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 0.2 points 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. Inequality and poverty rates are rising, exacerbated by high property and rental costs. In response to fast-rising housing costs, a new housing allowance was launched in 2018.

Childcare services have been expanded, and child benefits increased. Women’s labor-market participation rate is relatively low but rising. The generally high-quality healthcare system is having difficulty keeping up with population growth, and patients are often sent to nearby countries for treatment.

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

#25

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 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.”

Relatively few Luxembourgers enroll at the state university. This is due to the fact that some subjects, such as medicine, are not yet fully offered, and that Luxembourg didn’t have a state university for a long period of time.

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 19 Oct. 2019.

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 19 Oct. 2019.

Social Inclusion

#3

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 is a very prosperous country. Much of the population, including the middle class, lives in comparatively good conditions. The standard of living is often higher than in all other European countries. The value of statutory pensions ranges up to €8,525 per month.

However, inequality is also increasing, as reported in Caritas’ 13th Social Almanac, published in October 2019. Poverty rates are rising, and the share of the population that can be regarded as the working poor is growing. Salaries are too low, in part due to high land prices and rental rates.

However, those with high salaries do well in the country. Social contributions are limited to five times the minimum wage. For instance, someone who earns 10 times the minimum wage pays only 4% of their salary, rather than 8%, into the pension fund.

Other current statistics according to Eurostat and STATEC include:
• General poverty rate: 18.7% (10 years ago: 13.5%).

• Poverty risk of children: 22.8% (10 years ago: 19.9%).

• Gini coefficient before transfers: 50.2 (10 years ago: 44.0).

A new housing allowance was introduced in 2016 and launched in 2018. This will benefit around 35,000 low-income households, providing a monthly subsidy of a maximum of €300 per 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 to leaving spaces empty, and to encourage 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 intention of establishing effective quality control measures.

Citations:
Caritas: Sozialalmanach, Luxembourg 2019. Le “Sozialalmanach” est publié tous les ans au préalable du discours du Premier ministre sur l’état de la nation et sert d’instrument de dialogue avec les décideurs politiques, la société civile et l’économie.

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
Over the last year, it has become increasingly apparent that Luxembourg’s highly praised healthcare system has shortcomings. The population is growing quickly, and the health system is not keeping pace. Although there is still no shortage of doctors and nurses in the capital and the Diekirch area, except at the emergency room at night and on weekends, there is a lack of trained medical staff in other parts of the country. Furthermore, the Luxembourg healthcare system remains too dependent on professionals from abroad.

The country’s policymakers are attempting to ensure that more nurses and doctors are trained, but these efforts have thus far been insufficient.

Due to the country’s small size and the absence of a university hospital, it is not possible to provide all medical treatments domestically. 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.

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

Citations:
Etat des lieux des professions médicales etdesprofessions de santé au Luxembourg, Rapport final et Recommandations, Version 2019-10-01.
http://sante.public.lu/fr/actualites/2019/10/conference-de-presse-etude-professionnels-de-sante1/rapport-final-etat-des-lieux-professions-medicales-et-professions-de-sante-vers-complete.pdf.

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. For example, the government has pushed for policies to offer a wide range of child allowances and childcare services, such as child benefits, maternity leave, parental leave, birth and post-birth allowances.

Indirect help is also offered, such as subsidized mortgage interest rates, with this depending on the number of children at home. In general, Luxembourg offers the highest level of child benefits within the European Union, and is one of the four leading EU member states in terms of family benefits overall. 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 childcare facilities, with the aim of making it easier for women to work.

Yet, despite a strong increase in recent years, the workforce participation rate among women remains comparatively low at 65.1%, compared to an EU average of 65.3%. Luxembourg ranks 16th out of the 28 EU member states on this measure.

Luxembourg’s public childcare institutions include the “maisons relais,” general day care centers; the “éducation précoce,” a third preschool year; and “foyers de jour,” or after-school centers. Since August 2016, there has been one fixed allowance per child, regardless of the family composition. Child bonuses and child allowances are paid in one sum of €265 per child, with an increase from the ages of six to 12 years. Since 2017, as part of a new coherent family policy, the government has offered free childcare facilities (20 hours per week), early language support and intercultural education. These structures are now more strictly controlled by officials and are required to 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 19 Oct. 2019.

“Women.” Webseite Grand Duchy of Luxembourg. http://luxembourg.public.lu/en/le-grand-duche-se-presente/population/femmes/index.html. Accessed 20 Oct. 2019.

