At the invitation of STATEC, the Luxembourg Statistical Institute, an “economic” seminar will be held on April 25th on the subject of “The importance of the trade unions in a changing Luxembourg economy”. On the agenda is a lecture by a university professor with the provocative title “Will they rise again? Four scenarios for the future of trade unions”.

Speakers will also include representatives of the OECD, an organization that has often expressed its hostility to employees’ representatives in the past. The speakers will present their views in detail over the course of 2 hours. Originally, the three nationally representative unions were to have only 15 minutes to respond to the statements.

Unions cancel In a joint letter, the CGFP, the LCGB and the OGBL have informed the STATEC director that they will not be able to participate in the seminar for known scheduling reasons. The STATEC seminar will take place at the same time as a meeting between the social partners and the government in the framework of the European Semester. In their joint letter, the employees’ representatives also disapproved of the fact that they were not involved in the preparatory work for the studies in question.

It is inexplicable that STATEC, for the umpteenth time, commissions its critical studies exclusively in cooperation with the trade unions and publishes the figures without consulting them. No other sector is highlighted to this extent. There is no detailed STATEC analysis of membership trends in political parties, employers’ associations or voluntary organizations. The real motives behind this one-sided, undifferentiated presentation, based in part on false assertions, raise questions about independence and impartiality.

A questionable undertaking In March 2002, a STATEC study was published under the catchy title “Unions in decline in a changing world of work”. It falsely claimed that the country’s three main trade unions had experienced a decline in membership between 2017 and 2019. Against this background, the question inevitably arises as to how the experts could have arrived at such a grossly inaccurate estimate. At the time, the CGFP and OGBL hotly contested the statisticians’ findings and methodology. Instead of wasting public funds on dubious and costly studies, the Ministry of Economy and its subordinate STATEC would do well to stick to the facts.

In many countries, people are reluctant to join trade unions for fear of reprisals or having their careers destroyed. For months now, people in neighbouring countries have been suffering the consequences of the failure of social dialogue: social conflicts, growing frustration, political disillusionment and work stoppages have become part of everyday life. In Luxembourg, too, attacks on trade union freedoms are on the rise. In the interest of the workers, the government and STATEC should consolidate the social dialogue instead of torpedoing it every year.

One suspects that STATEC’s recent economic seminar on the place of trade unions was also put under the spotlight of political influence. In this context, it is undeniable that there are personal links between the Statistical Office and the Observatoire de la Compétitivité. This organization also appears on the organizational chart of the Ministry of the Economy.

Following the public debate in January on the petition “2 days of telework per week for all”, which had gathered no less than 13,892 valid signatures, the OGBL was invited to a hearing on February 9th in the context of a meeting of the “Telework” subcommittee of the Chamber of Deputies. The OGBL, represented by Frédéric Krier and Jean-Luc De Matteis, took the opportunity to present its views on the various aspects of telework.

It is certain that the use of telework will continue to be much more widespread than before the health crisis. In many sectors, the possibility of teleworking is seen as a significant advantage, especially in view of the rush hour traffic jams in Luxembourg. Teleworking saves time by allowing people to get to work without wasting hours in traffic jams or on overcrowded, often late trains. More widespread use of teleworking could potentially help to reduce road congestion and also achieve a better balance in terms of CO2 emissions.

However, it should not be forgotten – and the OGBL made this clear at the hearing in the Chamber of Deputies – that almost half of all jobs are not “teleworkable” by their very nature. This fact should not be overlooked when calling for “2 days of telework for all”.  On the contrary, care must be taken not to create a divide between those who can telework as part of their job and those who cannot.

The OGBL also considered that there was no need for a new “telework” law, since an interprofessional agreement between the nationally representative syndicates (OGBL and LCGB) and the employers’ union (UEL) was signed on October 20, 2020, and declared generally binding by the Grand Ducal regulation of January 22, 2021. This agreement not only regulates telework in a more flexible way than the previous agreement, but is also the first agreement of its kind between the social partners to introduce additional co-decision rights with the staff delegation.

Although this agreement does not cover civil servants and state employees, it should be noted that a draft law regulating telework in the civil service is currently being discussed in the Chamber of Deputies, which is largely inspired by the interprofessional agreement.

This does not preclude the need for some specific legislative adjustments. For example, the interprofessional agreement called on the legislator to include the telework dimension in legislation on health and safety at work.

