Cross-border and foreign resident workers no longer shield Luxembourg from the consequences of demographic ageing

In most European countries, the national population is the main source of its workforce. Therefore, the demographic ageing of the national population influences directly the ageing of the workforce. Luxembourg is a special case in Europe because the ageing of its workforce is also linked to the ageing of cross-border and foreign resident workers.

A steady influx of young cross-border and foreign resident workers

Until the mid-2000s, the arrival of young cross-border and foreign national resident workers slowed the overall ageing of Luxembourg’s workforce. This demographic aspect in turn buffered the consequences of ageing. However, as shown in the table this trend has declined since the mid-2000s.

This shift is evidenced by the major increase in both the average age and share of workers aged 50+ for cross-border and foreign resident workers. Moreover, during the same period, the share of young workers have known a sizeable decline.

Maintaining older workers in employment: a national and European issue

The evolution of the workforce age-pyramid illustrates an insufficient renewal by new generations of workers. Thus, some firms and sectors are more impacted by the ageing of their labour force. That is why active ageing is still a crucial issue for all actors who can play a constructive role (workers, firms and politics), at the national level (draft law on age management plan) as well as at the European level (Lisbon and EU2020 strategies).

In most European countries, the national population is the main source of its workforce. Therefore, the demographic ageing of the national population influences directly the ageing of the workforce. Luxembourg is a special case in Europe because its workforce greatly depends also on cross-border (47% in 2023) and foreign-resident workers (27% in 2023). Until the mid-2000s, the ageing of Luxembourg’s workforce was lower than that of the national population due to the steady influx of young cross-border and foreign resident workers. This allowed Luxembourg to mitigate the consequences of ageing compared to its European neighbours (Leduc, 2004). However, workers are ageing and approaching retirement. Although Luxembourg was once shielded by the consequences of demographic ageing, it has now caught up to its European neighbours.

Several indicators illustrate this shift: The major increase in both the average age and share of workers aged 50+ for cross-border and foreign-resident workers. Throughout the 1994-2023 period, the mean age of Luxembourgish resident workers rose by 3.7 years (to 41.1 in 2023) versus 6.7 years for foreign resident-workers (41.5 years) and 7.6 years for cross-border workers (41.5 years). The share of young workers among cross-border workers (ages 15-34) was 30.4% (2023), which is half the 61.4% share in 1994. This trend is also visible in the share of younger workers among foreign-resident workers, which dropped to 30.3% in 2023 from 55.8% in 1994. Whereas the share of Luxembourgish young workers dropped at a much lower rate (33.5% in 2023 from 45.8% in 1994). Inversely, the relative share of older workers has significantly increased over the same period. The share of older workers multiplied by a factor of 4.4 for cross-border workers, 2.9 for foreign-residents and 1.9 for Luxembourgish residents.

The influx of young cross-border workers, combined with the presence of a young foreign resident workforce, has played a key role in making the Luxembourgish labour market dynamic. However, this is faltering and Luxembourg will need to deal with the effects of population ageing. Some firms and sectors are already feeling the impact of an ageing labour force. In this framework, active ageing (Zanardelli, Leduc, Clément, 2012) remains crucial to social debates on sustaining pension systems and other issues.