CGFP head expresses anger over collapse of final round of social talks

Luxembourg's civil unions are anything but pleased following the collapse of the third and final round of social talks between unions, employers, and the government. Speaking to RTL Radio on Monday morning, CGFP president Romain Wolff called the outcome “a stain on the Luxembourgish social model” and questioned how dialogue could continue after such a breakdown. A full day of discussions failed to move beyond the first item on the agenda, namely pensions, prompting Wolff to describe the meeting as “all for nothing.”

The outcome of the third round included an eight-month increase in working time, spread over the next five years, a half-percentage-point rise in pension contributions for the state, and tax incentives for employers and employees alike for private retirement savings; but Wolff remains unconvinced. In his view, the government had no mandate to launch pension reform at all. While he acknowledged that action was needed, he strongly criticised the way it was handled:

“So we sit down together, and then suddenly at the end they say: ‘Right, now we’re taking responsibility.’ But if I look at what was on the table at ten in the morning and compare it to what was said at half past three in the afternoon, when the government basically said, ‘right, this isn’t going anywhere’, the text was exactly the same. They might as well have just said, ‘Here it is, do you agree? No? Okay, then let’s stop right here.’ It was all for nothing.”

CGFP: Government had a draft text ready in advance

Wolff raised concerns about the government's handling of the negotiations, suggesting that legislative texts related to pension reform were already prepared in advance, leaving little room for discussion. “If the government hadn’t already been working on this, there’s no way the texts could now be fast-tracked through the legislative process as quickly as they plan to”, Wolff shared.

He continued: "I find it hard to believe that these texts haven't been worked on in advance. In my view, the texts are already ready and will be introduced very soon. I just hope that certain provisions don’t end up being slipped into other legislation like the budget law. We’ve seen this kind of thing before, for example in the area of public service security, where a proposed increase in contributions was suddenly included in a broader bill. If that's the case, they should draft a separate law. But I find it very hard to believe that this hasn’t been in the works for some time”, Wolff warned.

He added that an agreement on pensions could have been reached, but said the government backtracked on the so-called “adjustment”, which links pension increases to salary growth. According to Wolff, it was agreed before the summer break that this adjustment would be preserved. However, it now appears it will only apply depending on the financial situation of the pension funds and could be suspended if revenues fall.

Yes to pension cap, but no specific amount

Ahead of the talks, the CGFP had raised the idea of introducing a cap on pensions for civil servants. However, on Monday morning, union president Romain Wolff declined to commit to a specific figure. “It’s not our role to decide that. The government should have continued the discussions, but it chose not to”, he said. However, the significant gap between pensions in the public and private sectors cannot be ignored, he stressed. As a potential solution, the CGFP has advocated for lifting the contribution ceiling in the private sector to help close the gap.

Pessimistic employment outlook raises concerns for pension system

Luxembourg’s pension system is based on a pay-as-you-go model, meaning current workers fund the pensions of retirees. To keep the system sustainable, a long-standing assumption has been an average annual employment growth of around 3%. However, that trend has shifted sharply since 2022. In its Note de Conjoncture from June, STATEC forecasts only 1% employment growth this year in its optimistic scenario, and no more than 1.5% for 2025.

Does this worry the CGFP ?

According to Wolff, the 3% benchmark cited comes from Luxembourg Business Association (UEL) president Michel Reckinger – but he acknowledges that broader financial questions remain unanswered.

“The government is planning a tax reform expected to cost €900 million. At the same time, there’s heavy investment in defence, hundreds of millions, I would say. So I keep asking myself: where exactly is the money going to come from to fund all of this? It would be useful if the responsible ministers addressed this directly. Maybe there’s more money available than we think. I don’t know but they should tell us.”

Wolff declined to say whether further union actions are planned. The CGFP’s committee is scheduled to meet Monday morning. What is clear, he stressed, is that no agreement has been reached.

Listen to the interview here

Full interview available in Luxembourgish on RTL Play.