Luxembourg

   

Social Policies

#3
Key Findings
With a generous social safety net, Luxembourg falls into the top ranks internationally (rank 3) for its social policies. Its score on this measure has improved by 0.1 point relative to 2014.

Education spending is high, but children of migrants are disproportionately pushed to non-university schooling tracks. Linguistic complexity forces many students to repeat academic years. Income inequality levels are very high, but the welfare system is comprehensive and generous. In response to fast-rising housing costs, a new housing allowance was launched in 2018.

Child-care services have been expanded, and child benefits increased. A relatively high share of children live below the poverty line. Women’s labor-market participation rate is relatively low but rising. The health care system is generally of high quality. System costs are high, but out-of-pocket expenses very low.

Pension benefits are quite high, but further reforms are needed to ensure sustainability. More than half of the country’s residents have a migrant background. A new naturalization act has eased the way to citizenship, and all foreigners, whether citizens of the EU or third countries, can vote in local elections if they fulfil residency requirements.

Education

#27

To what extent does education policy deliver high-quality, equitable and efficient education and training?

10
 9

Education policy fully achieves the criteria.
 8
 7
 6


Education policy largely achieves the criteria.
 5
 4
 3


Education policy partially achieves the criteria.
 2
 1

Education policy does not achieve the criteria at all.
Education Policy
6
The country’s education policy must deal with the challenges of a multilingual society and a high proportion of migrant students.

After six years of elementary school, students face a junction and must choose one of two tracks, a general (former: secondaire technique) or an academic (classique) one. The number of students who must repeat a whole academic year is among the highest in the European Union; more than 50% repeat one or more academic years. Although Luxembourg has the highest percentage of university graduates and smallest class sizes in Europe, about 25% of students do not achieve sufficient basic skills in math (range 33), science (range 33) and reading (range 36), to complete their education successfully, according to the PISA study.

The assessment notes that only 40% of the students graduate in the prescribed timespan. This places Luxembourg well below the OECD average, behind France, Belgium and Germany. In addition, the government has decided not to participate in all PISA studies which was criticized in Luxembourg’s media.

There is a marked division between Luxembourg nationals and migrant students, as migrants (especially the Portuguese minority) generally struggle with the country’s three languages and often end up in the technical track (secondaire technique), which affects their progress toward a university education. Recent studies have shown that migrant students are four times less likely to transfer to the higher-level university-oriented early school track (enseignement secondaire) than Luxembourgish nationals. To counter this, more affluent migrants often send their children to international schools. This leads to yet another division between high-income and low-income migrants. A further reform with more permeable structures (including a more open guidance procedure with parent input) to avoid early tracking is being tested.

In general, university students in Luxembourg are very mobile and often study abroad, acquiring new knowledge and language skills. Overall, 75% of tertiary-level students study abroad (2016), while 58% of all students in Luxembourg are foreign. According to the OECD, Luxembourg has the highest level of education expenditure per student ($42,435 per student in 2016) and the smallest average class size (15 primary school students per class and 19 secondary school students per class).

With 4,525 students in 2018, Germany is the primary destination for Luxembourg’s university students. This number has grown by 300 people over the previous year (2017) and is a new record. In second place is the University of Luxembourg with 3,723 students. The University of Luxembourg sees itself as a multilingual university, with courses taught in English, German and French. Other destinations are Belgium, France, the United Kingdom, Austria and the Netherlands. Nevertheless, “German universities are in vogue,” concludes the Luxembourg newspaper Tageblatt: “Luxembourg students prefer to find their way into German-speaking countries.”

The fact that relatively few Luxembourgers enroll at the state-owned university is based, on the one hand, on the sterile design of the university campus in Esch-Belval and also on the fact that some subjects, such as medicine, are not yet fully offered.

Citations:
Zenthöfer, Jochen: “Studenten aus Luxemburg : Deutschland ist Zielland Nr.1.” Frankfurter Allgemeine Zeitung, 29 September 2018. http://www.faz.net/aktuell/feuillet on/hoch-schule/studenten-aus-luxemb urg-deutschland-ist-zielland-nr-1-1 5811286.html#void Accessed 23 Oct. 2018.

