Backes (DP) on Monday said her office would propose some tax relief for households after a better financial result for the state’s 2022 budget than expected. This news came just a day before inflation triggered the indexation of wages, meaning a 2.5% raise from February.

“It’s thanks to us,” OGBL president Nora Back said on Tuesday of the index payment. The union last year had boycotted a relief package signed between the government, business groups and staff unions as it delayed indexation. Companies would be unable to afford payroll, social partners had argued. But a follow-up deal signed September re-established regular indexation rules.

Back slammed the promise of tax credits as dishonest, adding that state revenue was up because of working people whose tax burden had increased while that for companies had decreased.

Indexation results in people’s salaries shifting into higher tax brackets, she said. For a salary of €5,000 a month, the real increase in wages is 1.7% and not 2.5%, Back said. “After eight increases these last years, that represents a difference of €200 a month.”

Taxes increased 21.8% for employees with a salary of €5,000 between 2017 and 2023 because tax brackets aren’t adjusted for inflation, the unionist said, calling for a change in tax rules. “They don’t want to hear it, but it will be one of our key topics in view of the elections.”

A more detailed catalogue of priorities will be issued in due course, Back said, but it will definitely include demands to reduce working hours to 36 hours per week at the same salary.

Labour minister Georges Engel (LSAP) last year said that a study should determine whether reducing working hours in Luxembourg is feasible. Business groups have already warned against the measure warning of a loss of productivity in an already tight labour market.

The OGBL called on the finance ministry to crunch the numbers how much money was missing from people’s pockets because of the gap between indexation and taxation, demanding sustainable and retroactive relief.