© Envato
In its annual report, the Economic and Social Council (CES) has come to the conclusion that remote work not only had an impact on Luxembourg’s commerce, but also on public finances in 2022.
Since more cross-border employees started to work from home last year, Luxembourgish businesses might loose an estimated €350 million in revenue per year due to reduced consumption from commuters.
According to the National Institute of Statistics and Economic Studies (STATEC), Luxembourg is the champion of Europe in terms of ideal remote work conditions. More than half of employees in the country are in a position where their jobs can also be done remotely.
© Statec
A recent study carried out by the Chamber of Employees shows that while only 29% of Luxembourg’s resident population are in favour of remote work, that number is significantly higher in the Grand Duchy’s neighbouring countries: 53% in France, 42% in Germany, and 43% in Belgium prefer working from home.
At the moment it seems likely that employees will be able to work remotely more often in the near future. The CES therefore wants to prepare the government for the potential impacts that this paradigm change might have.
The CES based its calculations on employment numbers from 2019. At the time, 460,000 people worked in Luxembourg, out of whom 258,100 were residents and 201,900 cross-border workers.
Out of this total, 197,914 people were able to work remotely. Supposing that each of them worked from home on one day during the week, the number of back-and-forth trips on weekdays would decrease by 40,000.
While this would surely reduce traffic and the risk of congestion on Luxembourg’s motorways, more remote work would also have economic impacts for local restaurants and shops.
According to estimations from hospitality federation HORESCA, cross-border commuters consume about €25 per work day in a hospitality business and €15 per day in other businesses. The federation therefore concludes that increased home office rates might lead to a loss in revenue of €350 million per year.
The hospitality sector alone might suffer daily losses of turnover amounting to €500,000, close to €110 million per year. This in return would lead to 1,000 jobs being cut, €7.5 million lost in social contributions, €5 million lost in value-added tax, and close to €3 million lost in income tax.
The fiscal agreement in place between France and Luxembourg was renegotiated on 30 September to include the possibility of doing 34 home-office days per year without consequences on taxation for cross-border workers.
A similar convention also seems close to be done and dusted for Belgian cross-border workers while those living in Germany are set to keep their maximum of 19 days for the time being.
Then there is also the problem of social security. Once a cross-border employee completes more than 25% of their work hours outside of Luxembourgish territory, they get affiliated to the social security system of their country of residence. This in return means the Luxembourgish employer also has to start an affiliation with that system.
It appears that few employers would take that risk. The CES further concludes: “In the current labour shortage situation, these problems can become vital for the economy. It is becoming easier for a well-trained young talent living in Metz to look for a job in Paris with three days of remote work and two days of commuting by train than to accept the Luxembourgish conditions.”