Luxembourg companies are worried by the German minimum wage’s increase. Currently at €9.82 per hour, it is set to rise to €10.45 on 1 July and then to €12 in October. It will still be lower than the Luxembourg minimum wage (€16.0465 for qualified workers and €13.37 for unqualified ones), especially after taxes, which are higher in Germany. However, the gap is narrowing significantly.
For example, a person who lives in Trier and works in Luxembourg receiving the unqualified minimum wage of €2,313.38 gross would end up with €1,960.37 net. The tax credit applicable from August will add another €84 to that person’s monthly remuneration. If the person drives to work 20 days per month they would spend approximately €200 for that period leaving them with an income of €1,844. Meanwhile in Germany, they would be receiving a gross income of €2,080 from October onwards, amounting to a net income of €1,484 but would likely spend less time travelling to work.
Most German cross-border workers are employed in the construction sector (17.5%) followed by those in finance and insurance (13.6%), trade (12%), manufacturing (11.8%), health (10.8%), and transport and storage (9%).
Pros and cons
“It is clear that Luxembourg is losing competitiveness compared to its neighbours,” says Michèle Detaille, president of industry federation Fedil. However, she points to other positives that the grand duchy can offer in terms of family allowances, aid for studies or parental leave.
Tom Baumert, director of Luxembourg’s federation for commerce (CLC), is also optimistic. “This could have an effect. But it will remain limited. Germans often earn more than the SSM [minimum wage, editor’s note].” The impact would have been greater if the minimum wage had been increased in France or Belgium, according to him, because it is from these countries that many salespeople or cashiers who receive a minimum wage come from.