Megatrends like climate change, digitalisation or globalisation will “have many repercussions in Luxembourg, including employers often struggling to find the skills they need and productivity becoming a more important driver of further economic growth,” says the OECD in its National Skills Strategy.

Luxembourg’s workforce shortage is already felt throughout the country, like in the trades sector--where around at the moment. The ageing population of both Luxembourg and the greater region--where the grand duchy currently draws 46% of its workforce--will also soon become a problem if not replaced or upskilled.

Four priority areas delineated

For its strategy, the OECD collaborated with more than 160 participants from ministries, government agencies, municipalities, education providers, employers, workers and researchers from Luxembourg. The watchword of the institution following its study: collaborate on and improve your training offers.

The OECD identified four priorities for the grand duchy to look into, namely:

-       Offer labour-market-relevant and inclusive adult learning opportunities for adults;

-       Implement better guidance and incentives for skills the country needs;

-       Improve labour market conditions to attract and retain foreign talent;

-       Strengthen the governance of skills data in the country.

Skill mismatch a worry

Among the issues the institute noted in its study of the Luxembourg labour market and skill offer was the presence of overlaps and gaps in the adult learning options offered by different local players.

Despite low and stable unemployment numbers--which stood at --the number of job openings (10,988 in January 2023) and job seekers (15,801) reflect a skill mismatch too, which, unless addressed, risks worsening. Here, the importance of guiding workers or jobseekers towards trainings that can both give them access to the labour market but also respond to the needs of the labour market is key.

The lack of communication between skill guidance providers therefore also needs to be improved, said the OECD. The government should put in place financial incentives both for adults to give them access to learning opportunities and to employers so these can offer their staff relevant upskilling.

Training providers therefore need to not just better communicate on their respective offers, but also adapt the latter to match the developing demands of the future. For instance,  implementing upskilling and reskilling pathways that allow those previously active in ‘brown’ jobs to transition to greener jobs is primordial to ensure the country’s successful sustainable transition.

Socio-economic background remains a hurdle

The OECD study also found that a person’s socio-economic background remained a determining factor of their educational development and professional opportunities.

While Luxembourg has a high enrolment rate (91% at pre-primary level too), the outcome of those 12 years of education needs to be worked on, according to the OECD. Luxembourg scored below OECD average in key areas like mathematics, reading and science, with the socio-economic background of children having an important impact on their likelihood to develop said skills. This link between performance and socio-economic background is stronger in Luxembourg than other OECD countries, said the institution.

At university or college level, the socio-economic background continues to have a stark influence on the likelihood of enrolment. Though Luxembourg has a higher average than other OECD countries--64% of women and 53% of men between 25-34 against 52% for women and 39% for men on average--the outcomes for disadvantaged students need to be improved.

For adult learning, the issue lies within the fact that despite of a higher enrolment rate (16%) than average (9% in the EU), one’s gender, age, and socio-economic background remain determining factors in the ease of access to training.

The question of foreign talent

The OECD in its analysis of Luxembourg’s workforce shortage rightly highlighted the importance of attracting and retaining foreign talent. Access to the labour market remains not only complicated for third country citizens, but the integration of accompanying spouses and families mean that some choose to leave the grand duchy prematurely.

The obstacle in this recommendation lies within the fact that, while the “high quality of life, a safe living environment and attractive incomes” the OECD report identifies as pull factors, there are other factors, like difficult access to housing, the increasing cost of living, which reduces the attractivity of Luxembourg wages, and mobility issues which undermine regional recruitment within the greater region.   

Here the OECD suggested that “Luxembourg should take active steps to expand its supply of affordable housing. Creating more abundant affordable housing opportunities might particularly facilitate the recruitment of foreign talent into medium-skilled shortage occupations and/or into more junior roles, where wages tend to be generally lower than in senior, high-skilled jobs.”