Economics

Juncker: "I will not be one to abolish wage indexation"

The automatic indexation of wages, even in its new limited form, weighs far too heavily on businesses, reiterated the organisation Fedil in a New Year reception meeting. A vision not shared by the country’s Prime Minister.

14.03.2012

(ADW) The automatic indexation of wages, even in its new limited form, weighs far too heavily on businesses, reiterated the organisation Fedil in a New Year reception meeting. A vision not shared by the country’s Prime Minister.

For Robert Dennewald, President of Fedil (Business Federation Luxembourg), a new indexation tranche costs "just over 400 million euros a year for the private economy." A hard burden to bear for companies, especially in times of crisis.

Under these conditions, limited to one indexation tranche of salaries in 2013 and 2014 is "not nearly enough to redress the competitive position of Luxembourg companies”, he stated.

Invited to speak, Jean-Claude Juncker presented a different view of the financial pressure faced by businesses. He reminded Fedil that the freezing of indexation in 2011 saved 170 million euros to businesses. "In the next two years, it will be 450 million," added the Prime Minister.

Restrictions on the index equals 1.6% of GDP

In total, the restriction of indexation is the equivalent to 1.6% of GDP. "Do not think I'll be the one to abolish wage indexation," he said to the many entrepreneurs attending Fedil’s New Year's reception.

Jean-Claude Juncker took up the argument of ‘social peace’, explaining that it was guaranteed by indexation. Social peace is one of the elements of competitiveness for the Grand Duchy so dear to its businesses.