After three days of intense tripartite negotiations, Prime Minister Luc Frieden announced on Thursday evening that the government, business representatives, and trade unions have reached agreements in principle on several core issues. Frieden highlighted that these agreements required compromise from all sides.
The main objectives laid out include strengthening purchasing power, protecting jobs and businesses, and supporting the transition to renewable energies.
To combat the country’s dependence on fossil fuels, the transition to renewable energy will remain a top priority. The government will introduce a cap on energy prices, including diesel, petrol, electricity, and heating oil, with gas also under consideration.
From 1 June, a new temporary tax credit will be introduced, equivalent in value to one wage indexation.
There will also be targeted support for those on the minimum wage and low incomes. Through tax credits, the net minimum wage will be raised further, so that every minimum wage earner will receive an additional €200 net per month, on top of index-linked increases, until 1 July 2027. The majority of this increase will come into effect from 1 January 2027.
Prime Minister Frieden also announced support measures for companies affected by international crises, as well as for the logistics and agricultural sectors. Temporary measures include financing for heat pumps and the introduction of a social leasing scheme, aimed at helping low-income households purchase electric cars.
Nora Back, president of the Independent Luxembourg Trade Union Confederation (OGBL), described the agreements as a breakthrough, stating: "We have succeeded in getting social dialogue back on track. We can talk to each other again."
When asked about the financial impact of these decisions, Prime Minister Frieden estimated the package will cost around €450 million over two years. He emphasised that no additional taxes will be levied on citizens to finance these measures.
