What is the Luxembourg average salary in 2024

The Luxembourgish Economy

Luxembourg has the best monthly wages in the world and with its thriving economy it is an attractive place to be, for both locals and expats. Of course salaries vary based on a number of factors, such as the industry someone works in, as we will see below in the article in detail, but nevertheless, Luxembourg has the highest minimum wage in the world. Evidently, the cost of living might vary as well, in countries with such high wages as Luxembourg, but one thing you would need to consider if thinking of relocating for work is also the quality of life you will be receiving by making such a move. It is fairly expensive to live in Luxembourg, but there is an equivalent reward to take into consideration.

Luxembourg City is one of the leading financial centers within the European Union which means that various EU institutions and international corporations as well have a significant effect on Luxembourgish average wages, especially within the capital region. Something to consider though to take into consideration before packing your bags to Luxembourg is the progressive income taxation, which can alter your income significantly.

Factors that define salaries

Much like in any country, there are quite a few factors that can define employee income. These factors are important for employees in order to better navigate the job market and then understand compensation strategies and therefore negotiate salaries. Here are some of the determining factors of salary levels in Luxembourg:

• The most important factor would be the industry and the sector. Every industry has different profit margins and economic values. The financiaid. Of course, it all comes down to supply and demand, regarding every industry, so professions thaal sector is generally highly pt are highly requested are also highly paid.
• Skills can also make a significant difference, so the experience and education define the salary as well. The more years of experience, the better paid, and that is because not only it demonstrates an expertise but also a professional network and most likely, industry knowledge. Advanced education is also being rewarded accordingly, with bonuses or specialized training.
• Skills lead to specific job roles and occupation. Specialized positions require a different, more advanced set of skills and knowledge which results in higher salaries. To be more precise, managerial and senior roles are usually better paid than entry-level positions.
• Company size is another major factor that affects salaries since well-established companies have better profitability margins, so they can offer more in both salary and benefits.
• In Luxembourg, location is also a main factor influencing salaries. It might come as a surprise to most, since Luxembourg is a fairly small country, but urban areas, like the capital, offer considerably higher salaries than rural areas, mainly because of the concentration of high-paying industries.
• Legal and collective agreements with unions may also be a factor that affects salaries as they can set minimum pay thresholds for some sectors. Government regulations and union bargains can influence the overall salaries and they often create a ‘floor’ for the negotiations to start.
• Since Luxembourg is such a small country, in order to attract international talent and sustain its existing local workforce, competitive salaries must be offered and benefits taken into consideration. The country’s economy needs to reflect the salary expectations of current and potential employees.

Gender and industry specific wage gaps

• 1. Gender

  Unfortunately to this day there is still a difference between what women earn and what men earn, even in Luxembourg, much like in many other countries in Europe. There are some theories trying to explain the fact which are: Differences in industries men and women are usually employed, and not a gender issue per se. Gap between full-time and part-time, suggesting that women often cover more part-time positions than men, there is therefore a difference in pay and limited professional development. It is a fact that women have a very limited presence in senior positions, which automatically means lower salaries. Childcare responsibilities which come with motherhood can often be a factor due to career breaks and reduced working hours. There is an on-going effort for gender equality, with new policies and regulations but the gap continues to exist so far even though the Luxembourgish government is now monitoring all changes by analyzing data to further improve the situation by developing new strategies. Some new measures though are ambitious, giving hope! Luxembourg has implemented parental leave and childcare support policies, new laws support salary information disclosure and new initiatives for women in leadership are being promoted.

• 2. Industry

  The difference in salary might also be industry related. This is not just in Luxembourg, but might be a bit more obvious due to the fact that it is very finance and banking oriented. The best paid sectors in Luxembourg, besides finance and banking then, are: Lawyers and more specifically corporate or tax law specialists, IT and tech, healthcare, executive management and engineering.

Current average salaries and minimum wage in Luxembourg

According to the Luxembourgish government, as of September 2024, the average salary in Luxembourg amounts up to 81,000 euros per year, a significant increase since 2022. The median gross salary is of course quite lower, which in practice results in half the employees earning less than average, which is still quite high though based on worldwide standards. 

The amount discussed is concerning a full-time worker who has worked a full year and it represents gross earnings, which means including all payments received such as potential bonuses, overtime pay and the 13th month salary. 

To mention here that, besides high salaries also the unemployment and inflation rates are considerably low, 5,8% and 0,8% respectively, and mainly due to that the wage growth is stable. Of course, the competitive environment due to the presence of international corporations and financial institutions causes wages to grow.

Elaborating further though, this is just an overview of the average salary in Luxembourg, which gets calculated and paid based on the factors we explained earlier. The minimum wage on the other hand is the lowest of salaries that can be legally offered in the country, depending on some specific requirements and rules. Those would be:

• The country’s cost of living: The minimum wage needs to be adjusted accordingly to match the usual expenses required by someone to live comfortably in the country.
• Skilled or unskilled: The government makes this distinction in order to adjust salaries. Skilled worker is considered one with an official, relevant education while an unskilled worker doesn’t really have those qualifications.
• Age: There are different wages applying to underage workers, who are legally working, and different ones for the adult workers. Usually, adolescent workers receive only a percentage of an adult wage.
• Social minimum wage: That is a specific scheme for people who struggle financially due to specific personal, health or family issues and the rate is adjusted by the State.

Employer’s contributions

The total labor cost is influenced also by the employee compensation costs which goes further than their gross salary. The employer, besides the salary, must pay for social security which covers pension and illness, benefits such as health insurance, holiday pay, bonuses and potential company equipment (car, phone, computer etc), payroll taxes and other potential fiscal duties when hiring employees, training for professional development and some administration costs such as HR and payroll management, legal and accounting fees and other emergency costs.

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Comparison with other countries: Average salary in the EU

Considering all the factors mentioned in this article, it quite makes sense why there are differences, sometimes considerable, between countries, even with the EU itself, since it all depends on cost of living and social security costs. We are not considering different country taxes at the moment, as the salaries we are looking into are gross, hence before tax. But it is important to mention here that Luxembourg has a very strong social security system which of course ensures higher salaries.

Let’s see how average salaries look like for neighboring countries:

Of course, those numbers are subject to fluctuations based on exchange rates, economic conditions, and other factors. Also, to note here, that a higher cost of living doesn’t always mean a ‘better living standard’, regardless of high salaries. It depends on what the state offers and if it is truly worth it, for example free healthcare, or other resident benefits.

Luxembourg’s cost of living and quality of life

The cost of living in Luxembourg is considerably high, but higher average wages can cover this and translate it into great quality of life. Accommodation, transportation and daily expenses can take up a notable part of an individual’s salary, which makes competitive salaries in Luxembourg the norm, not the exception, promoting an outstanding quality lifestyle. But in the end, Luxembourg does offer the highest salaries in the world, but this also means substantial taxes as well. Nevertheless, Luxembourg provides a favorable balance for its residents, due to its strong economy and competitive welfare state, which distinguishes it internationally.