"The index is a social benefit paid for by companies"

By Camille FratiLex Kleren Switch to French for original article

The next wage indexation tranche will be implemented in October or November. While the impact on workers in the country is evident, its effect on businesses is much less clear. Two companies have shared with Lëtzebuerger Journal what each wage indexation tranche means for them.

It's a familiar tune we haven't heard for a few months. Even though inflation is back within the European Central Bank's target range – 1.7 per cent year-on-year in August – the half-yearly average of the consumer price index is close to triggering a new indexation of wages, pensions and certain social benefits. The last one took place a year ago, in September 2023, after two others in February and April. The next one should come at the end of 2025, thanks to the sharp rise in energy prices once the Frieden government has gradually lifted the energy shield.

For all employees in the country, whether they work in the public or private sector, a wage indexation tranche means an increase of 2.5 per cent in their gross salary. For the State, as the employer of 32,848 civil servants and similar staff (2021 figure), the bill comes to €2.2 million (based on the salaries of civil servants and similar staff in 2023). For businesses, each salary band will add 800 million euros to the wage bill, according to calculations by the Union des entreprises luxembourgeoises (UEL). But what lies behind this overall figure, which includes all companies with between 1 and 3,000 employees?

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