Luxembourg, country of the working poor?

Caritas warns of the phenomenon “Manpower Poor”, which has gained momentum in Luxembourg in recent years. Many of the country’s residents live below the poverty line while working.

The title of this paper may make you smile. And yet. Despite Luxembourg having one of the best social minimum wages in Europe, the proportion of “poor workers” in the country has continued to rise in recent years, according to a recent publication by Caritas Luxembourg, which aims to draw attention to the phenomenon.

According to Eurostat statistics in 2020, the percentage of employed living below the poverty line in Luxembourg was from 11.9%, up from 9.3% in 2007, an increase of 2.6% in 13 years. The Grand Duchy thus occupies the second place behind Romania European countries with the highest risk of “work poverty” in the EU. Not a very good place.

What is “work poverty”?

The phenomenon of the “working poor”, also known as “work poverty”, refers to people whose The monthly gross income is less than 60% of the median income, despite their employment. In Luxembourg, this limit was set for net income in 2020 at 1,942 euros per monthfor a one-person household.

For Caritas it is easy that the social minimum wage is not high enough to lift people out of poverty. “Its level is almost firmly on the poverty line in Luxembourg.”

As a reminder, the social minimum wage is 2,313.38 euros for an unskilled worker and 2,776.05 euros for a skilled person. However, the reference budget for a “decent and socially inclusive life” in Luxembourg is… €2,115.

Which households are most affected?

According to Statec data In 2020, 103,929 people lived below the monetary poverty linewith a higher at-risk-of-poverty rate among 18-24 year olds.

The differences between nationals and foreigners are also significant: still in 2020 At-risk-of-poverty rate of foreigners lived in Luxembourg twice as high versus nationals (23% versus 10.6% according to Statec).

Almost every second employee who works part-time or on fixed-term contracts is affected by in-work poverty (48.5%) in the country. Lone parents, non-Luxembourg nationals and the low-skilled are all at higher risk of being part of the Luxembourg working poor.

Case, the sword of Damocles

The latter are not only below the poverty line, but also more at risk Living costs, a particularly sensitive issue in Luxembourg. It must be said that the asking rents show an increase in the period from 2010 to 2019 by 47.4% for apartments and 31.3% for houses.

A real sorrow for many households: in 2019, according to Liser, More than a third of tenants use more than 40% of their income to pay for rent and heating. In 2016, this proportion was still 25%.

And with the Ukraine crisis worsening daily and driving up energy prices in all European countries, it is likely to continue its ascent.

A big challenge for Luxembourg

In view of these observations, Caritas advocates that this in-work poverty be viewed as a major challenge by Luxembourg’s political decision-makers. The latest tax support the government has proposed to offset rising energy prices and help the poorest households may not be enough.

“It is important to implement policies that ensure a more equal distribution of income‘ insists the association wishing for a Tax reform based on “genuine social redistribution”with the founding of aMechanism that periodically adjusts the tax rate to the cost of living“.

For Caritas, the tax system should be designed in such a way that “the poor are systematically exempted from paying income tax and other taxes wherever possible”. A fairer social justiceEnabling people who work… to be able to live with it.

The demands of Caritas for this May holiday

  • Use the reference budget to determine the minimum wage level;
  • Regularly adjust family and other allowances to price developments;
  • A tax reform with real redistribution for more social justice;
  • A reform of vocational training and the expansion of training opportunities;
  • A continuous effort to improve the compatibility of work, family and private life.

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