Government scales back furlough scheme


Luxembourg is scaling back its partial unemployment programme, which allows companies to keep on staff even when they don't have enough work for them. Photo: Romain Gamba 

Luxembourg’s partial unemployment programme--under which the state pays 80% of employee wages to support businesses in financial distress--will be scaled back starting at the end of June. 

Prior to the pandemic, the scheme was limited mostly to industrial companies, with aid given to businesses facing difficulties because of the economy or circumstances beyond their control.

For the second half of May and June, for example, the government will help companies in construction make their payroll as a materials shortage means they cannot operate at full capacity.

But aid for the hospitality sector, which was only eligible for partial unemployment under pandemic rules, is set to run out. Restaurants are currently allowed to operate until 10pm, with diners seated at tables of up to four people and a negative coronavirus test result required for indoor service. These rules are up for review mid-June.

The government starting April had tightened eligibility criteria for businesses in gastronomy to receive partial unemployment.

In June, the equivalent of 27,030 full-time employees will receive their salary from the state, which pays 80% of an employee’s income up to a limit of 2.5 times the minimum unskilled wage (currently around €5,300). Workers on minimum wage receive the full sum. Companies must still pay social charges for their staff.

The number of people receiving support will be down from 31,342 employees in May. The number of companies receiving aid will drop from 4,029 in May to 3,676 in June.

In February 2020, the last month before the coronavirus pandemic forced Luxembourg into lockdown, the number of people on partial unemployment was at just 2,227, working for 27 companies.