Employment boosted by influx of cross-border workers

In recent decades, paid employment has more than doubled in Luxembourg, primarily because of the influx of cross-border workers coming from France, Germany and Belgium.

Labour shortage needs to be filled

The Luxembourg labour market is unlike any other such market in Europe. Whereas most jobs in neighbouring countries are filled by their residents, in Luxembourg there are a very large number of cross-border workers, mainly from the Greater Region. This unusual situation stems primarily from the strong economic growth experienced by the country in the late ’80s and early ’90s.

Cross-border has quadrupled in 28 years

Since 1994, the number of paid jobs in Luxembourg has more than doubled, rising from around 190,000 to around 475,000. While the number of jobs filled by residents has been multiplied by 1.8; the number filled by cross-border workers grew fourfold (4.5). Consequently, while cross-border workers represented 26% of the people working inside the country on March 31, 1994, the figure had risen to 47% in 2022.

National employment consists of both Luxembourgish and foreign-resident workers, while domestic employment considers Luxembourgish, foreign-resident and cross-border workers (those who commute mainly from the Greater Region labour pool). The present indicator focuses on statistics for domestic employment.

Moreover, these age pyramids specifically concern paid employment in Luxembourg, i.e. employees, workers and civil servants. The self-employed, the unemployed and other self-employed persons are not included in this indicator.

Over the last two decades, domestic paid employment has more than doubled, from approximately 190000 workers on March 31, 1994, to around 475000 workers on March 31, 2022 (source: IGSS). Though the employment of residents has multiplied by 1.8 over this period, the employment of cross-border workers has experienced a fourfold increase (4.5 exactly). Therefore, while cross-border workers accounted for 26% of domestic employment in March 1994, their proportion has risen to 47% in twenty-eight years (see Age pyramid (%) and main indicators on domestic employment in Luxembourg (1994, 2003, 2007-2022)).

The atypical composition of the active population, both residents and cross-border workers, makes Luxembourg a special country in Europe. This specificity can be largely explained by the economic growth the country has known during the late 1980s and early 1990s, which led the Grand-Duchy to recruit an external workforce to remedy the labour shortage. Therefore, the number of cross-border workers has risen each year. Between 1994 and 2003 the number of cross-border workers more than doubled with a growth rate of 113% compared with a growth of 19% in the number of resident workers (7% for Luxembourgish residents and 39% for foreign residents). Afterwards, between 2003 and 2007, the number of cross-border workers increased by 26% (respectively 7% on average for all residents - 2% for Luxembourgish residents and 13% for foreign residents), only to slow down to 8% between 2007 and 2008 (respectively 3% for all the resident workers - 1% for Luxembourgish residents and 5% for foreign residents). It is only since 2008, following the global economic crisis, that the increase in the number of cross-border workers had slowed right down and stabilized until 2015 between 1 and 3% a year, such as the resident workers. Since 2015, the number of cross-borders workers has increased by about 34% compared to 17% for all residents (16% for Luxembourg residents and 18% for foreign residents).

As regards the nationality of the cross-border workers, French workers make up the majority by accounting for more than 50% of the total of cross-border workers in any particular year. Their number has increased fivefold in 28 years. In 1994, German cross-border workers accounted for less than one-fifth of cross-border workers but this proportion has increased to 24% in 2022. Germans have experienced the most significant growth over the period 1994-2021 since their number has multiplied by 5.9. Finally, though the number of Belgian cross-border workers has more than tripled (3.7) between 1994 and 2022 their share among cross-border workers has decreased, from 30% (1994) to 23.2% (2022) of the total of cross-border workers.