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Both unions and employers' representatives are still mostly in the dark about what an additional wage indexation will mean for Luxembourgish businesses.
Prime Minister Xavier Bettel announced a new tripartite meeting on Wednesday after the National Institute of Statistics and Economic Studies (STATEC) published the latest inflation numbers and forecast another wage indexation for late 2023.
Neither unions nor employers' representatives have any details on what an additional indexation will mean for businesses. According to last year's tripartite agreement, the government will cover all of the wage indexations necessary in 2023.
The first wage indexation for the year was made on 1 February and a postponed one from last year is to be made in April.
According to Tom Wirion, director of the Chamber of Craftspeople, the situation in the sector is tense as the impact of the indexation cannot be simply passed on to customers. The president of the Union of Enterprises (UEL), Michel Reckinger, further draws attention to the fact that businesses already have to cover the continually increasing energy and material costs.
© Didier Weber / RTL
Given the situation, Wirion has questioned how the indexation mechanism is to continue functioning in the long run, labelling it a "vicious circle" as new indexations continue increasing inflation, which in return leads to new indexations.
Additionally, there is the question of phasing out the current inflation-reduction measures, such as the cap on energy prices. Once abolished, there is an increased risk of creating an inflationary shock with new wage indexations, explains Wirion: "I think we have to take a step back and review whether the accumulation of indexations is the right path forward for people and businesses."
All potential solutions should therefore be considered, argues Wirion.
© Didier Weber / RTL
Patrick Dury, president of the Luxembourg Confederation of Christian Trade Unions (LCGB), believes that the last tripartite agreement was the right decision since it achieved the desired purpose of curbing inflation.
However, one demand by unions was not respected and will therefore be repeated in the next meeting, namely the adjustment of the tax table to inflation, says Dury. Both purchasing power and jobs have to be secured, he further argues.
At present, the UEL is not yet overly concerned about the prospect of a second indexation. "In the last tripartite meeting, the government promised to fully cover the difference of another wage indexation", notes Reckinger.
