In an interview with RTL, Isabelle Schlesser, president of Luxembourg’s Employment Development Agency (ADEM), warns that the country might be entering a period of prolonged stagnation.
In 2023, growth began to stall, and by 2024, the overall labour market had only grown by 1%. The private sector fared even worse, with a historical low of 0.3%. In contrast, previous years had seen a steady 3% increase, a benchmark not only for maintaining low unemployment but also for sustaining the Grand Duchy’s welfare state.
For those who had hoped the decline was temporary, Schlesser offers little consolation. The labour market has been “much less dynamic” for over a year, and signs suggest that the trend might continue. Luxembourg’s national statistics office (Statec) also forecasts a 1% growth rate for 2025. While a slight rebound is expected next year, Schlesser stresses that “we will not return to the levels we had a while ago.”
Fewer job openings not only increase unemployment, but they also reduce government income from social contributions while raising costs for unemployment benefits. People affected by job loss also spend less, which further weakens economic momentum – a vicious cycle.
The reasons for lower hiring rates include global uncertainty, geopolitical tensions, and the growing impact of automation on the workforce.
According to ADEM, the unemployment rate stands at 6%, a level that is expected to persist in the near future. Schlesser also acknowledged the presence of “hidden unemployment,” especially among young people looking for their first jobs, many of whom aren’t required to register with ADEM. Schlesser couldn’t estimate the extent of such hidden figures.
Cross-border workers make up around 40% of Luxembourg’s workforce, but ADEM has observed a shift in origin. While commuters from France are increasing, numbers from Belgium and Germany are in decline.
Long commutes have become less attractive, and wage improvements in Germany are making domestic jobs more appealing. Schlesser adds that border control do not yet appear to be a major factor at this stage.
Schlesser also addresses age discrimination in hiring processes. In light of ongoing pension reform debates and longer working lives, she stresses the urgency for companies to rethink their approach to older jobseekers.
Being hired after the age of 45 is difficult, and after 55, the chances are even slimmer. The argument that experienced workers are too expensive no longer holds, especially with state-backed support mechanisms such as Luxembourg’s reemployment aid, which helps employers cover the cost of hiring older staff.
