The drop in revenue due to one telecommuting day per week could mean the loss of more than 2,000 jobs.
Photo: Romain Gamba/Maison Moderne
The Economic and Social Council (CES) has calculated the impact of teleworking on the Luxembourg economy and public finances: for one day a week of telework, there’s an estimated €350m in annual shortfall for the retail and hospitality sector.
The CES unveiled its opinion on the topic on Tuesday, and the shortfall is not negligible: €348,328,640, to be precise, if those who can telework were to do so once a week. The CES estimates that out of the 460,000 workers in the country, both resident and cross-border workers, 197,914 occupy administrative functions that do not require continuous working from an office. One teleworking day per week compared to 220 per year would then correspond to 8,708,216 fewer trips.
The trade group Horesca estimates that an employee spends an average of €25 per day in the hospitality industry, and €15 euros in shops, or €40 in total. This would then breakdown to€217,705,400 in missing annual turnover for restaurants and cafes in the country, and €130,623,240 for shops.
"It is also not guaranteed that teleworkers will consume more in their locality of residence. It may very well be that consumer behaviour is turning more to e-commerce,” writes the CES.
€10m less VAT
According to Horesca, this drop in revenue would translate in its sector alone into a loss of more than 2,000 jobs, €17m in social contributions and almost €6m in withholding tax on wages. To this bill must be calculated €10m less VAT which would go to the state.
"These estimated impacts are much lower than the reality of the year 2020, where teleworking and other reluctance and restrictions due to covid-19 have resulted in the hospitality sector falling by more than 50% in business turnover over the months of June and July,” notes the CES.
Local economy and public finances are not spared because, outside the exceptional period linked to covid-19, cross-border workers who exceed a certain number of days worked from their home (19 for Germany, 24 for Belgium, and 29 in France) must pay taxes on their income in their country of residence. With one day per week, they would exceed this quota. When asked about this, the CES could not calculate how much this would cost the grand duchy.
Stay below the 25% threshold
"Teleworking is never an advantage for the state," explains CES president Jean-Jacques Rommes. To limit the damage, he recommends that agreements between countries be renegotiated. Extension of the thresholds means financial compensation. Again, the CES does not calculate from what amount the state would gain. "It's a [risky] calculation to be made."
Ideally, it should stay below 25% of working time from home, it said. Otherwise, we would exceed the limit from which the worker must register for the social security of his or her country. The employee, employer and the Luxembourg state would then lose.
"It is therefore a question of finding in any case the right balance between the application of the teleworking regime and the related budgetary and economic losses,” concludes the report.
This article was originally published in French on Paperjam.lu and has been edited and translated for Delano.