Luxembourg competitiveness suffers, say entrepreneurs
(CS) Luxembourg's competitiveness has suffered over the past two years, with entrepreneurs saying that especially the cost of labour, administrative burdens and the political environment have had a negative impact.
These results form part of the October 2013 edition of the Luxembourg Business Compass, a biannual study, which surveys top decision-makers at the Grand Duchy's biggest businesses. For the latest instalment, 86 company owners, CEOs, CFOs and COOs were interviewed between October 2 and 14, just before the elections on October 20.
While overall, respondents expected the Luxembourg economy to grow slightly over the next 12 months, a more optimistic view compared to April this year when they foresaw stagnation, competitiveness appeared to have taken a hit since the last survey.
While in April, 35 percent of Luxembourg's top businesspeople assessed the Grand Duchy's competitiveness as a business location as “good”, this number dropped to just 28 percent in October. Meanwhile, the number of people saying that competitiveness was “average” grew from 38 percent to 53 percent, the highest value recorded since October 2010.
Cost of labour down – innovative power up
The biggest contributing factor in this negative development was identified as the cost of labour, with 70 percent saying that the situation in this area has gotten worse. This was followed by administrative burdens, the political environment and the regulatory environment, with 55 percent saying that the situation has gotten worse in each of these areas.
Political stability especially decreased in October this year, compared to previous surveys, likely as a result of the announcement of snap elections in July and the political scandal surrounding the secret service affair.
The promotion of Luxembourg as a business location was meanwhile seen to have progressed positively, with 33 percent of respondents saying that the situation has improved.
At the same time, the economy's innovative power when it comes to introducing new products and services and developing new markets was thought to have improved by 24 percent of respondents, the highest value in over one year.
Reducing government expenditure
A to-do list for the next government was also compiled in the survey, with 77 percent of top decision-makers saying that the government needs to reduce expenditure. Also on the list were:
- streamlining the government administration and reducing bureaucratic red tape (57 percent),
- working on the indexation of salaries and pensions (40 percent),
- fighting unemployment (34 percent)
- putting the pension system of a financially sound footing (30 percent)
- reducing national debt (30 percent)
- giving the right to vote to foreigners living in Luxembourg (15 percent)
- reforming the banking system (8 percent).