Although the agreement of October 20, 2020 stipulates that work equipment, in particular IT equipment, is to be paid for by the employer in the case of regular telework, the employee concerned may nevertheless incur additional costs related to his or her home workstation, such as the furnishing of an office, etc. It is important to note that the agreement also stipulates that the employer is to be responsible for the cost of the equipment. In this respect, it should be noted that the agreement of October 20, 2020 stipulates that the costs of telework are to be borne by the employer. In this respect, these costs should be considered as tax-deductible expenses. In any case, and not only for teleworkers, the minimum lump sum of 540 euros for the deduction of acquisition costs should be increased, since this minimum has not been adjusted since the 1990s. Given the inflation since the last adjustment, this amount should at least be doubled.

Finally, we need to ensure that syndicates can disseminate information to all employees, including those who telework. To this end, we need to amend article 414-16 of the Labor Code, which establishes the right of staff delegations to use all means of communication available in the company, including electronic means, to communicate with employees. The same article explicitly excludes trade union communications from this provision. If delegates elected on union lists want to share information from their union with staff or inform them about union activities, they can only do so on paper, using a notice board, etc., unless there is an agreement with the employer. This means that many union delegates do not have the right to use electronic means of communication. This means that a large number of employees who do not necessarily go through the company headquarters, and especially teleworkers, cannot receive union information. This discriminatory and anti-union provision must be abolished and all delegation communications treated in the same way.

Finally, the most important issue concerning the legal framework for teleworking remains the question of cross-border tax and social security rules. These rules need to be adapted to allow cross-border workers to telework without fear of major tax implications or even social security disaffiliation.

Even before the pandemic, the OGBL had been working to harmonize the different tolerance thresholds for taxation in the Greater Region (Belgium and France: now 34 days; Germany: still only 19 days). It is also necessary to put an end to discrimination against civil servants, but also against employees of public institutions. The recent agreement with France now provides for equal treatment for all workers, but in Germany they continue to be taxed at their place of residence from the first day of telework.

Ideally, there should be a single tax and social security threshold, currently 25%. The OGBL is not opposed to the ongoing discussions at European level to raise the social security threshold to 40% of annual working time, provided that this higher threshold applies only to telework hours and not to other work services. The aim is to make telework more widely available and not to encourage social dumping by circumventing posting rules.

A threshold of 40% for both social security and tax purposes would allow all cross-border workers whose work can be teleworked to telework up to two days a week without any impact on their tax or social security contributions.

The OGBL hopes that the Luxembourg government will defend this position in bilateral discussions with neighboring countries and at the level of the European Union.

Frédéric Krier, Member of the Executive Board

“You now have a choice: either the “capped” index or the neutralization of oil products in the index”!

That was on April 27, 2010, and it wasn’t an ILRES survey, it was Minister of State Juncker lobbying the syndicates at the tripartite meeting. The unions didn’t fall for it and left it to Juncker to declare the negotiations a failure and put an end to them.

Just imagine: the unions would have agreed to neutralize the indexation of oil products! Given the current explosion in energy prices, the overall loss of purchasing power for the population would have been enormous.

When the tripartite failed again in early 2012, the OGBL president at the time, Jean-Claude Reding, made it clear that the prime minister was only trying to gut the indexation mechanism: “Juncker absolutely wants to do away with the index. Since 2006, he has constantly tried to limit the automatic adjustment of wages”. (Luxemburger Wort, 15.03.2012)

Yesterday is today. Since inflation accelerated in the second half of 2012, the political attacks on our indexation system have gained new momentum.

René Winkin, director of FEDIL, and Carlo Thelen, director general of the Chamber of Commerce, were the first to speak. Dressed in green, they pharisaically called for a “sustainable” shopping basket to exclude fossil energy products from the index.

Pharisaical because such a distortion of the purpose and meaning of the index not only opens the door to political manipulation against our indexation system, but also calls into question and fundamentally undermines the entire Luxembourg wage formation system. The OGBL’s response was swift:

“The OGBL categorically rejects a degenerate index. For households, energy consumption is not a question of will, but an existential necessity. Depending on the budget, the geographical location of living and working, the housing situation, etc., the potential for energy savings and the possibility of using public transport are limited. Sometimes even extremely limited. (OGBL News, 1/2022).

