Inflation in Luxembourg: “Social Crisis” or “Company in Difficulty”? The new index splits

Statec on Wednesday planned a new index tranche for the fourth quarter of 2022. Should the figures be refined and confirmed in early September, it now seems certain that a new index will take place between late 2022 and early 2023. It remains to be seen if it will be up immediately the payroll will be applied or whether it will be postponed, like that of the beginning of summer, which will not come into force until next year.

To take this decision, the government, unions and employers will have to meet again at a tripartite meeting, as decided after last March’s agreement. At OGBL, we are not surprised by this new index bracket. “We knew from the beginning that the figures presented during the tripartite meeting would not stand up,” breathes Jean-Luc De Matteis, Central Secretary of the OGBL. The different country scenarios with inflation up to 7.3% show “a major impact on people’s purchasing power. Noodles have increased by 20%, oil by 30%, heating oil by 80%,” the trade unionist lists. “We go deep into people’s wallets and risk a major loss of purchasing power.”

As a result, the OGBL approach the next group of three “as they did the last one. We absolutely have to support the households and must not touch the index. The index is just an inflation catch-up, we need to go further,” he explains. According to him, “Companies have no problem. Oil companies are getting richer, industry and construction are doing well.”

Jean-Luc De Matteis hopes that “this time tripartism will be prepared by the government. We don’t just want to talk about the Index, we want to discuss all the real issues. Taxes, housing… We can fund things with tax rates for high salaries, more taxes for businesses…”

In the case of the LCGB, too, “this index is not a surprise, everyone was used to the idea,” comments Patrick Dury, chairman of the union. He also goes to the negotiating table with “the same priorities as last time: the purchasing power of employees and job security. This crisis must not become a social crisis.”

But is purchasing power protection necessarily linked to the use of the index, or are compensations possible, such as tax credits that are granted instead of the summer share? “The agreement was solidarity last time, but I don’t know what will be discussed next time,” continues Patrick Dury. “We have other demands, such as adjusting the tax scale, exempting the minimum wage from taxation… We are counting on support for low and middle wages.”

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

On the employers’ side, it is time for reflection and analysis, taking into account “the evolution of the situation and the new elements”, Jean-Paul Olinger reacted. 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 provides for “delay and compensation”.

Mr. Olinger emphasizes the need to look at the economic situation globally, without forgetting the risks weighing on companies: “All economic indicators are negative. Inflation also affects society. Additionally, if they are faced with unforeseen salary expenses, some could find themselves in big trouble,” he concludes.