Luxembourg prepares for May wage indexation: what's important to know

According to the latest data from the National Institute for Statistics and Economic Research STATEC, it is highly likely that the next indexation of salaries, pensions and benefits will be activated in Luxembourg in May 2025. This means that as early as next month, the salaries of all employees, including the public sector, will automatically increase - according to the indexation system enshrined in the law.

Indexation in the Grand Duchy is an automatic mechanism that protects the purchasing power of citizens in the face of rising prices. When the average consumer price index reaches a set threshold (in this case 1013.46 points), all wages and pensions are automatically increased by a certain percentage. This rule applies regardless of the economic situation.

At the moment, the index has reached 1012.69, and according to STATEC calculations, inflation would need to reach 0.56% to reach the threshold in April. This is quite a realistic scenario, despite a slight decline in prices in March, mainly due to the cheapening of oil products.

If the threshold is crossed in April, all workers and pensioners will see an increase in payments from May onwards. This applies to both the private and public sector. The specific percentage of increase depends on the latest agreement on the application of the index, but it is generally around 2.5 per cent to basic pay.

STATEC will officially confirm the triggering of the index at the end of April. At the same time, experts note that after this wave of new indexations are not expected until the end of the year.

Annual inflation in Luxembourg, according to STATEC, is 1.3 per cent, which is considered relatively low by European standards. This means that the purchasing power of citizens is preserved, and the triggering of the index is more of a preventive measure built into the country's economic model.