Luxembourg government to prioritise AI innovation and civil service investment

The 2025 state budget will be presented in a public session on Tuesday afternoon in the Chamber of Deputies.

In an interview with our colleagues from RTL Radio on Tuesday, Corinne Cahen, MP for the Democratic Party (DP) and rapporteur for the draft budget, explained that the challenges of Artificial Intelligence (AI) would be the central theme of her report. She highlighted that AI is "already widely used" and offers significant new opportunities, particularly in the field of healthcare, such as disease prevention.

AI requires a legal framework

When asked if Luxembourg can compete with industry giants like Google, Cahen responded that while Luxembourg may not match their scale, there are niches where the country is already making strides. "Seven years ago, PhD students from the University of Luxembourg founded a company that produces a digital twin, for example, of the electricity network," she noted. "Instead of testing directly on the main grid, tests are conducted on the twin network. The same could be applied in the healthcare sector," Cahen added.

Cahen emphasised that significant progress is already being made in Luxembourg. "We also have a degree of sovereignty over our data, but there is still much work to be done," she said. According to Cahen, Luxembourg must ensure that "internet traffic remains within Luxembourg, or at least within Europe," and that AI is governed by a clear legislative framework.

The MP also pointed out the dangers posed by the spread of fake news on social media in recent years, which underscores the need for AI to be clearly identifiable. "Users need to know when something has been created or influenced by AI," she explained.

Cahen also addressed the ethical challenges posed by AI, stressing the importance of setting clear boundaries on what AI can and cannot do. "Humans must remain at the beginning and end of the process," she said. "AI may mine the data, but the final decisions must always be made by humans."

Civil service salaries: 'Room' for potential increases

Currently, 24% of central government spending–nearly a quarter of the state budget–is allocated to civil service salaries. "We must preserve that," Cahen emphasised. "We have a strong public service, including a police force, and we want to see more police presence," she added.

When asked whether the wage gap between the private sector and the public sector is still justifiable, Cahen responded by acknowledging that salaries are a significant portion of any budget, including her own company's. "State salaries are, of course, attractive, but what should truly matter is the work behind them and the public service we all benefit from," she said.

Read also: Luxembourg pension debate: Why are civil servant pensions so much higher than those of employees?

The General Confederation of the Civil Service (CGFP) is currently negotiating a new salary agreement. Cahen noted that there is "room" for potential increases but stated that she does not wish to interfere with the negotiations between ministers and unions.

Opposition budget criticism: Lack of concrete measures

Cahen rejected the opposition's criticism that the draft budget lacks concrete measures, particularly in regard to housing. She pointed out that "€480 million has been allocated specifically for off-plan (VEFA) projects," and added that "15% of the budget is dedicated to education, while 47% goes to social transfers."

Regarding revenue, Cahen made it clear that the financial sector is the largest contributor, bringing in "€4 to €5 billion a year." She stressed that the government must also ensure it "invests at the right time, bridging the gap between a start-up and a finished product."

Cahen highlighted that in the United States, billions are mobilised quickly, while Europe tends to face challenges in this area. She stressed the importance of both the European Investment Bank (EIB) and governments, especially in Luxembourg, ensuring that "companies don't leave once their product is developed and ready."