3.1 General context
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Labour market situation in the country
The Luxembourgish labour market is characterised by its significant proportion of cross-border commuters from neighbouring countries (France, Belgium and Germany), who constitute about 50% of the workforce. The number of newly created jobs has increased during the past years, with domestic employment (total employment on the national territory) growing from 470,000 in 2000 to 518,885 in 2025.
The Luxembourg labour market has recovered well from the COVID-19 sanitary crisis in 2021. However, in 2022, the energy crisis and high inflation posed major challenges to households and the economy. According to Statec, the Luxembourg economy faced a decline in GDP in Q4 2022, driven by negative impacts from the financial sector and decreased household consumption. After a GDP contraction in 2023, Luxembourg's economy has returned to growth, though recovery remains weak and uneven across sectors, with modest expansion of +0.5% in 2024, followed by a predicted stronger growth of +2.5% in 2025 and +2.4% in 2026 (Statec, 2024). Most of these jobs require higher-level skills and qualifications (Statec, 2022).
Although unemployment remains low overall, a cooling trend has been observed in early 2023, especially in sectors like construction and business services. Young people remain more affected by unemployment. The unemployment rate among people under 25 varied from 17.5% in the second quarter of 2019 to 23.3% in the second quarter of 2020, before falling to 16.9% in the second quarter of 2021. In 2024, the unemployment rate is of 21,3%. This volatility is closely related to the high proportion of young people who are still studying and, therefore, not part of the active workforce.
The significant disparity between the overall unemployment rate (relatively low) and the youth unemployment rate (relatively high) indicates that the transition from the education system into employment still represents a critical phase for many young people in Luxembourg. It can be expected that the pandemic has aggravated the situation, particularly for young people with lower qualifications. This group faces a heightened risk of unemployment. (MENJE & UL, 2015)
Luxembourg has a strong tradition of social peace. Social issues are usually resolved within the framework of wide-ranging consultations between the social partners, in the form of the Tripartite Coordination Committee. This committee brings together representatives from the government (minister of Finance, minister of the Economy, and the minister of Labour), employers (Chamber of Skilled Trades and Crafts) and labour representatives (trade unions).
Main concepts
In the domain of employment and labour market policy (under the responsibility of the Ministry of Labour), people under 25 years of age are defined as 'young people'.
This definition differs from the characterisation of the age group 'young people' in the 2016 youth law: persons no longer attending primary education or special schools who are younger than 30 years (see: 1.1 Target population of youth policy).