The first indexation was triggered in April. The second, which was supposed to be triggered in July 2022, was postponed to 1 April 2023 by the tripartite agreement. And
Prime minister (DP) confirmed that a meeting of the tripartite coordination committee would be convened in autumn.
"We have an agreement in place, this must be our basis," , director of the Union des entreprises luxembourgeoises (UEL) told Delano’s sister publication Paperjam. This agreement "stipulates that 12 months must elapse between each instalment", he said. In principle, this third index should therefore also be delayed. The question of the tripartite meeting for Olinger will be: “What will be the compensation modalities: an energy tax credit (as for the second index of the year, editor's note) or something else? We will have to see", he says.
It's a virtuous circle, a company that is doing well is a condition for employment
Olinger puts things into perspective: “Indexation could fall at the end of the year but also at the beginning of next year, there are still uncertainties". Bettel has asked Statec to update its calculations for the beginning of September.
According to Olinger, aids to households and businesses go hand in hand. "It's a virtuous circle, a company that is doing well is a condition for employment.” The UEL is working on a sectoral analysis with the various federations to assess "which companies need help". Similarly, "there are households that have not lost purchasing power, while others have,” he estimates. "We are talking about a real crisis which has an impact on consumption. A company that sells less produces less. To avoid falling into this vicious circle, we must help households, which is what the government has done so far.”
Taking measures ahead of winter
The revised inflation forecast wasn’t unexpected for , director general of the Chamber of Commerce. Thelen told Delano he was “not surprised in the current context, but of course disappointed that our hopes had at the beginning of this war, that there would be a diplomatic solution rather quickly, [didn’t materialise]”. The estimations for inflation in 2023 have now doubled compared to initial projections, points out Thelen, which will put pressure on Luxembourg companies that were hoping to continue their emergence from the pandemic.
Bigger consumers have added technological solutions to reduce their energy bill. Maybe in smaller companies, there's still a lot to do
The time ahead of the tripartite talks needs to be used by companies to implement responsible energy comsumption, according to the Chamber of Commerce. Thelen considers that companies but also households should pay attention to their energy consumption.
“Big consumers already made many efforts before this crisis, because energy is always a factor of costs in production. And so bigger consumers have added technological solutions to reduce their energy bill. Maybe in smaller companies, there's still a lot to do,” he says. “And of course, private households can make an effort and not wait until winter”.
The Chamber of Commerce will put in place a helpline within its House of Entrepreneurship which will provide guidance to small and medium sized companies in their efforts to reduce their energy consumption and related costs. “This initiative will be put in place in cooperation with the Ministries of Energy and Economy,” says Thelen.
The indexation system as a whole is not an ideal solution generally for the Chamber of Commerce’s director and its general position is against automatic indexation. “In normal times we can accept a system when it [is triggered] every 18 or 24 months, but we criticise the system, because it's not socially targeted.”
Evaluating the situation
For the Chamber of Trades on the other hand, the tripartite will be the defining moment in how Luxembourg’s government, companies and unions will react to the inflation. “We will wait for the tripartite. We cannot say now what to do and what not to do,” director general of the Chamber of Trades told Delano. He insisted that that they are following the situation up close and are “evaluating the effects of the inflation” on businesses and the artisanal sector. “It is a labour-intensive sector,” he stated while also admitting that the cost of materials has put a strain on artisanal activities.
This article will be followed be another detailing the reaction and point of view on the matter of Luxembourg trade unions.
Additional reporting by Mathilde Obert.