The UEL says that sectors significantly impacted by the coronavirus pandemic, such as retail, will suffer most from the increase in the minimum wage Matic Zorman

The UEL says that sectors significantly impacted by the coronavirus pandemic, such as retail, will suffer most from the increase in the minimum wage Matic Zorman

Friday’s announcement by prime minister Xavier Bettel (DP) that as of 1 January 2021 the minimum wage would rise by 2.8% has been met with exasperation by the Union des Entreprises Luxembourgeoises. Bettel broke the news at a media briefing following Friday’s cabinet meeting and said the decision had been made so that “in Luxembourg no one is left behind”.

But the UEL says that the  2.8% increase “will result in an additional cost of more than €60 million for Luxembourg companies, not to mention the impact on the overall wage scale of our economy.” The organisation says the new minimum wage would specifically impact those labour-intensive sectors that have been most significantly damaged by the coronavirus pandemic--hotels, restaurants and cafés, and retail and transport.

Even a financial aid package worth €500 per employee until the end of June provides little consolation, the UEL said in a statement. “The increase in wage costs linked to this decision will last well beyond this date and impacts the competitiveness of all companies in the country.”

The UEL says it is well aware that it is difficult for a household living off the minimum in Luxembourg to make ends meet. “That is obvious, but it is a matter of tackling the problem intelligently. The main cause of these financial difficulties is the increasing cost of housing,” their statement reads. “However, it is naive to think that we will solve this problem by increasing the minimum wage. The minimum wage cannot be the adjustment variable for a stressed real estate market.”

The business organisation also points out that an automatic increase in the minimum wage every two years is not obligatory. Indeed, any plans for a rise in the minimum wage must be accompanied by a report on the development of general economic conditions and incomes, according to a clause in the Luxembourg labour code.

“It seems obvious that the ‘general economic conditions’…do not allow such a revaluation of the minimum wage,” the UEL says, adding that it wants the bill to be withdrawn from the parliamentary agenda.