Your Weekly Recap for 25–29 March.
Here are five things you should know at the end of this week:
- The key to balancing Luxembourg's pension system might be ... to work for longer
- Politmonitor survey: housing and mobility are main concerns for Luxembourgers
- According to Housing Observatory: property prices experienced sharp decline in 2023
- Attack at Moscow concert leaves more than 140 dead
- Container ship destroys Baltimore bridge: six presumed dead
1. The key to balancing Luxembourg's pension system might be ... to work for longer
In what will surely prove to be an unpopular realisation, Luxembourgers might need to work more years to keep the pension system from collapsing.
Quite the increase: civil servant pensions nearly quintupled in the span of 24 years.
What to know about Luxembourg's pension system?
What do the experts say? –At the beginning of this year, the Idea Foundation engaged with approximately a hundred political and economic decision-makers, social partners, and economists to address the challenging topic of pensions in Luxembourg. 73% of the panelists believe that, within the next three years, urgent reform is necessary.
The most popular approach among the experts seemed to be to "encourage individuals to work for longer". Second on the list was a gradual reduction in the level of "certain pensions in relation to salary income".
The weight of civil servants – Expenditure with civil servant pensions has increased five-fold since 1999, now amounting to around 1.2 billion. The situation is not likely to change soon.
The Luxembourg Civil Service Pension Fund is unable to provide this amount, which means the state needs to step in. In fact, current projections are pointing towards an increasing need for state intervention, which means a reduction of the pace of hiring is all but necessary.
In related news, the Left Party, with the aim of bolstering the pension fund, recently called for abolishing the contribution cap for high earners.
What to know –Luxembourg's pension system is based on three pillars: Social Security, company pensions and private pension plans. You can find more information about it here.
2. Politmonitor survey: housing and mobility are main concerns for Luxembourgers
Continuing the recent trend: the housing market remains the biggest concern for Luxembourgers.
- Mobility is also high on the list for many residents: long commutes increase worker dissatisfaction and risk pushing away new talent.
- A look at politician popularity rates, based on likeability and competence.
A never ending story – Unsurprisingly, Luxembourg residents seem to be most concerned about the current housing market. Three out of four individuals surveyed identify housing as their top concern.
The housing crisis manifests in multifaceted and almost contradictory forms. The issue of housing market inaccessibility due to soaring property prices in recent years appears, at a glance, to clash with the latest reports stating prices faced an important drop in 2023.
But escalating interest rates have made financing prerequisites increasingly hard to attain. This makes prospective buyers turn to renting - which leads to massively increased rents. It is an endless loop that is proving hard to break, especially with the ongoing issues in the construction sector.
There and back again – For both Luxembourg residents and cross-border commuters, mobility remains an enduring concern. Juggling work commitments and commuting demands, residents dedicate nearly 49 hours per week to their jobs, compared to just over 53 hours for cross-border workers.
The substantial time investment in commuting not only weighs heavily on workers but also raises concerns among employers. Prolonged commutes risk driving talent away from Luxembourg. This is another side effect of the housing crisis, as more and more people turn to neighbouring countries in search of more affordable living - which brings its own set of challenges.
Luxembourg City recently presented a new mobility plan which hopes to address some of these issues.
You like me! – Politmonitor also consults Luxembourgers on the popularity of our politicians, and this year we had a few changes: First of all, fan favourite Jean Asselborn is no longer on the list, by virtue of his retirement from an active political role.
Then, as many probably expected, prime-minister Luc Frieden rose in popularity, occupying third place.
At the top, we find two familiar faces: Xavier Bettel is at the head of the list, now followed by former Minister of Health Paulette Lenert. Having been major figures in Luxembourg politics' recent history, they will likely maintain their popularity for a while.
3. According to Housing Observatory: property prices experienced sharp decline in 2023
As anticipated, house prices in Luxembourg witnessed a significant decline throughout 2023.
Interest rates and construction sector stagnation seem to be the main culprits, affecting both existing properties and new-builds.
Direct consequence: rents are back on the rise.
A house? In this economy? – According to the latest data from the Housing Observatory, residential property values depreciated by an average of 14.4% over the course of 2023. The existing property market experienced the most substantial declines, with flats decreasing by 14.5% and houses by 18.8%.
We also saw fewer properties changing hands: a 28.6% decrease for existing apartments, and a staggering 72.8% drop for new builds.
And more bad news for sellers: experts recently estimated that a further decrease of "at least 10%" in property prices would be deemed desirable in 2024.
A matter of interest –The rough period has been primarily attributed to the surge in interest rates, which substantially impacted activity within the Luxembourg residential property market, as seen above.