He adds: “Any suggestion that the population lacks the will to live ‘sustainably’ is completely misplaced and counterproductive. If we separate the energy savings or increased energy efficiency required by climate policy from the social issue and the increase in social inequalities, we undermine society’s drive to conserve natural resources and protect the climate”.

The OGBL is thwarting the plans of employers and politicians.

In March 2022, the tripartite turned into a tragedy. When the CGFP and LCGB gave in, the government imposed its demand to manipulate the index: not only the postponement of the July 2022 indexation installment to April 2023, but also an interval of at least 12 months between the payment of two indexation tranches.

The OGBL’s refusal to sign and its consequent resistance may not have prevented the postponement of the July tranche, but it did thwart the implementation of the limitation of the index to one tranche per year and thus prevented further manipulation of the index, which would most likely have resulted in the loss of at least one indexation tranche.

The Tripartite Agreement of September 2022 threw this part of the March Agreement into the wilderness and restored the normal index mechanism.

The OECD attacks the index.

On November 17, 2022, the OECD presented its economic report for Luxembourg and attacked our indexation mechanism. With its statements, the OECD revealed for the umpteenth time where its interests lie when it comes to the relationship between capital and labor:
“The wage indexation system risks fuelling already high inflation at a time of unprecedented price shocks and could damage long-term competitiveness. (…) The current period of high inflation has highlighted the risks inherent in the automatic wage indexation system. Wage indexation is likely to create a wage-price spiral, particularly in the current context of high inflation and a tight labor market (…)”.

The passages I’ve bolded reveal the slyness of the OECD’s statements. Many things “could be” without a shred of evidence that they are or will be.

For decades, opponents of our indexation system have claimed that the index would trigger a wage-price spiral that would jeopardize Luxembourg’s competitiveness.

They deliberately ignore the fact that STATEC has repeatedly found in its analyses that a wage-price spiral (“auto-ignition”) triggered by the indexation mechanism does not exist as such, at least not to any significant extent.

And if there’s another claim that has yet to be substantiated, it’s that the index would lead to a weakening of Luxembourg’s competitiveness in relation to other countries. And there is nothing to suggest that the current index adjustments will do anything to change this situation!

Our indexation system is a thorn in the side of the OECD. That is why it “recommends” that the Luxembourg government revise our indexation system downwards:

“Once the current period of high inflation has ended, the government, in consultation with the social partners, should reform the wage indexation mechanism to better guard against the resulting risks to productivity, employment and inflation”.

The OGBL calls on all parties contesting this fall’s general election to unequivocally reject the anti-employee “recommendations” of the OECD.

This also applies to the OECD’s position in support of the employers’ demand for a “capped index”.

Do you remember RTL’s headline on November 23: “51% for a capped index”?

At the request of RTL and Luxemburger Wort, the market and opinion research company ILRES had put the question “For or against?” to “A capped index – i.e. the index would only be paid up to a certain level of gross income and would no longer be available to everyone”.

To those politicians who, in the run-up to the next parliamentary elections, leave the door open to the discussion of a “capped” index, we recommend a closer analysis of the results of the ILRES institute: 58.47% of the 18-54 age group are against a “capped index”. RTL overlooked the fact that the “51% for” shown in the table is due to the “64.53% for” coming from the 55+ age group. Conclusion: The majority of the working population of voting age is against the manipulation of the index in the form of a “capped” index. And the younger the respondents, the stronger their opposition.

The “capped” index: the beginning of the end of the index!

The OGBL is categorically opposed to a capped index. In fact, far from leading to greater social justice, a so-called “cap” would have the opposite effect.

Worse, in addition to reducing the wage share in favor of corporate profits and shareholders, a “cap” on the index would be the beginning of the abandonment of the indexation system as a whole.

The mere fact that employers find the limitation of the indexation system in the form of a “cap” attractive, and that they advocate, propose and demand it, should be enough to warn all workers!

But when ministers or party politicians, who claim to defend social progress, become receptive to demagogic superficialities such as “The price of butter is the same for everyone. Why shouldn’t it be the same for the index?” and they start to wobble, then the trade union movement is faced with the urgent task of explaining what the index is and what it is not or cannot be.

Secondly, we must remember that in 2013, Jean-Claude Juncker promoted the capped index at the CSV Congress.

At the time, the proposal was rejected by the then Minister of the Economy and Deputy Prime Minister, Etienne Schneider: “It doesn’t help us, so my party won’t support it”.

