In light of the recent economic forecasts published by the National Institute of Economic Studies (STATEC) and the resulting series of wage indexations, Prime Minister Xavier Bettel decided earlier this month to call for another tripartite meeting between government officials and social partners, to be held on 3 March. While the last tripartite meeting ended in a historic agreement, it currently looks as though the 2023 edition might turn into a veritable test for the PM’s thesis that the social model “is like the magic potion of the Grand Duchy”.
One of the main reasons why last year’s tripartite meeting has often been labelled a success despite concessions having been made by all sides is that the resulting agreement was signed by everyone at the negotiating table. A great relief at the time given that the Independent Luxembourg Trade Union Confederation (OGBL) had decided earlier in 2022 to step away from another agreement, which the other two major unions signed.
Ahead of the upcoming meeting, it thus seems useful to remember that although often portrayed as one side of the debate, the social partners are actually made up of several factions. The three unions all pursue slightly different aspirations, the clearest commonality being that they will most likely clash with the agendas of employers’ representatives. The government, itself a coalition of three distinct political parties, meanwhile has to cater to everyone’s wishes and test each faction’s willingness to compromise while simultaneously limiting its own concessions.
Knowledge Bites: Tripartite – the Luxembourg social modelWith that being said, it appears that all three unions are this time united in their demand for an adjustment of the tax table to inflation. However, Minister of Finance Yuriko Backes already ruled out this exact demand and labelled it irresponsible in an interview on Monday. Instead, she wants to introduce a series of targeted tax reliefs worth €500 million. At present, both factions appear dead set on their respective path, which certainly creates tension ahead of the upcoming tripartite meeting.
In the most recent turn of events, PM Bettel has accepted an invitation from the unions for a separate encounter ahead of the actual tripartite meeting, expected to take place on 28 February. The tax table adjustment will likely be at the centre of attention and might end up setting the tone for the official meeting between government and social partners.
It is difficult to assess where the bar lies and what to classify as a success at the upcoming meeting. If one thing became apparent in last year’s negotiations, then it was that any agreement is considered an achievement as long as everyone signs it. This allows every faction to maintain face and have a win on their record, which in return appeases everyone’s constituents. Everyone signing thus proves to be a rather vague aspiration as it hardly means that everyone wins as much in practice as in theory. It also says little about the actual content of the agreement.
Another circumstance bound to obscure the results of this meeting is the fact that we find ourselves in an election year. All three coalition parties are hoping for a final victory before voters will pass judgement on their achievements at the end of the legislative period. This might result in them making more short-term concessions than are actually advisable for the country in the long run.
For once, unions and employers’ representatives therefore seem to have the upper hand and are able to enter negotiations with greater bargaining power than usual. However, only time will tell whether this leads to overly bold and exaggerated demands on behalf of social partners.
And as for the agreement itself, if there will even be one, an even longer period of time will have to pass before anyone is remotely able to assess the success of the tripartite meeting. Until then, it seems all we can do is continue watching the series of events from the outside and take any results with a pinch of salt.
