When you move to another country, it is important to get simple and practical benchmarks quickly, especially with regard to the labour market, recruiting occupations and salary levels.
Here you will find useful information on wages: calculating net wages from the gross salary announced by your employer, minimum wage and gender pay gaps.
Wage levels, gross/net
Social contributions and payroll tax
In wage negotiations, we always talk about the gross wage, i.e. before deduction of the various social security contributions and especially before tax, since this is deducted at source in Luxembourg.
On the negotiated gross salary, several charges paid by the employee will have to be deducted. These include social security contributions covering health insurance, old-age pension insurance and long-term care insurance. These deductions vary according to the instructions set annually by the Ministry of Finance (Taxation) and your personal situation.
In addition to these contributions, which are calculated as a % of gross salary, the taxes due by the employee are deducted directly at source by the employer.
The salary received by the employee will be net of all social security contributions and taxes.
These calculations do not take into account certain other income that may be received by the employee such as benefits in kind (company car, etc.) and travel expenses.
Minimum social wage
Wages are freely agreed between the employer and the employee as compensation for the work performed. In Luxembourg, there is a social minimum wage (SSM) which must be respected by the employer.
The minimum social wage in Luxembourg is composed of two levels : unqualified and qualified minimum social wage.
- Since 1 January 2020, the unqualified minimum social wage has been €12,3815 per hour, which is equivalent to €2,141.99 gross per month for a full time job (40 hours/month)
This salary may be reduced according to the person’s age (under 18 years of age). See summer jobs.
- The minimum qualified social wage is €2,570.39 gross per month.
The qualification must be supported by 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 minimum social wage is adapted by the administration according to the average salaries. In the event of an increase in these minima, 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.
Average wages by sectors of activity
The average salary paid in Luxembourg is, according to the latest statistics, the highest among the 34 OECD countries.
In 2017, it amounted to an average of $63,062 per year, ahead of Switzerland ($62,283), Iceland ($61,787) and the United States ($60,558). Source OECD.
However, average wages in Luxembourg are high and show significant differences between sectors of activity (STATEC data):
- Industry: 53.009 €
- Construction: 42.847 €
- Services: 63.457 €
- Trade, repair of automobiles: 46.149 €
- Financial activities and insurance: 98.122 €
* Salary 2018 for a period of 40 hours).
Gender pay gap, wage differentials
In Luxembourg, the wage gap between men and women is 5.4%. In Europe, the wage gap between men and women is 16% on average. This means that when a man earns 1 euro, a woman earns 84 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, which has since been replaced by the Ministry of Equality between Women and Men (MEGA). The laws enacted aim to respect this equality. A Gender Equality Portal has been set up. It deals with equality on different themes, the main ones being work, society and youth.
The CNFL platform, National Council of Women in Luxembourg, lists the various competent contacts in the field of equality between women and men within the institutions and with partners.
Luxembourg reaches the maximum score of 100 (with only 5 other countries out of 187 studied) 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, were credited with this score of 100, attesting to gender equality in various areas including transport, access to employment, remuneration, marriage, maternity and pension benefits.