Gantenbein, Michèle: “Blick auf das Luxemburger Bildungssystem: Zu viele Schüler bleiben auf der Strecke.” Luxemburger Wort, 2 December 2016. https://www.wort.lu/de/politik/blick-auf-das-luxemburger-bildungssystem-zu-viele-schueler-bleiben-auf-der-strecke-5841706d5061e01abe83d1bf?utm_campaign=magnet&utm_source=article_page&utm_medium=related_articles. Accessed 17 Dec. 2018.

Chiffres clés de l’enseignement supérieur 2016/2017. Portail de la statistique, 2017. www.statistiques.public.lu/fr/actualites/conditions-sociales/enseignement/2017/10/20171004/EnseignSupchiffres201617.pdf. Accessed 23 Oct 2018.

Education at a Glance 2018: OECD Indicators. OECD, 2018. www.oecd.org/edu/education-at-a-glance-19991487.htm. Accessed 23 Oct. 2018.

Social Inclusion

#2

To what extent does social policy prevent exclusion and decoupling from society?

10
 9

Policies very effectively enable societal inclusion and ensure equal opportunities.
 8
 7
 6


For the most part, policies enable societal inclusion effectively and ensure equal opportunities.
 5
 4
 3


For the most part, policies fail to prevent societal exclusion effectively and ensure equal opportunities.
 2
 1

Policies exacerbate unequal opportunities and exclusion from society.
Social Inclusion Policy
9
Luxembourg’s strong economic performance over the last three decades has provided numerous governments with the means to build an outstanding welfare system, which includes generous insurance plans, benefit programs and public service provision. Most recently, the health care sector has been significantly expanded. Retirement benefits exceed Scandinavian standards. Since the 1970s, the welfare system has been consistently expanded, even when neighboring countries are forced to cut public welfare expenditure. In recent years, the proportion of non-EU citizens has risen to about 10%, representing a disproportionate share of the unemployed, minimum wage earners and welfare recipients. Luxembourg must improve the civil and professional integration of non-EU immigrants and refugees through improved multilingual education in early childhood and school, active fostering of language acquisition, and homologation of foreign vocational competencies.

Despite Luxembourg’s generous social transfers, 21.7% of children in Luxembourg live below the poverty line (60% of median income). The country’s Gini index score (31) highlights the extremely unequal distribution of income, which makes new measures against poverty and social exclusion necessary.

The demand for residential housing has always being far higher than the supply. It is no surprise that prices have been rapidly rising for years. Last year alone, the average price of private housing rose by 7.7%. Over the decade, rental prices have soared dramatically by 43%. The government recognizes the challenge presented to households and supporting the construction of about 11,000 new housing units by 2025. Notwithstanding, the attractiveness of home ownership remain unchanged. As a result, the volume of real estate loans increased by 29% in 2016, which should ease the pressure of inward migration and strong population growth. In 2016, 47 projects with 345 units were funded by the Ministry of Housing, of which 60% were initiated by municipalities. Since 2014, 362 new projects for low-income housing with 4,245 units have been approved by the government, of which 1,660 are for sale and 2,585 are for rent.

A new housing allowance was finally introduced in 2016 and was launched in 2018. The housing allowance will benefit around 35,000 low-income households, providing a monthly subsidy of a maximum of €300 for a family household. The allowance acknowledges the importance of social housing, especially in providing affordable rental properties for low-income people.

Nevertheless, the provision of social housing remains below the European average. Some municipalities have decided to impose a special tax on unoccupied houses to create disincentives for leaving spaces empty and encouraging existing residential property to be rented or sold. In addition to local programs, public social housing companies (Fonds du Logement, SNHBM and other social associations) are intensifying their activities. Following an audit by the authorities, the National Housing Fund was reformed in 2017, with the intent to establish effective quality control measures.

In addition, the 2017 social inclusion income reform (REVIS) supports the integration of social and labor-market policies with individualized and activating social assistance, providing monetary incentives to work.

Citations:
“Gini coefficient of equivalized disposable income.” Eurostat, www.ec.europa.eu/eurostat/tgm/table.do?tab=table&language=en&pcode=tessi190. Accessed 23 Oct. 2018.

“Income and living conditions.” Eurostat, www.ec.europa.eu/eurostat/web/income-and-living-conditions/data/main-tables. Accessed 23 Oct. 2018.

