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Tripartite in Luxembourg: Depriving certain employees of indexes would cause “tensions”

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Tripartite in LuxembourgDepriving certain employees of indexes would cause “tensions”

LUXEMBOURG – As the tripartite begins on Sunday, capping the index brackets at a certain level of income is not taboo.

by

Joseph Gaulier and Nicolas Martin

Supermarket illustration

The purchasing power of some households could be reduced.

AFP

“We have to find solutions, which cannot go through the payment of five indexes in one year”, insisted Michel Reckinger, president of the Union of Luxembourg Companies (UEL) ahead of the tripartite which will begin on Sunday. This would represent a 13.1% wage increase, and “25% since October 2021. How could the country remain competitive?”, continues Mr. Reckinger. So is the index adapted to the crisis?

Louis Chauvel, researcher at the Uni in sociology and economics, insists on the symbolic value: “In Luxembourg, the index has a sacred side. It is inconceivable to remove it”. Limiting its scope “would be tempting”, by adjusting the rate according to income: the salary increase would be less or even non-existent beyond certain salaries.

900 million euros per tranche

The Labor Code (article 512-12) already provides for this possibility “from a certain income threshold”. But Louis Chauvel evokes “inevitable tensions, especially in the pre-election period”. In Luxembourg, “social anger is more difficult to perceive than in other countries, but it exists”. For him, “taking into account the salary is no longer enough, it would also be necessary to take into consideration the mode of heating, the composition of the household, the mode of occupation (owner or tenant), the duration of the loan, etc. All this influences the fragility of a household”. An ideal targeting “does not exist because there would necessarily be dissatisfied people, especially within the middle classes”.

An index tranche would cost around 900 million euros to date, half to the State, the other to the private sector. However, the president of the UEL recalls that the tranches “affect the salary over 40 years. Even three tranches by the end of 2023 would not be enough to offset the price increases for the lowest incomes”. He favors other “crisis and targeted” tools, such as an energy bonus.

Louis Chauvel evoked the unavoidable character of the index.

Louis Chauvel evoked the unavoidable character of the index.

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