POLITICS & INSTITUTIONS - ECONOMY

“Lux. does well if the people in Luxembourg do well”



Prime minister Xavier Bettel presented his annual state of the nation speech for the second time to parliament on Wednesday 26 April, after encountering technical difficulties the previous day. Maison Moderne

Prime minister Xavier Bettel presented his annual state of the nation speech for the second time to parliament on Wednesday 26 April, after encountering technical difficulties the previous day. Maison Moderne

DP prime minister Xavier Bettel presented numerous reform proposals in his speech on the state of the nation on Thursday 26 April.

After a false start the previous day, he started out by praising what goes well in Luxembourg: a high quality of life, good social and welfare systems, a modern infrastructure, a strong economy and healthy public finances.

However, he continued with the challenges: mobility--or immobility, as he called it--and social cohesion. While “multilingualism is a big advantage, it also brings challenges”, Bettel noted.

He pointed to the huge demographic changes the country has and is still undergoing. The population has grown by 20% in 10 years--over the past 6 years it increased by 74,000. It currently stands at 600,000 and half of them are not citizens.

The labour market is composed of 43% cross-border workers, 28% of Luxembourg residents and 29% of residents. The liberal PM warned that “we lack the workforce, especially in sectors which generate our wealth”.

These demographic changes lead to a very high cost of living, particularly for housing--“too expensive”, he noted. The school systems must be continually adapted.

Investments

Bettel said that previous governments had not sufficiently invested in Luxembourg’s infrastructure, and that his government was catching up: investments in roads, rail tracks, hospitals, schools, electricity grids, water and gas systems, and the broadband and data infrastructure.

He mentioned the new train station at Pfaffenthal and the tram. He also talked about the new housing investments (such as the ones in Olm and Wiltz), which are environmentally innovative in that they generate their own energy.

Economy and labour market

“The economy needs to serve the people, not the other way round”, he declared.

Bettel announced a plan to attract new businesses in all corners of the country, making for a more decentralised economy, less focused on the capital. Subsidies for local authorities where unemployment is higher than the average is being considered.

The PM indicated that working from home should become more prevalent.

He also announced a new law on intellectual property, and new, simplified administrative procedures for businesses.

Flexible “co-working structures” are being developed with private companies, which could be implemented near the borders of the country.

“In terms of regional planning, we need to bring jobs closer to the people rather than the other way round”, Bettel proclaimed.

Education reforms

The speech was entitled “quality of life for Luxembourg”, and Bettel said that child care should become free for 20 hours a week during 46 weeks a year. For economically vulnerable families, this would be increased to 30 hours a week, representing savings of between €3,000 and €5,000 a year. He has also announced a budget increase of €81 million, and a new law on ensuring quality of child care.

For secondary school, Bettel argued that all students should get a tablet under special conditions.

In special education, Bettel has announced the creation of 350 new jobs to help students with learning difficulties.

Housing

The PM has noted the three pillars of the government’s housing policy: increase the number of state-led housing construction; making more land available for planning; and, tax and other indemnities.

Affordable housing is essential. “Many people earn too much to qualify for social housing but not enough to be able to afford the real house prices.” Bettel argued that rural areas must be better connected to public transport, and a global plan needs to be implemented.

Environmental sustainability

The government supports organic products, and has introduced subsidies to support farmers to switch to organic products. Bettel argued that the quality of water had been neglected by previous governments, and that the current government is catching up with considerable investments in improving the quality of rivers, streams and drinking water.

Welfare system

As people get older, the government wants to increase investments in the prevention of illnesses. A new law on hospitals should ensure that the first diagnosis and first treatment should be improved. Bettel announced that the availability of first aid courses should be increased, and that civil servants should all have the possibility to do one of these courses during work hours. The PM also argued that chronic illnesses are on the increase, and prevention should also include better eating and more sports. Investments in sports over the past 5 years was €500 million.

REVIS and special needs

The reform of the minimum guaranteed income (formerly RMG, now REVIS) ensures that single parents get more money. He announced that couple where one is in a “mesure de l’emploi” (job creation scheme) and the other gets the REVIS is now possible.

Bettel announced a new law to make it easier to enter the job market for people with special needs. He announced that restaurants, cinemas and retailers should all be more easily accessible for people with disabilities. The concept “design for all” should be extended to the private sector.

A new law on giving sign language an official status is also in the making.

Pension system

Bettel noted that the pension system is exceptional by international standards. He stated that adaptations might be necessary, and that the results of a new study will be presented in the next few months. One of the challenges is that life expectancy goes up but contributions go down.

Nursing care insurance

The PM indicated that a reform of nursing care insurance should allow the system to become more flexible and should be more individually tailored to the needs of the patients.

Personal data

Bettel declared that access to personal information held by the state will become a reality in the next few months. He argued that the law on an open and transparent administration is a first step which took decades, but he did not exclude further reforms.

Security/police/justice

The PM has said that while crime overall has gone down (except for reports of rape), more police officers will be employed.

He announced the creation of a new post of a family judge will be created.

Public finances

“Our public finances are doing well”, Bettel insisted. He argued that all international institutions and rating agencies give the government good marks: “let’s be happy about this!”

This drew some cheers, but also groans from MPs.

Debt is lower in relative and absolute terms compared to 2013, Bettel said. The latest forecasts predict 4.4% growth for 2017, and 5.2% for 2018. This is better than what was calculated in the multiannual framework for the budget.

Taking care of tomorrow

There was a slight commotion in parliament when Bettel said that 32,000 jobs had been created between 2014 and 2016, and that unemployment goes down.

Luxembourg invests over 4% of its GDP, which is much higher than Germany, and Bettel said this was evidence of the government looking to the future. While new loans had been made this year, the conditions have rarely been this good, argued Bettel.

The “fonds souverain intergénérationnel” (a sort of savings account of the state), created two years ago, currently stands at €185 million.

Shares in private companies are 10% of GDP and bring €300 million dividends--that is €100 million more than the interests on public debt.

Financial centre

“We have come from a situation where Luxembourg was on all sorts of black and grey lists, and we were seen with a critical eye. That’s certainly different now”, Bettel said.

“We cannot rest on what we have achieved so far.”

Bettel argued that transparency does not mean that everything from the banks and financial institutions belong in the public domain.

“Luxembourg still respects the privacy of its citizens and the confidentiality of companies”.

However, the information must be available to the authorities and the transactions must be accountable and open to scrutiny. In times of Brexit, where big actors look for alternatives to the UK, a good reputation is of enormous importance.

Fundamentals

Bettel kept repeating the slogan “Luxembourg does well if the people in Luxembourg do well”. The fundamentals of a good quality of life are, according to the PM, “peace, freedom, justice, solidarity and tolerance.” He linked these fundamental principles to the European Union, and reiterated the government’s commitment to it.

On Wednesday 26 April in the afternoon, the government and opposition parties are set to respond to the state of the nation speech. Finance minister Pierre Gramegna will also present the new budgetary situation for 2017 and how it complies with EU directives and regulations, and minister for the economy Etienne Schneider will present the national reform programme.