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EU PolicyWatch

Database of national-level policy measures

Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure LU-2022-14/2247 – measures in Luxembourg

Wage indexation advanced to address rise in prices

Indexation des salaires

Country Luxembourg , applies nationwide
Time period Open ended, started on 31 March 2022
Context War in Ukraine
Type Tripartite agreements
Category Responses to inflation
– Increasing income in general
Author Patrick Thill (LISER) and Eurofound
Measure added 12 May 2022 (updated 24 August 2022)

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.

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".

Use of measure

Wage indexation applies to all employees, regardless of their field of activity and status.

Contents

  • Pay increases

Target groups

Workers Businesses Citizens
Applies to all workers Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Trade unions
Employers' organisations
Companies

Social partners

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

Trade unions Employers' organisations
Role Consulted Consulted
Form Consultation through tripartite or bipartite social dialogue bodies Consultation through tripartite or bipartite social dialogue bodies

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 has refused to sign the agreement considering that the orientations proposed by the government aimed at social dismantling.

Sources

Citation

Eurofound (2022), Wage indexation advanced to address rise in prices, measure LU-2022-14/2247 (measures in Luxembourg), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/LU-2022-14_2247.html

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