Pensions

#12

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 of standard for the elderly (maximum: €8,300 monthly). The old-age poverty rate is lower than the poverty rate for families, especially when considering single-parent families. However, pensioners must contribute financially to the healthcare insurance system, and are fully taxed.

Luxembourg has not enacted a rigorous austerity policy, but has made slight changes to its pension regime and general employment rules. Despite Luxembourg’s high level of reserves, the OECD and the European Commission have urged Luxembourg to reform its pension system to ensure long-term sustainability, by increasing incentives for late retirement and linking pension levels with contributions.

The financial sustainability of the pension system is premised on continued population growth. However, Luxembourg’s current population growth is driven by immigration and its strong economic performance. Neither the economy’s overall strength nor the rate of increase in the number of contributors to the system over the decades to come can be predicted with certainty.

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.
„Rentensystem schützt vor Altersarmut: Arbeitnehmerkammer reagiert auf Kritik der EU an Luxemburg.” Tageblatt, 5. Juli 2019, http://www.tageblatt.lu/headlines/rentensystem-schuetzt-vor-altersarmut-arbeitnehmerkammer-reagiert-auf-kritik-der-eu-an-luxemburg/. Accessed 9 Dec. 2019.

Integration

#16

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
Luxembourg’s working population by origin breaks down as follows:

• 29.4% – resident non-Luxembourgers
• 27.3% – resident Luxembourgers
• 21.9% – commuters from France
• 10.7% – commuters from Germany
• 10.5% – commuters from Belgium

The country’s migrant population has grown continuously since the Second World War. Today, around 85% of migrants are citizens of the European Union, with 90% of resident migrants being of European descent. Most other highly qualified migrants have come either from Russia, Canada or the United States. 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.

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, whether they are citizens of the EU or third countries, 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:
Zimmer, Paul: “Die Grenzgänger,” CGFP, fonction publique, numéro 33, septembre 2019, page 11.

“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 20 Oct. 2019.

Safe Living

#6

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
In Mercer’s 2019 Quality of Living, Luxembourg City was ranked as the safest city in the world in terms of personal security, ahead of Helsinki and the Swiss cities of Basel, Bern and Zurich. In this context, several factors were analyzed: crime rates, law enforcement, security forces, the limits of individual freedom, international relations and press freedom.
The overall number of crimes in Luxembourg increased slightly by 1.5% in 2018. However, this figure has to be put into perspective, because of the difference between residents and non-residents in the country. If only the residential population was considered, the crime rate fell very slightly by 0.4%, with 6,194 offenses per 100,000 inhabitants.
Both the number of thefts (+5.9%) and the number of burglaries (+10.3%) increased compared to 2017. While the number of vehicle thefts declined (265 in 2018), more cars were broken into (1,476). In addition, almost twice as many bikes were stolen as in 2017 (465). The number of burglaries and attempted break-ins returned to the high reached in 2015, with 3,667 total burglaries.
After a strong rise in 2016, the number of rapes dropped to 76. However, it should also be noted that many such cases are not reported by victims. In addition, there were three murders committed in 2018. Furthermore, the drug hotspot at the central station (Straßburger Straße) remains a problem. The Luxembourg police seem to need more staff. However, in recent years, a reorganization of the police force has had positive effects.

Citations:
Le Luxembourg est la ville la plus sûre au monde. 19/03/2019. http://luxembourg.public.lu/fr/actualites/2019/03/19-mercer/index.html Accessed 18 Oct. 2019.

“Mercer ranks Luxembourg safest city in the world.” Delano, 14 March 2019, https://delano.lu/d/detail/news/mercer-ranks-luxembourg-safest-city-world/204176. Accessed 4 Dec. 2019.

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
With total development-aid expenditures of about 1% of GDP, the country’s development agency, Luxembourg Development Cooperation (Lux-Development), along with accredited domestic 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. National cofinancing costs and NGO administrative costs will be reduced. Luxembourg’s development assistance targets local initiatives, providing education and training in the fields of healthcare, water treatment, sewage, local economic development and infrastructure construction. About 14% of the cooperation budget aims to provide humanitarian support, including emergency assistance and reconstruction aid, following EU and OECD guidelines. Luxembourg is also an important actor in the microfinance sector, hosting firms that offer a full range of microfinance products, and supporting more than 50% of the global funds in this area.

Citations:
https://luxdev.lu/en/agency. Accessed 5th Dec. 2019.
Back to Top