In an interview on RTL radio, the leader of the LSAP parliamentary group, Lucien Lux, warned with prescience that “this type of measure would mean the end of automatic indexation in the medium term. It would then start with a ceiling of 2.5 times the minimum wage, which would then be systematically reduced until there was nothing left of the index”.

When it comes to indexation, it’s always worth repeating what it really is!

The then president of the OGBL, Jean-Claude Reding, also pointed out that “a capped index will mean that middle-income earners will receive less money. Those who can live on their dividends or bonuses will not be affected. I didn’t hear in Jean-Claude Juncker’s speech any mention of a cap on managers’ high incomes or rents. Nor is there any talk of taxing capital. The great mass of working people should get less. It’s all about slogans.

He continues: “When it comes to the index, it’s always worth repeating what it’s really about: it’s a wage policy instrument that maintains purchasing power. The index doesn’t change the gap between a low salary and a high salary. If we want more justice, we have to talk about tax policy. I have no sympathy for reopening the discussion about the index under the false pretext of fairness. (Tageblatt, 12.03.2013)

And so it is. In the face of the rising cost of living, the sliding wage scale, the “index”, aims to safeguard the value of all the wages that make up the wage scale. This adjustment of incomes, and in particular wages, is in fact nothing more than a time-delayed compensation for the increase in the prices of goods and services sold by companies to consumers.

In this context, it is worth mentioning that for workers not covered by a collective agreement, the index represents the only guaranteed increase in their wages (if we disregard the adjustment of the social minimum wage and any adjustment clauses in individual employment contracts).

Those who oppose a reduction in the wage share should distance themselves from the option of a capped index.

The index plays a very important role in the distribution of economic value added between capital and labor (primary distribution).

Without wage indexation, or in the case of index manipulation or limited wage indexation (e.g. by capping), the distribution of economic value added would shift in favor of capital. The wage share would decline.

From the foregoing, it is clear that automatic wage indexation must fulfill functions other than intervening in the relationship between wages, in the wage hierarchy.

In a context of inflation, the index restores the value of a given wage. It is not there to raise or lower one wage relative to another!

On the other hand, the formation of the wage hierarchy is the responsibility of the employer or the collective agreement, if there is one in the company or sector. And in the case of the social minimum wage, it is the responsibility of the legislator.

Are employers interested in the wage hierarchy? Or are they interested in lowering wages?

If employers want to defend a different wage hierarchy, it’s up to them!

And they should be at the forefront of proposing it in collective agreements. The OGBL will not be outdone when it comes to negotiating, in addition to linear increases, basic amounts, i.e. real increases in the form of an identical amount for everyone in the company or company sector, regardless of their individual wage classification.

This appeal is addressed, among others, to the Chamber of Commerce.

In its “30 flagship measures” for the parliamentary elections, the Chamber of Commerce launches a general attack on the index: an index capped at 1.5 times the median wage (i.e. from around 2 times the social minimum wage)!

The aim of this measure is “to give the current model a social and selective character and to reduce the resulting wage gaps”.

All this combined with the perfidious instrumentalization of the climate crisis (manipulation of the index basket by eliminating fossil fuel products) and the employer’s mantra: “at most one index bracket per year”.

Dear Mr. Thelen. If you are concerned about the “anti-social” nature of the wage hierarchy, instead of attacking the index, you should suggest to your friends in the employers’ association that, firstly, they introduce collective agreements everywhere and commit themselves to modernizing the law on collective agreements, and, secondly, that in the future they renounce real wage increases for the highest wage earners and distribute these earned wages to the lower wage classes.

Why have we heard NOTHING from you in this regard?

Or the former president of the Chamber of Commerce, Luc Frieden, who, after the restoration of the normal indexation mechanism at the fall tripartite, regretted “that we did not manage to make a structural reform, for example to limit the indexation to three times the minimum wage (…)” (RTL Radio, October 5, 2022).

Because, as already mentioned, for employers and some politicians it is not a question of increasing fairness in terms of wages and incomes, or of intervening in the wage hierarchy, but of limiting or dismantling our indexation system globally! And, consequently, to reduce the wage share in general.

The “capped” index has absolutely nothing to do with a “social index”; on the contrary, it deserves to be called an “employers’ index”, designed to reduce the total wage bill. And to lay the groundwork for the mutilation, even the abolition, of the entire indexation system.

There have been times when employers have taken a different view.