Le Fonds du logement. www.fondsdulogement.lu. Accessed 23 Oct. 2018.

Health

#3

To what extent do health care policies provide high-quality, inclusive and cost-efficient health care?

10
 9

Health care policy achieves the criteria fully.
 8
 7
 6


Health care policy achieves the criteria largely.
 5
 4
 3


Health care policy achieves the criteria partly.
 2
 1

Health care policy does not achieve the criteria at all.
Health Policy
8
Luxembourg’s well equipped hospitals offer a wide range of services, including high-tech and expensive treatments. Waiting lists are rare, except for some services that are in high demand (e.g., MRI scans). Nevertheless, Luxembourg also has the highest share of patient transfers to other countries for treatment within the European Union. Due to the country’s small size and the absence of a university hospital, it is not possible to provide all medical treatments. Necessary medical transfers to neighboring countries have the beneficial side effect of being more cost-effective for the state health insurance program, as those services are in general less expensive abroad.

Drawbacks of Luxembourg’s system include the lack of a university hospital and the individual nature of doctor’s contracts and treatment responsibilities. Most resident general practitioners and medical specialists sign contracts with individual hospitals and are only responsible for a certain number of patients, which prevents any sort of group or collective treatment options. Therefore, some hospitals have re-organized to keep doctors’ offices in-house without changing their status as independent physicians.

However, at a cost of $7,463 per person per year, Luxembourg’s health care system is (after the United States and Switzerland) the third most expensive system among all OECD countries. The high cost of the health care system is due to high wages, a high ratio of medical equipment to residents, a low generic substitution rate and, after Germany, the second highest government and compulsory insurance schemes with low out-of-pocket pharmaceutical expenditure for patients (2015: 13%).

Citations:
OECD Health Statistics 2018. http://www.oecd.org/els/health-systems/health-data.htm. Accessed 23 Oct. 2018.

Health at a Glance 2017: OECD Indicators. OECD, 2017. dx.doi.org/10.1787/health_glance-2017-en. Accessed 23 Oct. 2018.

Families

#8

To what extent do family support policies enable women to combine parenting with participation in the labor market?

10
 9

Family support policies effectively enable women to combine parenting with employment.
 8
 7
 6


Family support policies provide some support for women who want to combine parenting and employment.
 5
 4
 3


Family support policies provide only few opportunities for women who want to combine parenting and employment.
 2
 1

Family support policies force most women to opt for either parenting or employment.
Family Policy
9
Luxembourg’s corporatist welfare regime has gradually evolved over the years to a more universal system with a high degree of anonymity of patients. One indicator is the shift from a predominant transfer system to a transfer and service system, with specific provisions for children and the elderly.

Luxembourg has positively responded to its changing demographics by adapting its family policies. In this context, the government has pushed for policies to offer a wide range of child allowances and child care services, such as child benefits, maternity leave, parental leave, birth and post-birth allowances.

Furthermore, indirect help is also offered, such as subsidized mortgage interest rates, depending on the number of children at home. In general, Luxembourg offers the highest level of child benefits within the European Union. Today, it is one of the four leading EU member states in terms of family benefits. It has made sustainable improvements in terms of family-friendly workplace arrangements, while gender-based job segmentation and gender pay gap have decreased.

When compared internationally, Luxembourg’s tax policy is family-friendly. Women’s labor-market participation has considerably increased since the launch of the European Employment Strategy. At the same time, the government has invested heavily in child care facilities, with the aim of making it easier for women to work.

Yet, despite a strong increase in recent years, the rate of women’s workforce participation remains comparatively low at 65.1%, compared to an EU average of 65.3%, with Luxembourg ranked 16th out of 28 EU member states.

Luxembourg’s public child care institutions include the “maisons relais,” general daycare centers; the “éducation précoce,” a third preschool year and “foyers de jour,” after-school centers. Since August 2016, there will be one fixed allowance per child, regardless of the family composition. Child bonuses and child allowances will be paid in one sum, €265 per child with an increase from the ages of 6 to 12 years. Since 2017, as part of a new coherent family policy, the government offers free child care facilities (20 hours per week), early language support and intercultural education. These structures are now more strictly controlled by officials and must provide qualified staff for multilingual offerings.

Citations:
“Employment rate by sex.” Eurostat, www.ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=t2020_10&language=en. Accessed 23 Oct. 2018.