The diminished activity, combined with a decrease in purchasing power among households (estimated to be around 30%) and investors, contributed to the widespread reduction in property prices across the country.
The crisis in the construction sector, which has led to multiple bankruptcies, is also a heavy factor, a direct consequence... or both.
Can't buy, can barely rent –Rents began to rise once more towards the year's end, registering a 3.9% increase over twelve months, surpassing inflation, notes the Housing Observatory.
This recent uptick can be attributed to a "notable surge in rental demand", mainly as a result of the aforementioned escalation in interest rates, which put many buyers' plans on hold.
Renting remains a problematic issue. The escalating demand is further straining a saturated market, and the scarcity of new construction projects may exacerbate the situation in the forthcoming months.
4. Attack at Moscow concert leaves more than 140 dead
Over 140 dead, with several dozen injured is the current toll of last week's attack on a concert hall in Moscow
The Islamic State has claimed responsibility, casting a shadow over Western Europe
Putin has attempted to link the attack to Ukraine, despite denial from the US and other nations
A tragic evening –Last Friday, attackers dressed in camouflage uniforms entered Crocus City Hall - a shopping and entertainment centre in Moscow - opened fire and threw a grenade or incendiary bomb. Panic ensued, as people started rushing towards the exits amidst gunfire and smoke, "climbing over each other's heads".
The current toll is over 140 dead, with 80 people still in the hospital. The attack, the deadliest on Russian soil in nearly 20 years, was claimed by the Islamic State group.
IS resurfaces –The reappearance of the Islamic State raised concerns among Western nations, especially because this summer will set the stage for two massive sporting events: the Euro 2024 in Germany, and the Paris Olympics.
Large scale events are a security nightmare due to the immense influx of hard-to-control crowds. To this end, France has already enlisted the help of foreign security forces.
International cooperation in the prevention of terrorist attacks has been ongoing for several years, resulting in foiled attacks and dismantled cells, but leaders warn against complacency.
Pointing fingers –Russian president Vladimir Putin did not waste any time in connecting the attack to Ukraine, claiming to have evidence - which the US has vehemently denied.
Putin has been accused by the opposition of ignoring security threats, even after being warned of potential risks.
To many, Putin's insistence on linking the Moscow attack to Ukraine - despite the Islamic State's claim - fells like an attempt at simultaneously shirking responsibility and stoking the fire of a war-weary nation who is not entirely convinced.
5. Container ship destroys Baltimore bridge: six presumed dead
A major bridge in the US city of Baltimore almost entirely collapsed Tuesday after being struck by a cargo ship, sending multiple vehicles and up to 20 people plunging into the harbour below.
The bridge's dramatic destruction shut the port for maritime traffic, which last year accounted for more than 52 million tons of foreign cargo, worth some $80 billion, according to a recent statement from Maryland Governor Wes Moore's office.
Conspiracy theorists said Tuesday that the Baltimore bridge collapse resulted from an intentional attack -- despite officials quickly saying there was no evidence of foul play.
Six presumed dead –The missing men, all Latin American immigrants, are believed to have been killed when the Singapore-flagged, 1,000-foot container ship 'Dali' lost power and careened into the bridge.
The workers were part of an eight-person road repair crew working an overnight shift. Two were rescued shortly after the collapse, and two bodies were recovered Wednesday.
Key hub –Baltimore is the deepest harbour in Maryland's Chesapeake Bay, and handles the highest volume of cars and light trucks in the United States, as well as the largest quantities of imported sugar and gypsum.
It is the ninth-busiest major US port in terms of both foreign cargo handled and foreign cargo value, and is directly responsible for more than 15,000 jobs while supporting almost 140,000 more.
Recovery will be 'very long road' –Nearly the entire steel structure -- crossed by tens of thousands of motorists each day -- collapsed within seconds.
The Maryland Department of Transportation had asked the Biden administration for an initial $60 million for "immediate response efforts, and to lay the foundation for a rapid recovery."
The best of... 📚
- Business & Tech – Disgraced crypto tycoon Sam Bankman-Fried gets 25-year sentence.
- Science & Environment – Financial crisis at UK's biggest water supplier worsens.
- Entertainment – Beyonce's long-awaited new album, heavy on the Texas roots, is out this Friday.
- Sport – Spain prosecutors want Rubiales jailed for 2.5 years for World Cup kiss.
And in case you missed it... ⚠️
- Luxembourg City's municipality unveils new mobility plan.
- 18-month suspended prison sentence and €1,500 fine for Luxembourg international Gerson Rodrigues.
- Findel Airport fire ravages Air Rescue equipment.
- Four killed in German motorway Flixbus accident.
Your Weekly Recap is published every Friday at noon. Read earlier versions.
