Postponing the next wage indexation, which was supposed to be triggered in July, will give companies “enough planning security” and once the indexation is postponed, gross salaries up to €100,000 will receive degressive tax credits. In addition, there will be targeted aids for individuals and companies, which means that the government’s ‘Solidarity Package’ is “still valid”, according to Fayot.
The war in Ukraine has further increased the already high inflation and hampered economic growth. The Luxembourg Chamber of Commerce has released a new economic indicator based on data from 564 Luxembourgish businesses with more than six employees. 37% of enterprises have had to reduce their profit margins. 41% were able to pass on a portion of the rise in energy prices to their customers. Only 9% were able to pass all costs on to their customers.
Carlo Thelen, the Director of the Chamber of Commerce, stated that companies are trying to avoid this or find a middleground but “this only works up to a certain point”. Thelen explained that some companies have energy contracts that are “still good”, but these contracts will have to be renegotiated in the coming months. Long-term contracts will be replaced by selective purchases, which will have “dramatic” implications for planning security. On the other hand, companies are aware that customers will not be able to bear all of the extra costs, according to Thelen. For this reason, the Head of the Chamber of Commerce hopes that the crisis will be over soon.
“One step forward, two steps back”
The results of the Chamber of Commerce’s indicator represent “one step forward, two steps back”. The indicator’s rough score for the first half of the year was 55 points, after it had just climbed back up to 62 after the pandemic. The main concern of companies is the loss of profitability, which is a direct consequence of the war in Ukraine.
