Cultural and geographical context
One of the first things to analyze to understand the business culture in Luxembourg is the cultural and geographical context of Luxembourg, this will make it easier to understand why many of its peculiarities and customs.
Luxembourg is a small but culturally very rich nation and, in its culture, you can see a wide influence of the countries that surround it: France, Germany and Belgium. This context has generated a multicultural environment where diverse customs, languages and traditions coexist and intertwine.
Cultural Diversity, expatriates and cross-border workers
Luxembourg has one of the highest foreign population rates in Europe. At the beginning of 2024, of the total population, 354,372 people were of Luxembourg nationality and 317,678 were of foreign nationality, which means that the country has 47.3% of foreign nationals, almost half of the population.
Given the significant proportion of foreigners in the country, their culture significantly shapes Luxembourg society and it is important then to examine in more detail the most represented cultures.
Source: Statec
In this regard, we have that the most represented population is Portuguese, which comprises 13.53% of Luxembourg's population, that is, 90,915 people. This large proportion of Portuguese is due to the large Portuguese immigration that Luxembourg has had in the past. In the world, it is certainly the largest proportion of Portuguese in relation to the native population. Next come France, Italy, Belgium and Germany with percentages of 7.33%, 3.74%, 2.81% and 1.86% of the population. Although lower, these figures are still significant.
In addition, it is important to take into account the large presence of cross-border workers in the labor market. Luxembourg has become over time a real magnet for cross-border workers, to such an extent that of the 484,285 employees in Luxembourg in 2023, 227,955 were cross-border workers, representing 47% of the employment force in the country. The majority of these workers, about 123,645 come from France, then follow workers from Belgium and Germany almost equally with 51,691 and 52,619 workers at the end of June 2023.
All this cultural diversity is reflected in the workplace, where inclusiveness and respect for diverse traditions and customs are valued. It also influences the languages spoken in different contexts.
Multilingualism and Linguistic Diversity
Three official languages are spoken in Luxembourg: Luxembourgish, French and German, which is related to the historical influence of its neighboring countries. But these are not the only languages spoken in the country, English and Portuguese are also present.
Source: statistiques.lu
According to a study conducted by the state statistics department in 2021, Luxembourgish is the main language with 48.9% of the population using this language as their main language. Then comes Portuguese, with 15.4% of the population and although it is not an official language, it is strongly present in the country given the significant percentage of the population originating from Portugal as we have just seen. This is followed by French with almost the same proportion and a little further away are English, Italian and German.
As for the use of the main languages at work and in business, we have the following picture:
- French: at work French is the main language of communication, in the different communes of the country the figures for the use of French as the main language at work never go below 43%, even reaching 79%. This underlines the general observation that French is the most important language in the workplace. French is mostly used in the commercial sector and in hotels, restaurants and cafés, mainly in and around the capital.
- Luxembourgish: In the workplace, after French is Luxembourgish, which has a rather secondary diffusion in the capital and surrounding areas where it is used as the main language only by between 30% and 56% of the population. However, the diffusion of the language is much greater in the other regions where it reaches values of 69% to 95%.
- English: The workplaces where English is most widely used are in the capital and surrounding areas, with percentages ranging from 30% to over 63%. The highest figures are in Niederanven (63%), Sandweiler (59%) and the capital (58%). This is related to the presence of large international companies in this region. Although French remains the central language in the workplace throughout the country, English has established itself as the second most used language and in some cases is on a par with French in the capital region.
Working hours and work-life balance in Luxembourg
In Luxembourg, a typical working week is 40 hours, with eight-hour working days and a legal maximum of 10 hours of work per day with some exceptions in extreme circumstances. This does not include commuting time.
Hours are usually Monday through Friday, 8:00 or 9:00 to 17:00 or 18:00 although many companies have flexible schedules so that employees can arrange their schedule at their convenience as long as they work the 40-hour workweek.
Many employees do however work overtime which means that in practice, Luxembourgers work more per year than their neighbors. All these overtime hours are paid, and companies must compensate employees for working Sundays with a wage increase of up to 70%, nights with an additional 15% and public holidays with a supplement of 100% per hour. In addition, Luxembourgers enjoy 25 paid vacations per year and there are 10 public holidays in the Grand Duchy.
In terms of work-life balance in Luxembourg, the country has one of the best work-life balances in the world. According to the OECD Better Life Index, around 2.8% of employees in Luxembourg work long hours in a paid job, far less than the OECD average of 10%. In addition, full-time workers spend on average a similar amount of their working day on personal care such as eating and sleeping and recreational activities as the OECD average of 15 hours.
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We will now examine the culture in the business environment, review the way decisions are made, the way meetings are conducted, how personal and professional networks are established in the country, and conclude by assessing how the country ranks in the area of corruption.
