The average standard of living in Luxembourg was estimated to increase by 7.7% from €3,745 in 2021 to €4,032 per person, per month, in 2022. Notably, this growth surpassed the annual inflation rate, which stood at 6.3%. The national statistics bureau released the on the occasion of the International Day for the Eradication of Poverty on 17 October. Statec explained that factors contributing to this positive shift included the indexation of April 2022, tax credits, aid in response to the surge in energy costs and wage increments due to the limited labour market.
Furthermore, the study found that the poverty rate in 2022 had decreased slightly from 18.1% in the previous year to 17.4%. Concurrently, the subjective metric of individuals ‘struggling to make ends meet’ demonstrated a similar declining trend.
Employment and poverty
Statec’s analysis underlined that not all jobs, especially outside the digital domain, came with the assurance of high pay. In 2022, 12.9% of Luxembourg’s workforce faced the risk of poverty. Over half of these workers were concentrated in sectors like construction, hotels, health and commerce.
Furthermore, temporary workers, part-timers, non-European nationals and those with limited education were notably more susceptible to poverty. Additionally, households with dependent children also experienced heightened poverty risks.
Despite the presence of social safety nets like social inclusion income scheme (Revis) and minimum social wages, these were occasionally insufficient, especially for families with children, given Luxembourg’s high cost of living and high housing costs.
Housing burden and disposable income
Statec also found that almost 90% of households in grand duchy felt their housing expenses in 2022 were either considerable or moderately significant. This sentiment spanned across varying financial demographics, affecting 82% of the affluent households and 91% of those less financially fortunate. Especially concerning was the housing expenditure of households in the lowest income quartile, consuming 57.9% of their disposable income.
Despite net income availability, unavoidable commitments such as rent, insurance and loan repayments persist. Statec highlighted that the less affluent households spent over 60% of their disposable income on these obligatory outgoings, while this ratio diminished to 20% for the wealthier households.
After deducting these fixed costs, the remaining average disposable income for spending was €4,624 per month per household, but it drastically reduced to €1,121 for the bottom 10% income bracket. When considering this truly available income, the risk of poverty escalated to an average of 21%.