In 2017 the Luxembourg employment rate of older workers was the second-lowest in the EU at 39.8% Shutterstock

In 2017 the Luxembourg employment rate of older workers was the second-lowest in the EU at 39.8% Shutterstock

In its 2019 country report for Luxembourg published on Wednesday (seen at the end of the article), the Commission gave a critical analysis of progress made by the country on structured reforms, prevention and correction of macroeconomic imbalances.

Luxembourg, it said, had made limited progress in addressing the 2018 country-specific recommendations for increasing the retirement age for older people, improving the long-term sustainability of the pensions scheme and reducing regulatory restrictions in the business services sector.

On the former, the report pointed out that in 2017 the Luxembourg employment rate of older workers was the second-lowest in the EU at 39.8% and had remained stagnant since 2010.

Despite implementing some labour demand oriented policies which have positively impacted other age groups, Luxembourg “failed to improve substantially older workers’ participation in the labour market.”

In 2016, the average retirement age was 60.2, while the statutory age is 65. Among the pensioner cohort, 59.2% were early pensioners (with an average age of 59.8). A special pre-retirement scheme allowing people in certain roles to retire at 57 was revoked discontinued in 2018. The report said its impact on early retirement was difficult to assess because of “an easing of restrictions on other kinds of early retirement schemes.”

It added that no incentive schemes to keep seniors at work for longer had been announced.

It is not the first time that the sustainability of the Luxembourg pensions scheme has been brought in question. In 2017, Luxembourg think tank the Idea Foundation called for urgent reform of the pension system to avoid inequalities between generations. The report said that curbing early retirement would ease matters. Luxembourg finance minister Pierre Gramegna (DP) has repeatedly sought to allay concerns over the sustainability of the system, saying “pensions are safe the next 30 to 40 years”, at a December 2017 British Chamber event.

Luxembourg was also challenged over its limited progress in reducing regulatory restrictions in the business services sector. The Commission report said regulatory restrictions “remain above EU weighted average in several regulated professions.” It did, however, recognise that a new draft law was planned for the start of 2019 to reform the profession of architects and that in 2018, the requirement of holding a professional qualification to obtain a business licence had been withdrawn.