Business strategy, planning, and decision-making
Business strategy in Luxembourg is conservative and long-term oriented, with a rigorous focus on planning and stability. Luxembourgers are pragmatic and like to carefully calculate potential risks so decision-making can take some time. Thus, when developing a business strategy, it is important to consider both long-term and short-term planning. If you're planning to establish your business, this step-by-step guide on opening a company in Luxembourg will help you navigate the process efficiently.
Luxembourg companies value regulatory compliance and social responsibility, especially in highly regulated sectors such as finance. Additionally, transparency is highly valued in the Luxembourg business culture and openness, both about pricing and other details, is appreciated.
Companies with a traditional corporate culture have a hierarchical structure coupled with a standard top-down management approach in which decision-making is aligned with the hierarchy. Leaders occupy a key role and top management approval is commonly required for strategic decisions.
However, the culture is generally supportive and respectful and is characterized by collaboration and consensus, seeking to integrate diverse perspectives. In recent years, business leaders have begun to involve staff and subordinates more often in decision-making. Leadership styles are likely to continue to evolve as the country strives to be an attractive destination for technology companies and telecommuters.
Business meetings and negotiations
Luxembourg is a country that values punctuality, it is important to be on time for work or any meeting, whether social or business. Arriving late for any appointment is considered impolite and disrespectful. If you are unable to arrive on time, it is necessary to call before the scheduled time to inform the person you are meeting and offer your apologies. Arriving late can make you appear unreliable and this diminishes your bargaining power in any type of business.
It is also important to note that meetings besides starting on time are usually short and well organized as Luxembourgers tend to get to the point, offering a detailed presentation of data and analysis and promoting informed decisions.
Business networking
Making personal contacts in Luxembourg, as elsewhere is of utmost importance both for growing your own business and for getting a new job. Quality contacts are a gateway to new opportunities and can positively influence a person's or company's reputation.
Another important point to consider is the small size of the nation, which in many cases facilitates contacts but also has multiple implications. In business, the small size of the country creates an environment where trust and reputation are essential. In narrow business circles, such as the financial or technology sector, the proximity between professionals and companies facilitates direct access to key figures and speeds up decision-making. However, this same context means that information and opinions spread quickly and a bad reputation can severely affect an individual.
In the Grand Duchy, there are many opportunities to rub shoulders with other professionals. For example, you can join various groups and organizations such as BNI Luxembourg or attend some of the activities organized by the Luxembourg Chamber of Commerce. In addition, numerous trade fairs take place in the country throughout the year. If you're considering registering a company, professional incorporation services can simplify the process for you and ensure compliance with local regulations, saving you time and effort.
Bribery and corruption
Luxembourg has a virtually corruption-free environment, which is supported by a solid legal framework that effectively combats this problem. The laws and sanctions in place are applied without bias, regardless of whether they involve foreign investors or other groups. In the World Bank's Corruption Perceptions Index, the country ranked 9th worldwide in 2023.
As a global financial center Luxembourg prioritizes the fight against money laundering and terrorist financing. The Commission de Surveillance du Secteur Financier (CSSF), similar to the US SEC, enforces the rules. Corruption is a serious criminal offense and is dealt with seriously by the authorities without the need for intervention by international non-governmental watchdog organizations.
Business etiquette in Luxembourg
Finally, we will analyze the culture in terms of frames of reference for communications and social interactions as well as dress codes and gift-giving customs in the professional environment.
Communication
In Luxembourg, in the professional environment, men wear a suit, shirt and tie, and women wear a dress or pants. Bright colors or bold prints are uncommon in formal settings and a neutral palette is preferred.
In sectors such as finance, banking and law, the dress code is traditional and formal. Men tend to wear dark suits with light shirts and sober ties, while women opt for skirt or trouser suits in neutral or discreet tones.
In technology or creative sectors, the dress code may be more relaxed, although a “business casual” style is usually maintained. Men may opt for tie-less shirts and chinos while women may wear blouses and casual pants or dresses.
Gifts
In a professional environment, gifts are not usually exchanged in Luxembourg, however in some cases, such as on special occasions, small, symbolic gifts such as a box of chocolates or a bottle of good quality wine may be given.
Instead of a material gift, a thank you letter or an invitation to a business lunch in a formal setting is often valued more highly. These alternatives maintain professionalism and allow you to strengthen the relationship without creating the pressure to reciprocate.
When invited to someone's home, it is customary to bring flowers, chocolates, or a good bottle of wine. As for flowers, according to ancient European tradition, if given as a gift, they should be odd-numbered, except for the number thirteen, which is considered unlucky. It is also discouraged to give chrysanthemums since in Luxembourg they are used in funerals.
