Minimum wage in Luxembourg: between social guarantees and economic risks
Rodion Kutsaiev, Unsplash
On 8 January 2025, Labour Minister Georges Mischo responded to questions from opposition MPs about Bill No. 8437 concerning the minimum wage. The bill has caused controversy between the government and the Council of State, which has expressed concern about the lack of a clear methodology for calculating the minimum wage.
The Council of State insists that the text of the draft requires explanation and further justification before a final decision can be made.
According to the labour minister, the methods proposed by the EU directive for calculating the minimum wage - 60% of the median wage or 50% of the average - will result in significant financial burdens:
- 60 per cent of the median salary (about €2,900): €359 million annually for the private sector and €68 million for the Employment Fund;
- 50 per cent of the average salary (about €3,100): €634 million for the private sector and €120 million for the Employment Fund
The minister emphasised that such sums could lead to economic instability, especially for small and medium-sized enterprises.
MPs from the ruling coalition supported the minister, pointing to social guarantees that allow residents to "get by" even at the current level of the minimum wage (around €2,600). Opposition representatives, on the other hand, argued that the private sector had long benefited from low wages and could afford fairer pay.
In order to develop a sound methodology of calculation, Georges Mischo plans to involve experts from the STATEC statistical bureau. A meeting and a report analysing the impact of different approaches to calculating the minimum wage is planned. The first information on progress is expected on 29 January or 5 February.
