Luxembourg’s Hidden Paradox: Europe’s Wealthiest Country with Some of Its Poorest Workers

Luxembourg often shines on global rankings — the richest country in the world, the highest minimum wage in the European Union, and a financial hub at the heart of Europe. Yet behind these impressive numbers lies a surprising reality: many of the country’s workers are struggling to make ends meet.

Despite its reputation as a land of opportunity, Luxembourg’s poverty rate reached 18% in 2021, one of the highest in the EU, according to data from the French statistics institute Drees. The findings reveal a growing contradiction — a nation of prosperity where even full-time workers can fall below the poverty line.

The Luxembourg Paradox
Luxembourg’s poverty threshold — defined as 60% of the national median income — stood at €1,502 per month per adult in 2021, while the country’s median income was €2,503. That means anyone earning below that threshold is considered at risk of poverty, despite working in one of Europe’s best-paying economies.

Worse, the country also ranks near the top of the EU for working poverty: 13% of employed residents aged 25–64 live below the poverty line, just behind Romania.

High Wages, Higher Costs
So, how can a country with such high wages have so many struggling households? The answer lies in Luxembourg’s skyrocketing cost of living, especially housing.

“The country has a standard of living that becomes unaffordable for those who earn the minimum wage,” explains Sérgio Ferreira, Political Director of ASTI (Association de Soutien aux Travailleurs Immigrés). “Housing expenses alone eat up a huge portion of people’s salaries.”

Luxembourg City consistently ranks among the most expensive places to live in Europe, with rental prices far above those of neighboring countries.

Too Many Earning the Minimum
Another key factor is the large share of low-income workers. Around 16% of Luxembourg’s workforce earns the minimum wage — well above the EU average of 11%.
Ferreira notes that sectors like construction, commerce, and hospitality account for about half of all minimum-wage jobs, and the vast majority of these workers are immigrants. “In construction, 90% of workers are foreign nationals, and in retail, 80%,” he adds.

Social Support Gaps
Luxembourg is known for its strong welfare system, but even there, challenges persist. Ferreira points out that family benefits were frozen between 2006 and 2022, leaving many families exposed to rising inflation without any increase in aid.

Worse, many people who qualify for support don’t apply. Studies show that up to 80% of eligible families never request rental or living-cost allowances, often because the process is complex or poorly understood.

Still, without government assistance, the picture would be far bleaker. “Without social support, the poverty rate in Luxembourg would jump from 18% to around 40%,” Ferreira notes.

Who Is Most Affected?
Among those hardest hit are single-parent families — where the poverty rate reaches 44% — and young adults facing job insecurity and unaffordable housing. Despite generous child benefits and parental leave policies, the tax burden for divorced residents and the high cost of childcare continue to strain family finances.

The Myth of the “El Dorado”
For decades, Luxembourg has been viewed as a promised land for foreign workers, especially from neighboring countries like Portugal and France. But that dream is fading fast.

“The El Dorado of Luxembourg doesn’t exist — and never really did,” says Ferreira. “Immigrants often arrive with high hopes, only to face the reality of low-wage jobs, high rent, and limited access to support.”

Luxembourg remains a country of opportunity — but increasingly only for those who can afford it. As the gap between wages and living costs widens, the Grand Duchy’s challenge will be to ensure that its prosperity is shared by all who help build it.
Read More : Luxembourg. How does the highest-paid country have the poorest workers in the EU? | Contact

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