Salary levels in Luxembourg, social minimums

Are you moving to Luxembourg and looking for a job? When looking for work in a country other than one’s home country, it is important to have simple and practical benchmarks in mind regarding the levels of remuneration offered.

Here you will find useful information about salaries in Luxembourg

• calculation of the net salary from the gross salary announced by your employer,
• legal social minimum wage
• gender pay gap
• average salaries by sector of activity.

Remuneration levels in Luxembourg

The salary is freely fixed between the employer and the employee. It represents the compensation for the work done. This negotiation takes place during the recruitment process between the job seeker and the recruitment officer. This negotiation can also take place during the course of the contract.

Difference between gross and net salary

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 calculation of the tax. It should be noted that the tax is deducted at source by the employer.

The gross salary does not take into account any benefits in kind that may be negotiated in addition.

From the negotiated gross salary, several charges must be deducted to obtain the net salary, actually paid to the employee.

Social security contributions

Social security contributions represent the social security contributions paid to the CCSS by both the employee and the employer.

Social security contributions cover health insurance, old-age pension insurance and unemployment insurance. These levies vary according to the instructions established annually by the Ministry of Finance.

Social security contributions amount to approximately 12.5% of the gross salary, payable by the employee. The company also contributes the same amount to old age, unemployment and accident insurance.

Income tax withheld at source

In Luxembourg the tax is deducted at source by your employer.

The employer calculates the taxes due by the employee on the basis of the tax card sent annually by the Administration following the taxpayer’s declarations. The deducts this amount of tax from the gross salary and pays a net salary to its employee.

In summary, the salary received by the employee is a salary net of social security contributions and taxes.

Learn more about income taxes in Luxembourg.

Calculation of net salary

Social minimum wage (SSM)

In Luxembourg, employers must pay their employees a minimum social wage (SSM), depending on their qualifications and age.

This social minimum wage is determined for unskilled workers on the one hand, and for skilled employees on the other. It also varies over time according to an index calculated on the basis of inflation. The triggering of the index affects all salaries, which must be increased by 2.5% each time.

For the 3rd time in 2023, the index has triggered a further rise in salaries, representing an overall increase of 7.7%.

With effect from September 1, 2023, following a further increase in the index band, the monthly social wage now stands at : 2,570.94 euros minimum for an unskilled worker over 18 years of age and working full-time for 40 hours a week .

Salary scale in Luxembourg

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.

Indexation of wages to the cost of living

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 required to increase the compensation of all their employees accordingly. If not, they are subject to a fine.

Remuneration of pupils and students during school vacations

Students in seasonal employment may not be paid less than 80% of the social minimum wage. See above.

Average salaries by sector of activity

The average salary paid in Luxembourg is 75,305 USD according to the latest OECD statistics of 2021. Luxembourg is thus in first place ahead of the United States with 74,738 USD and Iceland in third place with 72,434 USD. Switzerland is in fourth place with 69,726 USD.

Average salaries in Luxembourg are high compared to the European average. They also prove to be far superior compared to neighboring countries. This clearly explains the number of French, German and Belgian cross-border workers, attracted by the much more attractive salaries.

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: 104,256 euros. A report by the Ministry of the Civil Service published in November 2022, established that civil servants and state employees earned an average of 8,688 euros per month. More than a hundred various allowances are added to this annual remuneration, up to an additional 9,384 euros a year. Over 60% of state employees benefit from at least one of these additional allowances.

   

Source: Administration of direct taxes.

To learn more, check out the compensation and hiring trends by industry study:

Which sectors of activity are recruiting, who and how many?

Gender pay gap

In Luxembourg, the hourly wage of women exceeds that of men! As of 2021, and for the first time, women will receive a higher hourly wage than men.

Gap gender in Luxembourg

The gender pay gap in Luxembourg has been the lowest in Europe since 2018. The balance even tips in favor of women if we consider hourly wages alone, with a gap of -0.2%.

In the latest study published by Eurostat, Luxembourg is ahead of Romania and Slovenia. These two countries have a 3.6% and 3.8% gap between the average hourly wage of men and women respectively.

Expressed as a % of that of men, this gender pay gap is particularly remarkable in Luxembourg. The efforts made by the Luxembourg government in this area show a notable progress since 2006. At that time, women lagged behind men by 10% in their earnings.

Gender Inequality

These figures are encouraging at first glance. Nevertheless, the real wage inequality remains at 7%, if total annual compensation is taken into account. Indeed, women hold more part-time positions. Moreover, although they have a higher level of education than men, they are less represented in high-paying positions. Less than 1% of them receive a salary of more than 200,000 euros. While 2% of the men have an annual salary of more than 200,000 euros.

Gender equality policy in Luxembourg

The Luxembourg government has been committed to promoting gender equality for over 20 years. This is true 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 also been set up. It deals with equality on different themes including work, society and youth.

The CNFL platform, Conseil National des Femmes au Luxembourg, lists the various competent contacts in the field of equality between women and men within the institutions and with the partners.

To complete this information, please consult our pages on the job market.