure have been made after it came into effect.
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29 June 2022
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Following the indexation in 2022, two further indexations were triggered in 2023. The first corresponds to changes in the annual inflation rate of the national consumer price index (NICP). This rose to 4.8% in January and exceeded the threshold of 964.64 points, triggering a new indexation on 1 February 2023.
The second indexation corresponds to the law of 29 June 2022, which transposes certain measures provided for in the tripartite agreement of 31 March 2022. This caused the application of the index tranche triggered in June 2022 to be postponed until April 2023.
As a result, the new sliding salary scale was increased to 921.40 points (previous scale: 898.93 points), resulting in a 2.5% increase in wages, salaries and pensions.
The minimum social wage (SSM) is set at €2,508.24 for unskilled workers and €3,009.88 for skilled workers.
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Use of measure
Wage indexation applies to all employees, regardless of their field of activity and status.
Contents
Target groups
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Workers
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Businesses
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Citizens
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Applies to all workers
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Applies to all businesses
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Does not apply to citizens
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Actors and funding
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Actors
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Funding
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National government
Trade unions
Employers' organisations
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Companies
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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Consulted
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Consulted
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Form
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Consultation through tripartite or bipartite social dialogue bodies
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Consultation through tripartite or bipartite social dialogue bodies
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Social partners' role in the
implementation, monitoring and assessment phase:
-
No involvement
-
Main level of involvement: Unknown
Involvement
Social partners are not involved in designing, implementing or monitoring. This measure automatically applies to all companies.
Views and reactions
The trade unions, excepted Confédération Syndicale Indépendante du Luxembourg (OGBL), have signed the Tripartite agreement with the proviso that further indexation be considered in the event of an exceptional rise in the price index. OGBL refused to sign the agreement considering that the orientations proposed by the government aimed at social dismantling.
Sources
