37,000 “first round” jobs are indirectly generated by the financial sector, while 15,300 jobs are created in a “second round” effect, said the Idea Foundation. Photo: Romain Gamba/Maison Moderne

37,000 “first round” jobs are indirectly generated by the financial sector, while 15,300 jobs are created in a “second round” effect, said the Idea Foundation. Photo: Romain Gamba/Maison Moderne

A report published by the Idea Foundation on 9 February found that Luxembourg’s financial sector has indirectly generated 70,000 jobs. Added to the 64,600 jobs directly generated by the sector, the report found that the sector is linked to a total of 135,000 positions.

In January 2023, Luxembourg for Finance and Deloitte published a paper that highlighted to the country’s economy, which found that nearly a third of jobs in the grand duchy were linked to the sector. It analysed the jobs created both directly and indirectly, as well as the added value from different sectors within the financial industry, such as banks, insurance or audit.

The from the Idea Foundation goes into further detail on the jobs that are indirectly generated by the financial sector.

Administrative and support service sector, specialised, scientific and technical activities, and information and communication

The report states that the financial sector directly generates 64,600 jobs, according to Luxembourg for Finance’s definition. But on top of that, 37,000 “first round” jobs are indirectly generated by the financial sector--these are what the Idea Foundation calls “providers”--while 15,300 jobs are created in a “second round” effect. These 15,300 positions are in the category titled “providers of providers”. Together, these “first round” and “second round” jobs total up to 52,300.

The sector of specialised, scientific and technical activities counts the largest number of indirect jobs, both first and second round--12,903 “first round” jobs are indirectly generated (35%), while 5,739 “second round” jobs are generated (37%).

The sector of administrative and support services counts the next largest number of indirectly generated “first round” jobs--11,652 (31%). It also includes 3,445 indirectly generated “second round” jobs (22%).

6,310 indirectly generated “first round” jobs are in the information and communication sector (17%), while 4,402 indirectly “second round” jobs are in that sector (29%).

Other jobs linked to the financial sector

But with 64,600 directly generated jobs and the 52,300 indirectly generated jobs (both first and second round), that only brings the total to 116,900 positions linked to the financial sector. This figure, noted the Idea Foundation’s publication, is fairly “conservative” and only takes into account the additional impact of consumption by companies. The financial sector also causes favourable economic spillover effects through income and associated investments via “induced effects”.

The Idea Foundation noted that 12,200 “induced” jobs are linked to consumption, while 6,400 jobs are associated with investments.

That brings the total number of jobs associated with the financial sector to approximately 135,500 positions.

The Idea Foundation cautions that this is “still a relatively conservative estimate”. Savings, taxes and social contributions are “evacuated”, even though they could be used to finance jobs or public investments--these effects are not taken into account in their calculations, said the report.