What you need to know ahead of resuming reform talks

The government, trade unions, and employers meet on Wednesday at 10am at the State Ministry for a third round of social talks on Sunday work, shop opening hours and pensions, with unions demanding a written deal, employers pushing for restraint, and PM Luc Frieden under pressure after the protest of 28 June.

Talks had ended on a relatively positive note in July, and after a summer pause, both sides will try to preserve that fragile understanding. Unions remain both confident and cautious: they see real chances of concluding the debates but insist they will only be reassured once a written agreement is in place.

The government and employers, weakened in the balance of power after the protest of 28 June, are less categorical and maintain that not every point needs to be settled in detail. For now, no one dares to predict that a formal agreement will emerge as early as this Wednesday.

Background

The background to these negotiations is tense. PM Luc Frieden's contentious reform drive, set out in his May State of the Nation speech, was sharply curtailed by the mass demonstration of 28 June organised by the two major trade unions, namely the Independent Luxembourg Trade Union Confederation (OGBL) and the Luxembourg Confederation of Christian Trade Unions (LCGB). Added to this was pressure from his coalition partner, the Democratic Party (DP), as well as dissent within his own ranks in the Christian Social People's Party (CSV).

After the first round of talks on 9 July, plans to weaken the role of trade unions in collective agreements were dropped. Following the second round on 14 July, differences also emerged over pensions, with proposals less far-reaching than Frieden's initial vision.

In July, RTL learned that government plans to extend shop opening hours could be limited to 8pm, with later hours possible only if provided for in a collective agreement. Likewise, Sunday work, originally to be regulated by law, might instead be managed via collective bargaining.

Pension reform

The pensions issue remains the toughest. Frieden had proposed lengthening working lives from 40 to 45 years, but this may now give way to a lighter measure – less than a year – with more focus on early retirement schemes. Another option, strongly resisted before the protests but now back on the table, is raising contributions from 24% to 25.5% to boost revenues.

Even the strongest mix of measures, however, would only push the problem back a few years, as LCGB president Patrick Dury admitted this week. Pension expenditure will exceed revenues as soon as next year, and without change, reserves will be depleted by 2044.

On the other hand, the Luxembourg Employers' Association (UEL), led by Michel Reckinger, has argued that the 2012 reform should remain in force. That law foresees withholding the end-of-year bonus and limiting the annual adjustment when the system runs into deficit.

For now, positions remain far apart. Frieden himself said last week that it was not necessary to reach consensus with everyone on every detail. Whether new or more creative financing ideas will be put forward remains uncertain, as does the question of whether there will be a written agreement at all. Unions are optimistic, employers appear increasingly desperate, and Frieden's room for manoeuvre is narrow.

The Greens (déi gréng) have already requested that Frieden appear before the relevant parliamentary committees to update deputies on the state of play.

The outcome of Wednesday's talks will become clearer over the course of the day. A press conference is scheduled following the meeting at the State Ministry.

On Thursday, UEL president Michel Reckinger will be interviewed by RTL.