Luxembourg often tops European and even world rankings for its GDP per capita and minimum wage. But the country also stands out in other, sometimes less impressive, respects.

The first "Working, yet poor" report, published at the end of June, shows that Luxembourg is among the European countries with the highest risk of in-work poverty in the EU and that this risk has increased in recent years.

In 2019, 12.1% of employees lived in a poor household in Luxembourg, compared to 11.2% in 2013 and 9.3% in 2007.

"On the one hand, the in-work poverty rate is calculated on the basis of median household income. On the other hand, the increase in salaries is quite insufficient to escape the risk of in-work poverty,” stresses Luca Ratti, assistant professor of labour law at the University of Luxembourg, who participated in the study.

A higher risk in certain categories of the population

The report points out that some workers are more exposed to the risk of poverty in Luxembourg. These include single-person households and single-parent families.

The threat is also greater for part-time, fixed-term and temporary workers. In 2019, these workers represented "only" 7.4% of the employed resident population. Yet the poverty level in this class was 27.7%, the researchers point out.

The researchers analysed policies and measures that, directly or indirectly, can have an impact on in-work poverty. The focus is on tax classes and access to affordable housing.

"The tax class for single people is disadvantageous, especially as the study shows that single parent households are the ones most affected by in-work poverty", says the professor. As for the cost of housing, it is not taken into account by the indicator, but its weight is such that "if the cost of housing were included in the statistics, we would have much higher in-work poverty rates, from 40 to 45% for certain categories of workers", warns the researcher.

The study also compares the situation in Luxembourg with other European countries such as Belgium, Sweden, Italy, the Netherlands, Germany and Poland. The grand duchy stands out with a lower share of self-employed workers, who, due to the unpredictability of their income, are more exposed to the risk of poverty.

Another specificity is that workers on permanent contracts in low-wage sectors such as services are more at risk of poverty, but this is nothing compared to countries without a minimum social wage, collective agreement or legal coverage of employment contracts. As for intermittent workers, who can be found, for example, in the service of online platforms, the phenomenon remains rare in Luxembourg.

Less material deprivation

While the risk of falling into poverty is high for workers in Luxembourg, the proportion of households facing severe material deprivation is very low, at around 0.9% where the deprivation threshold is 2.4%.

"The assessment of material deprivation is done at the individual level, it is independent of the context in which the person lives,” Ratti says. In his view, this rather low rate in Luxembourg "means that the country's situation is normally positive and therefore we do not have many very poor people.”

He also mentions certain specific features of Luxembourg, such as Revis, which, in the professor's view, can play an important role in the fight against poverty.