On Friday morning, the Government Council decided that the minimum wage will increase by 3.8% from 1 January. The measure was announced shortly afterwards at a press conference by the Minister of Labour Marc Spautz and Minister of the Economy Lex Delles, with the latter later appearing on RTL to provide further explanations.
Before the 3.8% increase takes effect in January, an index-linked adjustment is expected to occur later this year, likely before the summer, according to Delles. This 2.5% increase would amount to around €65, while the January rise would add roughly €105, bringing the total increase in the minimum wage to around €170, he said.
However, questions remain as to whether this increase is sufficient to address the issue of “working poor”. Delles argued that the problem goes beyond the minimum wage alone, noting that while wages are an important factor, a broader set of measures is needed.
He pointed to government support through family policy, including energy allowances, and tax exemptions on the minimum wage, as part of a wider effort to support low-income households.
To ease the burden on businesses, the government has also decided to compensate 1.3 percentage points of the 3.8% increase. Delles said this was necessary given the current economic situation. Luxembourg’s economy has grown by only around 1% annually over the past two years, compared with a typical average of about 3%, while unemployment has risen to 6.2%, according to Delles.
Looking ahead to 2026, Delles said that the government expects conditions to improve and that it aims to avoid placing excessive strain on businesses that could undermine growth or job creation. For this reason, Delles said, it opted to offset 1.3% of the increase.
He added that the exact mechanism for this compensation is still to be defined, and that they are committed to doing so.
On whether the increase brings Luxembourg in line with the EU directive targeting 60% of the median wage, Delles noted that different indicators can be used. With the combined increases of 2.5% and 3.8%, one of these indicators would place the minimum wage at around 60.2%, he said.
Employers’ representatives have nonetheless expressed dissatisfaction, despite the planned compensation. Michel Reckinger, president of the Union of Luxembourg Enterprises (UEL), warned of potential inflationary pressures and job losses.
Delles acknowledged that the broader economic context remains challenging, citing uncertainty beyond the EU, the lingering effects of the Covid-19 pandemic, Russia’s war in Ukraine, high inflation, and ongoing energy issues. In this context, he stressed the importance of maintaining purchasing power through the measures adopted.
Trade unions, however, remain unconvinced. Nora Back, president of the Independent Luxembourg Trade Union Confederation (OGBL), criticised the decision as unilateral, taken without proper consultation.
She also questioned the use of public funds to finance the 1.3% compensation for businesses and highlighted the lack of clarity regarding its duration and overall cost.
Back described the move as a blow to social dialogue and warned that unions would now take their concerns to the streets.
Delles acknowledged the difficulty of reconciling the positions of both sides, especially through bilateral rather than trilateral negotiations, noting that unions had called for an 11% increase, while employers had opposed any rise, favouring alternative measures to support purchasing power.
He said the government had to take responsibility and make a decision that provides predictability for both businesses and employees.
Despite the announcement of potential union action, the government intends to stand by its decision, according to Delles. He concluded with a call for continued dialogue between all parties.
