3.1 General context
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Labour market situation in the country
The Luxembourgish labour market is characterised by its large number of cross-border commuters living in the neighbouring countries (France, Belgium, Germany) and working in Luxembourg (about 70% of the workforce). The number of newly created jobs has increased during the past years (domestic employment increased from 264 000 in 2000 to 486 700 in 2021). Most of these jobs require high qualifications (Statec, 2022a; Hury et al., 2015).
The Luxembourg labour market has recovered well from the sanitary crisis in 2021. However, in 2022, the energy crisis and high inflation pose major challenges to households and the economy. The Statec notes that the Luxembourg labour market continues to grow, but at a slower pace, and the unemployment rate, which is one of the lowest in Europe, is slowly rising. Projections are that employment will slow down in 2023, increasing by only 2.3%, while unemployment will rise to 5.1% (Statec, 2022b; Statec, 2022c).
Young people remain more affected by unemployment. The unemployment rate among people (under 25) varied from 17.5% in the second quarter of 2019 to 23.3% in the second quarter of 2020, before falling back to 16.9% in the second quarter of 2021. This volatility is very much related to the proportion of young people who are still studying and therefore not part of the active population. The proportion of the young population who are unemployed has been around 7% for several years (Statec, 2022c).
Compared to other European countries, Luxembourg has been characterised for years by a low unemployment rate for the total population, while it is relatively high for the group of young people (Statec, 2022c). The significant difference between the overall unemployment rate for the population and the youth unemployment rate indicates that the transition from the education system into employment still represents a critical phase for many young people in Luxembourg. It can be expected that the pandemic has aggravated the situation. This is particularly true for young people with poor qualifications. This group is at increased risk of becoming unemployed (MENJE & UL, 2015).
Luxembourg has a strong tradition of social peace. Social problems are usually resolved within the framework of wide-ranging consultations between the social partners, in the form of the Tripartite Coordination Committee. This committee brings together representatives of the government (minister of Finance, minister of the Economy, minister of Labour and Employment), employers (Chamber of Commerce, trades) and labour (trade unions).
In the domain of employment and labour market policy (under the responsibility of the Ministry of Labour, Employment and the Social and Solidarity Economy, MTEESS), people under 25 years of age are defined as 'young people'.
This definition differs from the characterisation of the age group 'young people' in the 2016 youth law: persons no longer attending primary education or special schools who are younger than 30 years (see: 1.1 Target population of youth policy).