Wurth: Lux. Has wrong growth model

Michel Wurth, chair of the business association UEL, stated that higher salaries were not warranted with the currrent growth model. (Luc Deflorenne/Archives)

Michel Wurth, chair of the business association UEL, stated that higher salaries were not warranted with the currrent growth model. (Luc Deflorenne/Archives)

Michel Wurth, chair of Luxembourg business coalition UEL has stated that the grand duchy’s growth model is excessively geared towards creating new jobs and not enough on increasing productivity.

After the OGBL trade union presented its demands before the parliamentary elections next year, which included higher salaries, Wurth said that the productivity gains that Luxembourg experienced were actually based on job creation, and therefore did not warrant an increase.

On Wednesday 27 September, the chair of the UEL (Union des Entreprises Luxembourgeoises) and of the Chamber of Commerce said in an interview with public radio 100,7 that productivity levels were lower than in 2007. Luxembourg’s economy was on a good course with 4% growth this year, but that it will create 3.6% more jobs, meaning that productivity gains are actually very small.

The UEL has argued that “first productivity per head must increase and then we can raise salaries.”

Wurth explained that Luxembourg already has higher salaries than its neighbouring countries. The demand by the OGBL to raise the minimum wage by 10% is not warranted by the productivity levels, said Wurth. With such a raise, Luxembourg businesses would lose more of their competitiveness in the Greater Region and it would become difficult for many sectors.

Wurth said: “we don’t want this distortion and damage the economy.”

Wrong growth model

The chair of the UEL found a fundamental problem with Luxembourg’s growth model: “we cannot grow by 4% every year and at the same time create 4% more jobs. We need to grow by having more productive jobs and have less job growth,” he said in the radio interview on 27 September.

Wurth was cautious on the demand for family subsidies, saying that a debate must be had in society.

However, he reiterated the position of the business association that they are against the indexation of salaries and also of family subsidies. The UEL also prefers to have a social dialogue with companies rather than at national level.

Government performance review

The UEL welcomed the government’s initiatives in economic promotion in finance and ITC, innovation, support for the university and its willingness to think about the future by providing a roadmap through the Rifkin report.

The UEL reiterated, however, its demand for a revised business taxation law, a different growth model, more focus on the digitisation of the economy and that the pension system should be tackled, as there are structural deficits.