Let’s quote the Economic and Social Council of Luxembourg (CES), which, in its opinion of December 9, 1988, on “Indexation of salaries, pensions and social benefits”, stated the following

“The ESC unanimously considers that limiting indexation to incomes below a certain ceiling is not an alternative to the present system of wage indexation. Such a limit would run the risk of provoking a double negotiation of wage increases. What’s more, salaries above the ceiling could benefit from higher real increases than salaries below the ceiling”.

Management and some politicians have lost sight of the clear vision of the Economic and Social Council: giving less to some will not bring more to others, but even … less! And those who earn a lot, or even more, will find their individual way of negotiating to compensate for this loss if part of the index is abolished!

In fact, capping the index at 2, 3 or 4 times the legal minimum wage would in all likelihood not disadvantage high earners, who generally have greater bargaining power within the company.

They would be able to keep their sheep dry, while middle earners would not only no longer benefit from the full index, but would also have less bargaining power than those at the top of the wage scale to negotiate wage compensation.

Worse still. It should not be forgotten that the periodic adjustment of the minimum social wage and pensions is based on the observed evolution of the average wage.

A cap on the index would slow down the increase of the average wage and therefore have a negative effect on the revaluation of both the minimum social wage and the pension adjustments. Any limitation of wages by capping the index will result in a lower revaluation of low wages and pensions!

A “capped” index: an attack on the Luxembourg wage-setting model

Limiting the indexation mechanism in the form of a cap would have other serious effects and consequences. As the Economic and Social Council (CES) has pointed out: “Such a limitation would risk provoking a double negotiation of wage increases.

This would have serious consequences for the specific Luxembourg wage-setting model, which is based on three closely linked and inseparable pillars: the index mechanism, the collective bargaining system and the social minimum wage.

The explanatory memorandum to the 1975 draft law on the generalization of the sliding scale of wages and salaries illustrates this link between the index mechanism and the collective bargaining system and explains their respective missions:

“Compensation for price increases is very likely to influence wage negotiations anyway, and it is preferable that it be granted periodically in moderate doses rather than intervening abruptly. This allows collective bargaining to focus on the level of real wage increases, with positive results. Indexation also facilitates the conclusion of long-term agreements, which are considered to be a factor of stability, and in this and other ways contributes to making relations between employers and employees more harmonious”.

However, if the indexation mechanism were to be used only to a limited extent, the above prediction of the Economic and Social Council (Conseil économique et social) would come true.

Collective bargaining would no longer focus solely on actual wage increases, but would also include the adjustment of wages to inflation.

This would remove the advantage of the current system, namely the possibility of concluding long-term agreements and collective agreements “à la carte”, i.e. tailored to a single company.

The consequences are obvious: above a certain level of inflation, difficult and conflict-ridden negotiations are inevitable, which means that the advantage of the current collective bargaining system in Luxembourg, i.e. relatively conflict-free labor relations and few strike days, would be a thing of the past.

There are many examples of this situation in other countries.

Social peace as a factor of stability and an argument for the attractiveness of Luxembourg as a business location would undoubtedly have come to an end.

A cap on the index mechanism would undoubtedly upset the entire system of collective agreements.

In low-wage sectors, which would not be covered by the capped index, employer pressure against real wage increases would increase.

In these sectors, where the wage hierarchy is broad, the syndicates would have to negotiate inflation compensation for part of the workforce.

This means that diverging wage interests would create internal conflicts within companies, which would logically have a negative impact on the collective bargaining power of the unions.

And in industries with a higher overall wage structure, the conflict over inflation compensation would become a central bargaining issue.

It goes without saying that the current collective bargaining legislation is neither structurally nor procedurally suited to such a situation. It would have to be completely rewritten.

In particular, the current legal provisions on strike procedures and the so-called “peace obligation” would become obsolete.

Conclusion: Leave the index alone!

In conclusion, the demand to limit, i.e. to cap, the indexation system is deeply regressive from a social point of view.

For all workers, especially those in the lower and middle wage brackets, the idea of capping the index is a frontal attack on our proven wage-setting model, and aims to dismantle it in the medium to long term.

The OGBL is right to categorically reject such a manipulation of the index. In the interest of all Luxembourg workers.

The index is one of our most important social achievements.

It contributes significantly to social peace. It is a social, economic and political stabilizer and must therefore be consistently defended by all progressive forces.

André Roeltgen, Central Secretary