When you are looking for work in another country like Luxembourg, it is important to get some simple and practical pointers quickly on the levels of pay on offer.
Here you will find useful information about salaries:
- calculation of the net salary from the gross salary announced by your employer,
- legal minimum wage
- gender pay gap
- average salaries by sector of activity.
Remuneration levels in Luxembourg
The salary is freely determined between the employer and the employee during the recruitment process or during the contract. The salary is the compensation for the work done. It is negotiated between the job seeker and the hiring manager.
In Luxembourg, however, there is a minimum social wage (SSM) that must be respected by the employer.
Social security contributions and withholding tax
In salary negotiations, we always talk about gross salary. This is the theoretical salary, i.e. before deduction of the various social contributions and especially before taxes. This salary does not take into account any benefits in kind that may be negotiated.
On the negotiated gross salary, several charges must be deducted:
- Social security contributions: these include social security contributions paid to the CCSS . These cover health insurance, old age pension insurance and unemployment insurance. These levies vary according to the instructions established annually by the Ministry of Finance. They amount to approximately 12.5% of the gross salary payable by the employee. The company also contributes the same amount for these insurances and the accident insurance.
- Income tax: in Luxembourg, tax is deducted at source by your employer. The latter deducts the taxes due by each employee on the basis of the tax card sent annually by the Administration following the taxpayer’s declarations. Learn more about income taxes in Luxembourg.
In summary, the salary received by the employee will be a salary net of all social contributions and taxes.
Calculation of net salary
Social minimum wage (SSM)
This minimum wage is determined at two levels: minimum wage for unskilled workers and minimum wage for skilled workers.
As of April 1, 2022, following a further increase in the index, the monthly social salary increases by 2.5% to 2,313.37 euros minimum for an unskilled worker over 18 years old and for a full-time job of 40 hours per week .
|Minimum hourly wage in euros||minimum monthly wage in euros|
|Qualified employee over 18 years old||16,0465||2.776,05|
|Unskilled employee over 18 years old||13,3721||2.313,38|
|Employee 17 to 18 years old||10,6977||1.850,70|
|Employee 15 to 17 years old||10,0291||1.735,03|
The qualification must be justified by an official certification, or by a minimum number of years of professional experience. Eventually, these rules are governed by the collective agreements of the sector in which one works.
The social minima are adapted by the administration according to average earnings. If these minimums are increased, employers must increase the employees concerned accordingly.
Wages are also indexed to the cost of living. When the price index increases by +2.5% over the previous 6 months, all wages must be increased by the same amount. Employers are obliged to increase their employees’ compensation accordingly. If not, they are subject to a fine.
Gender pay gap
In Luxembourg, the wage gap between men and women is now 0.7%. This gap is now the smallest in Europe according to the recent study published by Eurostat. Luxembourg is ahead of Romania and Slovenia, at 2.4% and 3.1% respectively. In Europe, the wage gap between men and women is 13% on average. This means that when a man earns 1 euro, a woman earns 87 cents for an equivalent position.
The Luxembourg government has been concretely committed for more than 20 years to promoting gender equality at all levels of society. A Ministry for the Advancement of Women was created in 1995 and has since been replaced by the Ministry of Equality between Women and Men (MEGA). The laws enacted aim to respect this equality. A portal for equality between women and men has been set up. It deals with equality on different themes including work, society and youth.
Luxembourg reaches the maximum score of 100 in a World Bank study in 2019, Women, Business and the Law 2019: a decade of reforms. Only 6 countries, Belgium, Denmark, France, Latvia, Sweden and Luxembourg have been credited with this score of 100. This rating attests to gender equality in various areas including transportation, access to employment, wages, marriage, maternity, and pension benefits.
Average salaries by sector of activity
The average salary paid in Luxembourg is 65,854 USD according to the latest OECD statistics for 2020. In first place, we find the United States with 69,392 USD. Iceland is in second place with 67,488 USD. Switzerland is in fourth place with 64,824 USD.
Average salaries in Luxembourg are high compared to the European average.
On average, a full-time employee in Luxembourg earned 64,932 euros (source STATEC 06/2021). This figure represents 182% of the European average. However, this figure must be tempered by the atypical nature of the Luxembourg job market.
- Financial and insurance activities: 99,250 euros per year
- Education: 98,835 euros. Luxembourg teachers are the best paid compared to their European colleagues.
- Specialized, scientific and technical activities: 88,721 euros
- Public administration: 86,582 euros.
Source: Administration of direct taxes.
To complete this information, please consult our pages on the job market.
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