Index stands in the way of competitiveness, says UEL
(CS/rar) With the minimum wage in Luxembourg higher than the average salary in France, the Grand Duchy needs to lower the cost of labour to stay competitive, the “Union des Entreprises” has warned.
In an interview with RTL, president of the union of Luxembourg enterprises (UEL) Michel Wurth said that the cost of labour in Luxembourg is too expensive compared to countries abroad.
Wurth continued that the Grand Duchy has seen higher inflation over the past years than its neighbours. “Together with indexation a wage dynamic develops, which automatically leads to a loss in competitiveness,” he added.
The high cost of labour is especially problematic for low-skilled fields of work, where jobs are being lost, Wurth implied.
Luxembourg needs to be more efficient
At a time of little to no growth, the UEL is therefore saying that indexation should be abolished, not just of wages, but also other parts of the economy such as rent or service contracts. This way inflation could be kept down, the UEL president said.
The loss in income should be compensated by social transfers, such as housing allowances. Wurth acknowledged that an employee living in Luxembourg has much higher costs of living than a worker living in Thionville. This needs to be compensated, he said.
Wurth also attacked the rise in public sector jobs, criticising it as unsustainable. Since 2000, some 30,000 jobs have been created in the public sector. “That is more than the steel industry ever employed,” he said. With these jobs financed through growing public deficits, the system cannot last, he added. “We need to try to become more efficient.”