The cross-border phenomenon is not new, but it is evolving. It’s even a necessity, says the latest analysis published by Idea Foundation director Vincent Hein.  at the phenomenon of cross-border workers, which is still a major factor in the Luxembourg model, although it is showing some signs of slowing down.

According to the think tank, cross-border commuters--228,000 according to the latest Statec figures--can no longer be considered “an adjustment variable.” First, because they are over-represented in job creation (53% of jobs created between March 2019 and March 2024). “There are now 14,700 of them, compared with fewer than 10,000 in 2019,” the study points out. Since 2022, out of 15,100 new employees, 7,700 have been cross-border commuters. Conversely, residents accounted for 47% of new jobs, a smaller proportion.

What’s more, certain sectors of activity are particularly dependent on non-residents, such as hospitality, ICT, public administration and health, where cross-border commuters account for 30% of employment. And even in an economic climate marked by a slowdown in employment, cross-border commuters were still over-represented. They were less affected, even in the sectors that lost the most jobs: construction, industry and commerce. In these three sectors, they account for 63% of employment, but only 28% of the decline in employment.

In his analysis, Hein puts forward a number of hypotheses that could explain this phenomenon: a higher average level of seniority among cross-border commuters, premature departures of new immigrants and moves by working residents. Added to this is the “demographic report for 2023, which also points to a slowdown in population growth,” and a drop in net migration.

The Idea Foundation’s analysis also points to signs that the cross-border phenomenon is running out of steam: employees from Germany and Belgium are down slightly (-0.3% and -0.1% respectively in the second quarter), says the think tank, which suggests that the factors that could explain this decline should be studied in greater depth. One factor has not changed: French cross-border commuters remain the most numerous, “accounting for 51% of net job creation over the past year.”

Strategic elements according to Idea

Based on this observation, and faced with the multitude of challenges facing the labour market (low labour productivity, housing difficulties, ageing population, etc.), Hein suggests a nine-point strategy to “guarantee the availability and attractiveness of cross-border workers in the years to come.” It consists of the following.

1. Consider the activation and training policies of neighbouring countries/regions as levers for improving the situation on the Luxembourg labour market, and consider ways of participating more actively in them;

2. Beware of discourse tending to relativise the importance of telework in the preferences of workers/companies;

3. Study the causes of the downward trend in the number of cross-border commuters living in Germany and Belgium;

4. Consider that the increase in the number of people retiring over the next few years will require more people to be recruited if the number of cross-border commuters remains constant;

5. Gain a better understanding of housing needs (and supply) throughout “Greater Luxembourg”;

6. Refine knowledge of demographic dynamics in neighbouring areas, as an integrated, shared projection model is becoming increasingly essential;

7. Don’t forget the labour needs of neighbouring economies in projections and in the development of cooperation projects;

8. Assess the risks and opportunities of “offshoring” models for certain Luxembourg economic activities;

9. Do everything possible to guarantee open borders in a tense European context.

This article was originally published in .