Employers in Luxembourg hope to attract more talent and retain staff by increasing salaries by 3% in 2023. Photo: Jobs.lu

Employers in Luxembourg hope to attract more talent and retain staff by increasing salaries by 3% in 2023. Photo: Jobs.lu

In light of high inflation, businesses in the grand duchy are under pressure to raise their employees’ wages, says global advisory, broking and solutions company WTW.

In a report published on 28 July, WTW shares that companies in the grand duchy are planning to increase wages by 3%, four out of ten local respondents also stated that the actual expense is higher than their projections. Close to one in three has or will increase the frequency with which they will review salaries, while 97% are planning to review pay checks every six months.

159 Luxembourg organisations participated in the survey, which covered 168 countries and 22,570 responses.

Labour shortage pushes to adaptation

Amid a workforce shortage that leaves the ball in prospective employees’ hands, companies have no choice but to review their pay budget. 55% reported fears linked to the current inflation, 40% followed the expectations and needs of their staff, while 69% kept an eye on the current tighter labour market and adapted accordingly.

it is imperative that organizations have a clear compensation strategy and an understanding of their own competitive position in terms of compensation.

Catherine Lesourdmanaging directorWTW Belgium and Luxembourg

With available in the grand duchy--a record--as well more talents, as well as the so-called Great Resignation slowly creeping towards the EU, employers must improve their ways.

““It is not just about pay, employers are looking for other ways to retain employees, such as a focus on wellbeing. In today's dynamic environment, it is imperative that organizations have a clear compensation strategy and an understanding of their own competitive position in terms of compensation," says WTW Belgium and Luxembourg managing director Catherine Lesourd in a statement.

IT staffing remains the biggest issue at the moment, with 82% of participants saying they struggled to recruit staff, while 79% had a hard time keeping their staff. On a national level, IT talent remains the most sought after,


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Many of the participants have taken first steps, such as workplace flexibility (69%), implementing more diversity and inclusion (57%), remote working options (43%). Only 35%, however, took to changing their pay structure (35%) to improve their attractiveness.

Over the past few months, the discussion of a wage indexation has been brought up many times due to the energy crisis and subsequent rise in cost-of-living expenses for Luxembourg residents. Following a tripartite agreement, the automatic wage indexation (that occurs every time inflation reaches the 2.5% threshold) has been . Instead of an increase in wages, resident and cross-border workers receive a tax credit to face the increasing cost of living.