Minister criticises exploitative employers

Luxembourg's employment minister has criticised employers who pay staff the minimum wage and rely on the state's re-employment compensation system to bump up the employee's wage packet.

The practice exploits the Adem benefits system, which guarantees to subsidise the wage difference if an employee in Luxembourg moves to a less well paid job.

Nicolas Schmit was critical of employers who abuse this system of public assistance. He said: “A salary that is paid by a new employer must be fixed on a realistic basis, not just the minimum wage because re-employment assistance is available.”

Mr Schmit suggested that cases like this occur because current regulation of the system is unclear. The employment ministry is currently working to reform re-employment support, a reform which it hopes will combat abuses while allowing those who need to access such support to do so more easily.

The reform will not, however, make access to re-employment benefits a once in a lifetime only benefit, as was misleadingly recently reported in a French daily newspaper in Luxembourg.

Simply, the state will regulate recipients of the benefit more closely to ensure that once an employee's new wage is equal to or above their original wage (upon which the subsidy is based), re-employment benefits will be halted.

The ministry is currently in talks with social partners to draw up a the final reform. The changes are expected to be implemented later in the year.