While Luxembourg is a wealthy European country, some of its people still live in poverty. In 2015, one in five citizens – 19 percent – lived under the threat of poverty. Unfortunately, there has been an uptick in the Luxembourg poverty rate since 2003, when the rate was 15.8 percent. This was at least partly due to the financial crisis.
The European definition of poverty, which is used to determine the Luxembourg poverty rate, includes people whose income, including social benefits, amounts to less than 60 percent of the country’s median income and therefore are unable to afford basic necessities like rent and transportation.
There is, however, good news when it comes to jobs. The unemployment rate in Luxembourg is 5.7 percent. This is the fourth-best in Europe after Germany, Austria and Malta. The European average is 10.4 percent, making Luxembourg’s rate quite low in comparison.
The average household available income in Luxembourg is $40,914 U.S., much higher than $29,016 – the average of member countries in the Organization for Economic Cooperation Development (OECD). While income inequality has increased in Luxembourg since the financial crisis, it is still below the average of all OECD countries.
According to a study by EurWORK, about 12 percent of workers in Luxembourg are paid minimum wage. However, it is much more common for younger workers to be working for minimum wage than older workers. Unfortunately, nearly half of workers between the ages of 18 and 24 make so little that they fall below the poverty line.
Address Luxembourg’s Poverty Rate
Nevertheless, the government has introduced plans to help the working poor. The minimum wage is tied to the rate of inflation, so people with resources less than the legal limits are now given a guaranteed minimum income so they are able to support themselves. In 2009, the government also introduced childcare vouchers for families at risk of poverty to help them pay for daycare or after-school babysitting. Employers generally support these reforms.
Though poverty remains an issue in Luxembourg, the government has a history of implementing proactive solutions which gives citizens reason to be hopeful about their country’s poverty rate being reduced in the near future.
– Brock Hall