In conversation with RTL Radio on Tuesday, former Labour and Civil Service Minister Dan Kersch of the Luxembourg Socialist Workers' Party (LSAP) questioned why the State of the Nation address was being held on Tuesday, rather than after the tripartite talks.
Either PM Luc Frieden would say nothing of substance, in which case there would be no need for a State of the Nation address, or he would pre-empt the negotiations, Kersch argued. That, he said, would send a poor signal for social dialogue.
The LSAP politician was sharply critical of the government and, in particular, Frieden. Ahead of the tripartite and the State of the Nation address, he called for concrete measures on housing, relief for the middle class, and a new tax policy.
Kersch said action was urgently needed on housing. Among other measures, he proposed that the state should provide guarantees for mortgages. If families were no longer able to pay their debts, the state could take over the property, become its owner, and rent it back to those affected, he said.
He also called for the public sector's right of first refusal – priority right to purchase land – to be strengthened, so that land does not end up exclusively in the hands of major developers.
Kersch argued that, in the current crisis, large developers should not be allowed to buy up land from smaller developers under pressure from banks and struggling with liquidity.
The state, he said, must finally become an active player on the ground.
With the economy slowing, revenues are falling while spending continues to rise. Asked whether he expected PM Luc Frieden to announce savings measures, Kersch said saving money was important, particularly in defence, where Luxembourg should not simply rearm aimlessly because US President Donald Trump demands it.
Above all, however, Luxembourg's tax policy needed to be reorganised, he said, adding that a tax reform to relieve the middle class was necessary.
At the same time, Kersch argued, the government must stop lowering corporate taxes across the board. If the aim was to protect companies, selective corporate taxation should be introduced.
Kersch said this had already been done under the previous coalition, when some companies paid 15% up to €175,000 and 17% above that threshold. This approach should be continued, he argued, in order to support small businesses, but not to companies that have made huge profits in Luxembourg.
Cutting taxes further for banks in particular was something "no one understands", the LSAP politician said.
Kersch also suggested that Frieden was probably not the right person to implement such measures. His polling figures were disastrous, he said, and if the tripartite talks were now also botched, there would not be much left.
In Kersch's view, Frieden was already on the defensive, adding that if the PM wanted to do something good, he should resign.
The former Labour Minister also expressed concern about economic developments and rising unemployment. High youth unemployment was particularly alarming, he said.
He called for new employment measures and public programmes for young people, warning that a society which signals to young people that they are not needed cannot be sustained in the long run.
Asked about the strained social dialogue ahead of the tripartite talks, Kersch said he assumed new Labour Minister Marc Spautz had a different attitude towards trade unions and social dialogue than his predecessor Georges Mischo, but warned that his room for manoeuvre within the current government was likely limited.
He said the LSAP had faced similar constraints in government, especially with the Democratic Party (DP) often applying the brakes on reforms. Even so, he argued, progress had been possible at the time, pointing to the increase in statutory leave from 25 to 26 days, the introduction of an additional public holiday, and a structural rise in the minimum wage.
Kersch said Spautz should be judged on whether he could deliver similar progress, adding that the minister had his personal support and, he believed, that of the LSAP.
The gap between the public and private sectors was also discussed. Kersch said public-sector careers needed to be better harmonised, but argued that the problem was not that civil servants earned too much.
Rather, he said, people in the private sector did not earn enough. For him, higher wages in the private sector were essential to maintaining social cohesion. At the same time, he warned against overstating the issue, as this would only divide society further.
Finally, Kersch said he was optimistic about the LSAP's development. Paulette Lenert's move to the Council of State did not mean the end of her political career, he argued, citing his own example, as he had moved directly from the Council of State into government.
With new party presidents Georges Engel and Maxime Miltgen, as well as young parliamentary group leader Taina Bofferding, Kersch said the party could develop a credible alternative to the current government's policies.
He added that people had since realised it had not been such a bad thing for the LSAP to be in government, arguing that they had prevented many of the measures now on the agenda.
