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Inflation in Luxembourg: “Social crisis” or “companies in difficulty”? The new index divides

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Inflation in Luxembourg“Social crisis” or “companies in difficulty”? The new index divides

LUXEMBOURG – While Statec is planning a new index tranche at the end of the year, trade unions and employers are each pleading their case before the three-party that is taking shape.

by

Jerome Wiss and Thomas Holzer

The agreement on the postponement of index tranches and compensation was signed on March 31.

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Statec planned, on Wednesday, a new index tranche for the fourth quarter of 2022. If the figures are still to be refined and confirmed at the beginning of September, it now seems certain that a new index will take place between the end of 2022 and the beginning of 2023. It remains to be seen s it will be immediately applied to pay slips or whether it will be postponed, like that of the beginning of the summer which will not come into force until next year.

To take this decision, the government, the trade unions and the employers will have to meet again within the framework of a tripartite, as decided after the agreement of last March. At OGBL, we are not surprised by this new index bracket. “We knew from the start that the figures presented during the tripartite meeting did not hold up,” breathes Jean-Luc De Matteis, central secretary of the OGBL. The different State scenarios, with inflation up to 7.3%, show “a big impact on people’s purchasing power. Pasta has increased by 20%, oil by 30%, fuel oil by 80%”, lists the trade unionist. “We touch people’s wallets deeply and we risk having a big loss of purchasing power”.

OGBL did not sign the agreement in March.

OGBL did not sign the agreement in March.

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As a result, the OGBL approaches the next tripartite “like the last. We must support households absolutely and not touch the index. The index is just a catch-up for inflation, we have to go further,” he explains. According to him, “companies have no problem. Oil companies are getting richer, industry and construction are doing well”.

“We don’t want to talk only about the index”

Jean-Luc De Matteis, OGBL

Jean-Luc De Matteis hopes that “the tripartite will be prepared by the government this time. We don’t want to talk only about the index, but discuss all the real problems. Taxes, housing… We can finance things with tax scales on big salaries, more taxes on corporations…”

At the LCGB either, “this index is not a surprise, everyone had got used to the idea”, comments Patrick Dury, president of the union. He will also go to the negotiating table with the “same priorities as last time: the purchasing power of employees and the safeguarding of jobs. This crisis must not become a social crisis”.

Patrick Dury (LCGB)
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But does the protection of purchasing power necessarily involve the application of the index or are compensations possible, such as tax credits granted instead of the summer portion? “The agreement last time was based on solidarity, but there I don’t know yet what will be discussed next time,” continues Patrick Dury. “We have other demands, such as the adaptation of the tax scale, the release of the minimum wage from tax… We are counting on the support of low and medium wages”.

“Social dialogue is and remains an important crisis tool and part of our success story. The government leaves no one” by the wayside, responded Prime Minister Xavier Bettel on Twitter. “Together with the social partners, we will find common solutions that will relieve people and businesses.”

On the employers’ side, it is time for reflection and analysis considering “the evolution of the situation and the new elements”, reacted Jean-Paul Olinger. The director of the UEL recalls that the scenario of the new index tranches is included in the agreement signed with the government last April, and that it provides for “lag and compensation”.

Jean-Paul Olinger (UEL).
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Mr. Olinger insists on the need to consider the economic situation in a global way, without forgetting the risks which weigh on the companies: “All the economic indicators are negative. Inflation also impacts societies. If in addition they have to face unforeseen salary expenses, some could find themselves in great difficulty, ”he concludes.