Luxembourg’s recruiters have spoken about a war for talent for decades. Higher pay is the main attraction of the Grand Duchy for foreign workers, but housing costs and traffic congestion are growing out of hand. Is the country starting to lose the fight?
‘Higher salaries and the potential for career advancement remain Luxembourg’s main way to attract new people,’ notes Richard Neale (pictured), head of Redbridge Recruitment. Gross annual wages for those who commute from France to Luxembourg are about 30% higher on average than for those who live and work in France. Similarly, cross-border workers from Germany and Belgium benefit from a 25% salary premium. These average figures probably give a somewhat false impression though, as Luxembourg’s workforce requires staff with above average skills, thus the average salary will tend to be higher.
‘Otherwise there are the 36 day holidays in the banking sector, the family-friendly quality of life, the low crime rate and so on that are the country’s main selling points,’ Neale adds, ‘yet there is not much more that employers can do to attract staff from abroad than they do in other countries.’
Some firms offer share option schemes, but assistance for children’s education fees are now taxed. There is talk of some businesses purchasing residential properties which they would offer at low rent to employees, but there is little evidence of this becoming more than a niche activity. Simply having a car parking space has become a prized incentive.
Soft advantages to the fore
Otherwise, firms are having to present softer advantages to potential recruits. The approach of Banque Internationale à Luxembourg is typical. ‘We have overhauled our career website,’ says Veronika Stepanova, Head of HR Business Partnership. She sees this as ‘an opportunity to promote our values and corporate culture…that BIL is a company where recruits can bring a lot, and where they will also learn and grow.’
BIL also offers advantages such as flexitime, mobile working, a reward scheme for high performers and a training centre. Yet there are limits to how flexible employers can be. Cross-border commuters are only able to work at home between 19 days (Germany) and 29 days (France) before suffering a tax penalty.
The government has recognised the problem for many years. ‘If the labour force no longer wants to come due to the length of the journey, that would be dramatic,’ was the assessment of François Bausch, the Minister for Sustainable Development and Infrastructure, back in 2015. Spending on transport infrastructure has been ramped up, with, for example, moves to double the rail network capacity by 2024. The government also wants more homes to be built. Yet with local authorities having control over planning procedures, the tendency to NIMBYism is strong. Moreover, with property prices rising by double-digits and interest rates at below zero, private building-land owners have less incentive to sell.
Salary costs rising
Hence employers are driven to offer staff more attractive pay packages, and this is despite not all financial sector business models performing strongly. Interim ABBL CEO Yves Maas noted in a recent interview with Investment Officer that banking sector salary costs rose 7% in 2018 despite the workforce increasing by less than 1%. This continues to be a good argument used by international groups and recruitment companies seeking to entice workers to the Grand Duchy. Yet there can be no guarantee that this will continue to produce results indefinitely.