Challenges and opportunities: Luxembourg’s Changing Financial Sector

Luxembourg’s financial sector has shown remarkable resilience in recent years, while other parts of the global economy have been hit by a series of crises.  Here we take a look at recent developments in this key sector and the challenges facing financial sector employees.

An unscathed sector: Luxembourg’s financial sector despite the crises

While rising inflation and interest rates are causing concern around the world, Luxembourg’s financial sector has so far felt surprisingly little of it. The crises since the Covid-19 pandemic have hardly affected the sector, which has recovered quickly. One third of Luxembourg’s gross domestic product depends on the financial sector, making it a key driver of the country’s economy.

The effects of inflation and interest rates

Nevertheless, banks in Luxembourg are not entirely immune to the effects of inflation and rapidly rising interest rates. This has led to a significant increase in value added in the banking sector. Demand for credit has declined as a result of rising interest rates, both from companies and households. Although this trend is expected to continue, the Luxembourg banking sector recorded an increase in value added due to the significant increase in interest margins and net commissions.

Challenges for financial sector employees

At a time when banks are once again posting record profits, with 2022 seeing the best net profits since 2016, the question arises as to what is happening to employees in the financial sector. The sector’s pay structure is currently based on the principle of meritocracy, which means that only members of management and a few beneficiaries benefit. The gap between the top earners in the financial sector and the workers who keep the system running every day is widening. The median wage is no longer affordable for “ordinary” employees in banking and finance.

The reality for the majority of employees

Salaries have been stagnant for years, and the lowest entry level salary in a bank is barely above the qualified minimum wage. At the same time, work intensity is rising sharply and overtime is multiplying, leading to serious health problems such as burnout. Many find themselves trapped in jobs with no career prospects, creating a serious recruitment problem for companies.

OGBL’s demands on the financial sector

Faced with these challenges, the OGBL Financial Sector is calling for fundamental change. It advocates collective wage increases to make compensation in the financial sector more equitable. A key point is a linear salary increase of at least 6% over the next three years, as well as an adjustment of salary scales and a budget for equal pay and collective increases for all.

The OGBL Financial Sector also stresses the need for secure professional reorientation to support employees in the face of technological change in the sector. This means promoting continuous training for employees in new technologies and working methods.

Work-life balance

Another important point: flexible working conditions to improve the work-life balance and the introduction of a right to part-time work, accompanied by guarantees of return to the original contract.

The financial sector, a driving force for social change

Finally, the OGBL Financial Sector stresses the importance of a paradigm shift in the financial sector, with an emphasis on serving people. It advocates a balanced consideration of the economic interests of the country and the quality of life of its citizens.

Collective bargaining for the sector will take place this year and the OGBL Financial Sector will defend its demands with determination. As the largest union in Luxembourg, it is taking the lead in pushing its agenda.

Overall, it appears that the Luxembourg financial sector faces challenges, but also offers opportunities for positive change. Fair pay and better working conditions are key to creating a healthy and sustainable financial sector in Luxembourg, which remains a driving force behind the country’s economy.

The financial sector plays a crucial role in Luxembourg’s economy, but employees often face challenges and uncertainty. As a result, many of them are turning to other sectors. In order to attract and retain the best talent and ensure the stability of the financial sector, a significant increase in salaries is required.

Raising salaries in Luxembourg’s financial sector is not only important, it’s the right thing to do for a number of reasons:

Economic stability: The financial sector is of vital importance to the Luxembourg economy. Banks in Luxembourg make a significant contribution to the gross national product of the Luxembourg economy and provide highly complex services. Adequate remuneration of employees is therefore essential to ensure that they are motivated and perform their duties efficiently. The added value of each employee in the financial sector is enormous and, measured against their knowledge and skills, justifies a salary increase.
Lack of qualified staff: Attractive salaries are essential to attract and retain qualified professionals in the sector. As a financial center, Luxembourg must remain competitive if it is not to lose its position. In addition to political and social stability and low social costs, the financial center relies on highly qualified professionals. A shortage of qualified personnel could jeopardize Luxembourg’s financial stability.
Motivation and job satisfaction: Fair remuneration increases the motivation and job satisfaction of employees in the financial sector. The result is higher productivity and quality of work. In the face of global competition, it is essential to compete on the basis of quality, expertise and excellence.
Social stability: Decent wages contribute to social stability by improving the financial security of employees. This has a positive impact on general well-being and social inclusion.
Image and reputation: Adequate remuneration strengthens the image and reputation of Luxembourg as a financial center. It shows that Luxembourg treats its employees fairly and is perceived as an attractive location.
Fighting inequality: Pay increases for all in the financial sector can help reduce social inequality. A fairer distribution of income reduces the gap between high and low earners. This gap is particularly wide in the financial sector.

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