“Women.” Webseite Grand Duchy of Luxembourg. http://luxembourg.public.lu/en/le-grand-duche-se-presente/population/femmes/index.html. Accessed 23 Oct. 2018.

Pensions

#11

To what extent does pension policy realize goals of poverty prevention, intergenerational equity and fiscal sustainability?

10
 9

Pension policy achieves the objectives fully.
 8
 7
 6


Pension policy achieves the objectives largely.
 5
 4
 3


Pension policy achieves the objectives partly.
 2
 1

Pension policy does not achieve the objectives at all.
Pension Policy
7
Luxembourg’s pension plans offer one of the highest replacement rates within the OECD and provide a high living standard for the elderly. The old-age poverty rate is lower than the poverty rate for families and even more so if single parent families are considered. However, pensioners must contribute financially to the health care insurance system and are fully taxed.

Luxembourg has not enacted a rigorous austerity policy, but has slightly changed its pension regime and general employment rules. Despite Luxembourg’s high reserves, the OECD and the European Commission have urged Luxembourg to reform its pension system to ensure long-term sustainability and increase incentives for late retirement as well as linking pension levels with contributions.

The financial sustainability of the pension system is premised on a continued population growth. However, Luxembourg’s current population growth is driven by immigration and its strong economic performance. Whether the economy will remain strong and the number of contributors continue to increase over the next decades is uncertain.

Citations:
“Neue Langzeitprognosen: Die Renten sind (nicht mehr lange) sicher.” https://www.wort.lu/de/politik/neue-langzeitprognosen-die-renten-sind-nicht-mehr-lange-sicher-584178895061e01abe83d1cb. Accessed 5 Nov. 2018.

Integration

#15

How effectively do policies support the integration of migrants into society?

10
 9

Cultural, education and social policies effectively support the integration of migrants into society.
 8
 7
 6


Cultural, education and social policies seek to integrate migrants into society, but have failed to do so effectively.
 5
 4
 3


Cultural, education and social policies do not focus on integrating migrants into society.
 2
 1

Cultural, education and social policies segregate migrant communities from the majority society.
Integration Policy
8
Since the Second World War, Luxembourg’s migrant population has grown continuously. Today, around 85% of migrants are citizens of the European Unionand 90% of migrants are of European descent. Most other highly qualified migrants have come from Russia, the United States and Canada. Luxembourg has one of the highest economically performing migrant populations, with a high proportion of economic migrants coming from other OECD countries and a very small proportion from economically weak developing countries. More than 50% of the total resident population in Luxembourg has a migrant background.

The Migrant Integration Policy Index gave Luxembourg an overall score of 57 (59 in 2010), ranking the country 15 out of 35 countries. Migrant children are fully integrated in local elementary schools or high schools. Children between 12 and 15 years old, who have recently migrated to Luxembourg, are given the opportunity to attend special classes called “classes d’insertion” in the capital’s Lycée Technique du Centre, with special programs in French or German, designed to facilitate integration into regular classes. Despite this, the average school dropout rate for children of foreign parents is high.

All foreigners, EU and third-country citizens, can vote and run for office in local elections, provided they fulfill certain residency requirements and are registered on the electoral list. Conditions for the inscription have been eased over recent years. However, meetings of local councils are usually held in Luxembourgish (with reports written in German, French or English), which poses an obstacle for resident foreign citizens.

In light of this experience, the government implemented a new Naturalization Act in 2017 to facilitate foreigners’ civic participation in public life and boost integration policy. Under the new law, people born in Luxembourg can apply for citizenship without other conditions or receive it automatically at the age of 18.

Citations:
“L’école du succès, une chance pour tous.” Ministre de l’éducation nationale. http://www.men.public.lu/catalogue-publications/themes-transversaux/scolarisation-eleves-etrangers/brochures-parents/ecole-succes/fr.pdf. Accessed 23 Oct. 2018.
“Nationalitätsgesetz: Reform soll am 1. April 2017 in Kraft treten.” Luxemburger Wort, 21 Sept. 2016, www.wort.lu/de/politik/nationalitaetsgesetz-reform-soll-am-1-april-2017-in-kraft-treten-57e257a8ac730ff4e7f66b96. Accessed 23 Oct. 2018.
“PISA-Studie 2016: Luxemburg liegt weiter unter dem OECD-Durchschnitt.” https://www.wort.lu/de/politik/pisa-studie-2016-luxemburg-liegt-weiter-unter-dem-oecd-durchschnitt-5846890b5061e01abe83d4ce. Accessed 3 Nov. 2018.

