How much do people earn in Luxembourg? The key figures

Known for its high salaries, Luxembourg attracts a large number of workers from abroad. Tempted to take the leap? What’s the right salary? Find out the specifics of what’s available in Luxembourg.

What’s a good salary in Luxembourg?

Average salary

The average salary is the sum of all salaries divided by the number of workers employed in the country.

The average gross annual salary per full-time equivalent (FTE) in 2022 was EUR 75,919 . This total includes all pay received, including any bonuses, overtime, 13th month salary payment, and end-of-year award.

These figures are by far the highest in the euro zone.

In the 2018–2022 period, the average gross annual salary increased by 3.6% per year on average across the economy as a whole – or an overall increase of 15.4%.

Nevertheless, major disparities exist between the different sectors. By way of example, the financial sector pays three times as much as hospitality.

Minimum wage

Luxembourg has the highest minimum wage in the European Union. Since 1 September 2023, this has been set at EUR 2,570.93 gross per month for an unskilled worker. For skilled individuals, the figure is EUR 3,085.11

It means you cannot be paid less than this salary if you are in full-time employment and working 40 hours a week. What’s more, the figure is indexed on a regular basis in order to take account of inflation.

Will my salary fund my lifestyle?

Pay packages in Luxembourg frequently come with a range of benefits such as company car, lunch vouchers, supplementary health insurance, additional days’ leave – and all of these factors need to be taken into consideration when working out your actual standard of living.

The housing issue

The cost of living is relatively high compared with other European countries, especially when it comes to housing.

According to a study carried out by CBRE last year, the average monthly rent (calculated for all types of rental) is EUR 1,497 plus an additional EUR 193 in charges. It comes as no surprise that rents are highest in the case of houses, at EUR 2,022 monthly before charges.

A cosmopolitan country offering a great lifestyle

Looking beyond this constraint, Luxembourg is a country well worth emigrating to. In particular, it has the best pension system and third best social security system in the world (INSEAD 2020).

As at 1 January 2024, Luxembourg had a population of 672,050. The population is also surprisingly diverse: as many as 47.3% of the people living in the country are not Luxembourg nationals. What’s more, that figure doesn’t include cross-border commuters, which total over 228,400. The melting pot of languages and cultures from these communities enriches life in Luxembourg and gives the country a cosmopolitan atmosphere. Public transport is free, and many families are also attracted by Luxembourg’s education system.

Average salaries by sector

The highest paying sector in Luxembourg is finance and insurance, where the average salary per FTE is EUR 113,0189; this is followed by education, with a figure of EUR 111,362. Professional, scientific and technical activities comes next (EUR 105,145), then public administration (EUR 100,4588).

Criteria affecting salary levels

Qualification levels

The average salary for an employee with a secondary school diploma is more than 30% higher than the salary for a person with no qualifications. If you’re a graduate, you can expect to expect earn 50% more on average than a person with a secondary school diploma. Holders of a master’s degree (or higher) earn 30% more on average than colleagues with a bachelor’s degree.

Experience

Another major factor affecting salary levels is age and, to a lesser extent, length of service with the same employer. As in most countries, a junior worker earns less than an experienced or senior worker. For example, an IT project manager with no experience can expect a gross salary of EUR 55,000–68,000. With eight years of experience under their belt, the salary rises to EUR 95,000–120,000.

A sector in demand

According to the National Employment Agency (Agence pour le développement de l’emploi – ADEM), 24 functions feature on the list of jobs where there is a supply shortage in 2024. The jobs in question mainly fall within the finance, IT, engineering, health and personal care, social work as well as business support service (human resources, accounting, auditing and legal consulting) sectors. Employers looking for qualified staff for the jobs mentioned can benefit from simplified, fast-track procedures for hiring people from third countries.

Salary differences between Luxembourg and its neighbours

France

The average gross annual salary per full-time equivalent (FTE) in France is EUR 41,962, i.e. 55% of the average Luxembourg salary, according to data published by Eurostat.

Belgium

The average gross annual salary per full-time equivalent (FTE) in Belgium is EUR 52,466, i.e. 69.5% of the average Luxembourg salary.

It should also be noted that Belgium is among the countries with the highest personal tax rates in Europe (50%).

Germany

With an annual figure of EUR 46,271, the average gross annual salary in Germany is 61.3% of the average salary in Luxembourg.

Salary indexation: typically Luxembourgish

Salaries in Luxembourg are adjusted automatically.

As soon as cumulative inflation reaches 2.5% in terms of the cost of living index (consumer prices), Statec activates the indexation of salaries and other social benefits.

Your employer is required to increase your salary as a result. This mechanism ensures that salaries are aligned with the way the economy is performing, thereby improving fairness and stability.

Taxes and social security contributions

In Luxembourg, your employer pays you a net salary every month, from which they have already deducted income tax and social security contributions.

The rate of income tax increases depending on your income level. Based on the current progressive scale for income tax, this rate varies from 0 to 42%. No tax is payable on incomes of less than EUR 11,265. The maximum 42% rate applies to annual income bands of EUR 200,005 and above.

Social security contributions paid by the employee – which are used to cover your health insurance as well as your pension – amount to 12.45%.

As well as offering high average salaries compared with other European countries, Luxembourg is characterised by its high quality of life. As a multilingual country that is home to 170 different nationalities, the Grand Duchy welcomes many workers from Europe and the wider world.

Thinking about taking the leap? We’d love to have you!

Your devoted BGL BNP Paribas Team, 15/10/2024

Sources: State-regards09-24, Eurostat, Statistiques.lu, Statec-regards-04-21, Hays, Administration de l’emploi (ADEM)

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