Luxembourg salaries not so advantageous Luxembourg salaries not so advantageous Luxembourg salaries not so advantageous

1 Yes, the country offers the highest minimum wage or gross annual income in the European Union. But in terms of purchasing power in Luxembourg, the amount loses effectiveness. Economy3 min.02.06.2021This article is archivedPatrick JACQUEMOTOYes, the country offers the highest minimum wage or gross annual income in the European Union. But in terms of purchasing power in Luxembourg, the amount loses effectiveness.

Statec comes to dent, with its latest study, the "myth" of the Luxembourg Eldorado. Indeed, on comparing European data, analysts note that it is not necessarily because companies offer the highest incomes, on average, within the European Union that residents find themselves there in terms of purchasing capacity. Nothing to complain about, however, because with an average gross salary of 64,932 euros/year, the country still offers the highest remuneration of the 27 Member States.

And if the index arrives before the end of the year...

But Statec wanted to look beyond this simple figure. Comparing what it was possible to consume with one euro earned in the Grand Duchy and in other countries. And this is where the situation deteriorates. Indeed, the cost of living in Luxembourg is such that the gap observed in the level of salary narrows if we take into account the real purchasing power provided by the salary paid. The windfall effect of the higher level of income offered is thus systematically reduced in comparison with all EU countries.

Make ends meet

For the Greater Region alone, when in France the average gross annual salary represents 58% of the same Luxembourg salary, the purchasing power standard (PPS) rises to 67 %. In other words, with the same income received in France, a French employee can consume 9% more at home than a resident... Same difference noted in Belgium (71% of the average salary, but 80% of PPS), but much more on the German side (69%, versus 84%).

Moreover, this gap between salary received and daily reality continues to increase the difficulties for the less well-off employees. A recent study by the Chamber of Employees also pointed to the rise of “working poverty”. Thus, one in four Luxembourg households (26%) admits that they can no longer make ends meet at the end of the month...

The same observation is also noted when comparing the purchasing power of Europeans earning the minimum wage. Admittedly, here again, Luxembourg employers are the most generous in the EU, and even more so since the rise on 1 January. But it is clear that the gap is clearly narrowing in terms of spending capacity on the national territory of employees. And the "best example" is to be found on the other side of the Moselle. Because if the German minimum wage is equivalent to 90% of that paid in the Grand Duchy, it offers almost the same purchasing power behind the border.

The rapid and spectacular change in Luxembourg

Statec even goes so far as to compare the situation by branch of activity. Tackle in passing another social legend who wants all trades to pay better in Luxembourg than in its neighbors. This turns out to be false, especially in a sector as essential as construction. Remuneration is almost equivalent on Belgian construction sites but, an important nuance, the ability to purchase proves to be superior - in short - for a Walloon worker rather than an employee of Esch. Based on the comparisons made, the same conclusion can be drawn for employees in the hotel and catering industry or administrative services. In the end, they would have little interest in moving from the kingdom to the Grand Duchy.

Even jobs in industry or commerce are no exception to this surprising observation: if the salary in Luxembourg in this sector is slightly higher than the salary received in the same branch in Germany or Belgium, the power of buying a euro is not to the advantage of employees living in Luxembourg. But it is not certain that these observations do not reduce the attractiveness of the country in terms of recruitment. The number of cross-border workers continues to grow, doubling in quantity from 2002 to 2019 to reach more than 200,000 people now.

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