POLITICS & INSTITUTIONS - ECONOMY

Luxembourg’s high salaries are relative: report



20200708_photo_matic_zorman_0072_preview.jpg

If cost-of-living difference are stripped out, Statec said that Luxembourg salaries are still the highest in the EU, but by a much smaller margin. Library picture: Commuters at the central train station, July 2020. Photographer: Matic Zorman 

Salaries in the grand duchy are only truly higher than those in neighbouring countries in certain sectors and not across the board when accounting for cost-of-living differences, a new paper has posited.

Statec, Luxembourg’s national statistics bureau, examined 2018 salary data and concluded the makeup of the country’s workforce and the need for employees to pay for higher housing and other costs have partially skewed comparisons.

The average annual gross salary in the grand duchy was €64,932, Statec said on 2 June. That was 182% of the EU average. However, corrected using a purchasing power standard, Luxembourg salaries were 145% of the EU average, falling to roughly €50,000.

On this measure, Luxembourg still had the highest annual salaries in the bloc, followed by Germany (in 2nd place), Denmark (3rd), Austria (4th), Belgium (5th), and France (ranked 11th), but the gaps with neighbours shrank notably. German workers, for example, earned approximately €8,500 less, compared to a €20,000 disparity using raw figures.

Using the same approach, Statec analysed pay by sector. Luxembourg topped the scales in the financial services, health and social action, civil service and education sectors. However, Belgium led in the construction, retail, hospitality, and administrative services and support fields, and Germany in industry. Luxembourg occupied second or third place out of the four countries in those areas. France ranked last in all sectors.

Another factor at play, Statec said, is the country’s highly educated (and thus highly compensated) workforce. The financial sector and the scientific, technical and specialised services sector collectively represented 22% of Luxembourg’s workforce. That rate was far higher than in Belgium (8%), Germany (9%) and France (11%). According to the Statec report, “these are two of three sectors with the best compensation and are filled mainly by higher education graduates. The impact of average salaries is therefore quite significant.”