Safe Living

#5

How effectively does internal security policy protect citizens against security risks?

10
 9

Internal security policy protects citizens against security risks very effectively.
 8
 7
 6


Internal security policy protects citizens against security risks more or less effectively.
 5
 4
 3


Internal security policy does not effectively protect citizens against security risks.
 2
 1

Internal security policy exacerbates the security risks.
Internal Security Policy
8
Luxembourg City is ranked 21 out of 231 cities worldwide in the 2016 Mercer Quality of Living Survey, despite being considered the safest destination for international assignments. Efforts have been made to enhance public security. As part of an ongoing police reform program, 51 police stations will be merged into larger and more efficient units. One of the priorities is combating gang-related crime, in particular, burglaries.

Nevertheless, issues with crime exist in the central station area of the capital and in certain areas of the city of Esch-Alzette. Furthermore, major raids on criminal gangs and drug dealers were conducted. Despite this, the number of burglaries has recently fallen and the number of xenophobic acts of violence is rather low. Overall, it appears that the police force is not able to recruit enough staff to police efficiently.

Citations:
“Western European Cities Top Quality of Living Ranking.” https://www.mercer.com/newsroom/2016-quality-of-living-survey.html. Accessed 6 Nov. 2018.
“Ruf nach mehr Sicherheit.” Letzebuerger Journal. 1 June 2018. http://www.journal.lu/top-navigation/article/ruf-nach-mehr-sicherheit/ Accessed 23 Oct. 2018.
“20 Prozent weniger Einbrüche.” Luxemburger Wort, 6 April 2017. https://www.wort.lu/de/lokales/polizeistatistiken-2016-20-prozent-weniger-einbrueche-58e61d69a5e74263e13ad1f3. Accessed 23 Oct. 2018.

Global Inequalities

#2

To what extent does the government demonstrate an active and coherent commitment to promoting equal socioeconomic opportunities in developing countries?

10
 9

The government actively and coherently engages in international efforts to promote equal socioeconomic opportunities in developing countries. It frequently demonstrates initiative and responsibility, and acts as an agenda-setter.
 8
 7
 6


The government actively engages in international efforts to promote equal socioeconomic opportunities in developing countries. However, some of its measures or policies lack coherence.
 5
 4
 3


The government shows limited engagement in international efforts to promote equal socioeconomic opportunities in developing countries. Many of its measures or policies lack coherence.
 2
 1

The government does not contribute (and often undermines) efforts to promote equal socioeconomic opportunities in developing countries.
Global Social Policy
9
At about 1%, the country’s development agency, Luxembourg Development Cooperation (Lux-Development), and accredited NGOs have far surpassed the UN’s industrialized nation contribution target of 0.7% of GDP for development assistance. After Norway (1.11% of GNI), Luxembourg is the second-largest official development assistance (ODA) contributor. The country has focused its development aid policy on poverty eradication and energy saving programs as well as on programs to reduce carbon emissions. The Ministry of Foreign and European Affairs manages almost 81% of the total ODA budget, while a remaining 16% is managed by 91 accredited NGOs.

“Le Cercle de Coopération,” the umbrella organization of accredited NGOs, has stated that budgetary rigor will apply to NGO development aid policies in the coming years, reducing national co-financing costs along with NGO administrative costs.
Luxembourg’s development assistance targets local initiatives, providing education and training in the fields of health care, water treatment, sewage, local economic development and infrastructure projects. About 14% of the cooperation budget aims to provide humanitarian support, including emergency assistance and reconstruction aid, following EU and OECD guidelines.

Luxembourg is an important actor in the micro-finance sector, hosting firms that offer a full range of micro-finance products, and supports more than 50% of the global funds in this area.

Citations:
Annual Report 2016. Luxembourg Development Cooperation Agency, 2017. https://luxdev.lu/files/documents/RAPANN_2017_UK_light.pdf. Accessed 23 Oct. 2018.
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