Even after paying everything - charges, wages, taxes - the Luxembourg economy remains in the red. In 2024, it was still €3.47 billion short of balancing the books, according to Statec. Over ten years, the cumulative hole reaches €8.2 billion and the balance has been negative without interruption since 2021.
As the Statec (which publishes these statistics in the national accounts), contacted by Paperjam, reminds us, a financing requirement arises when a sector's savings are no longer sufficient to finance its investments in non-financial assets: it then has to find the money elsewhere. This is precisely the situation of Luxembourg's productive fabric, which operates under a financing constraint.
When you go down a level, an initial divide clearly appears. Over the period 2015-2024, non-financial companies have a cumulative financing requirement of around €29 billion, only generating a surplus in one year, 2017, of €372 million. The year 2024 marks an all-time low at €6.547 billion. At the same time, finance companies were in a position to finance nine years out of ten, including investments, with the exception of 2019 (-€288 million), and still released €1.341 billion in 2024.
According to Creditreform's annual bankruptcy report, businesses in Luxembourg are facing persistent financial difficulties. "Businesses are facing liquidity pressures, with an unfavourable trend observed in certain sectors", stresses the organisation. The situation is particularly marked in construction, where "unpaid invoices are rising sharply". More generally, Creditreform notes "a steady increase in debt collection procedures over several years, marking a clear worsening of the situation". While some data show an average improvement in equity, Creditreform points out that "this trend is due to the bankruptcies of companies with low capitalisation, which are now excluded from the statistics, making way for companies with higher capitalisation".
These figures measure neither profits nor losses in the ordinary sense. They say nothing about the situation of an "average" company. They indicate something more structural: having paid for and invested everything, the productive economy is running out of money at the macro level, while the financial sphere is churning it out. This is not a moral opposition. It's an asymmetry of flows.
This imbalance has become the silent backdrop to all current social debate. In an economy where non-financial companies have to go into debt in order to continue investing, producing and paying their charges, every new wage or social demand is automatically transformed into a budgetary trade-off. If companies had to bear the cost of a 10% reduction in working hours at constant pay, a sixth week of statutory leave and extended social rights, they would have to do so without having any new financial margins in the macroeconomic sense. This means choosing between deferring technological investments, postponing infrastructure projects, slowing down the modernisation of production tools or resorting more to debt.
But these investments are not a matter of comfort. They determine the ability of the non-financial economy to become more productive, to absorb future shocks and to remain competitive. The Central Bank itself points out that productivity is stagnating or declining, which further reinforces this constraint. This idea of declining productivity is, however, contested. In a special bulletin published after the BCL's opinion, the Chambre des salariés (Chamber of Wage Earners) dismissed the scaremongering as unfounded: according to its calculations, Luxembourg's nominal productivity not only remains one of the highest in Europe, but its comparative advantage has strengthened over time. The CSL concludes that productivity cannot be held responsible for the current economic tensions. "You can't calculate productivity by including inflation. It's a gross error," sweeps aside Chamber of Commerce director Carlo Thelen in an interview at the end of the year.
The social conflict is not just about sharing working hours, but about an implicit choice of priorities between immediate redistribution and future wealth creation. It is on this weakened economic foundation that the political confrontation over working time is now being grafted. By calling for a 10% reduction in working time at constant pay, a sixth week of statutory leave, the extension of part-time working rights, and more rest and family leave, the OGBL and LCGB are making a demand that is, in effect, a demand for additional funding for companies.
From the trade union point of view, this demand is justified by wear and tear on the workplace, the worsening work-life balance, the rise in irregular working hours and a massive aspiration to work less for the same pay, as measured by the Chamber of Employees surveys. From the point of view of non-financial companies, it comes at a time when financing capacity is already negative, margins are under pressure and the investment effort remains high. If we were looking for other negative signals, we could add the 34% increase in the number of companies that will disappear in Luxembourg in 2023 compared with 2022 - last year's figures are not available. Or add the number of companies that will have to be taken over in the coming years or risk disappearing without further ado.
This is where the divide becomes political. The government finds itself caught between two rationalities that are difficult to reconcile in the short term. On the one hand, a productive economy that is short of money in the macroeconomic sense. On the other, a social demand that requires new margins to be freed up. Between the two, a financial sector in surplus which today largely supports public revenues, but whose profitability is, according to the Central Bank itself, largely cyclical. In other words, the State is relying more and more on a financial sector in surplus to stabilise its accounts, while it is asking a non-financial economy in need of financing to absorb the bulk of the social adjustment effort. This asymmetry mechanically feeds mistrust.
The unions' withdrawal from the Standing Committee on Labour and Employment, following the social round table, is a strong political signal. It means that the conflict is no longer limited to disagreement over the content of the reforms, but now concerns the very framework of the negotiations. For the trade unions, the move towards the annualisation of working time over twelve months represents a shift in the social model. For employers, it represents an instrument of flexibility that has become indispensable in an increasingly uncertain environment, defended in particular by the Union des entreprises luxembourgeoises.
The double divide is now fully visible. A horizontal divide between a financial surplus and a productive economy structurally in need of money. A vertical divide between unions and government, over the method, timetable and very meaning of the reforms.
It is their intersection that makes the situation potentially explosive: when money is concentrated in one pole, when investment and employment are concentrated in the other, and when the State is increasingly dependent on the former to balance its books, any social demand immediately becomes a question of economic sustainability and political choices. The debate on working time is therefore revealing. It is no longer just about hours, breaks or holidays. It raises the central question of the model: who finances what, who absorbs the risk, and who can still absorb the adjustment. The figures do not settle the debate. But they do show that the economic base on which it is taking place is now profoundly unbalanced.
And it is not the arrival in government of (CSV) that will upset the balance. Having just returned from the CSV congress to validate the arrival of the new minister in mid-December, the head of government, , had made it clear on the Trend Makers stage that "the new minister is there to apply the coalition agreement". In other words, not to give a more social twist to the government's policy.