Article 1: Be Paid What You’re Worth
Are You Where You Want to Be?
Whilst the last few years has called for us to adapt more than ever, some changes such as work from home policies, flexible hours and small pay rises (usually behind inflation) have been embraced: but is this really enough?
Here we present articles in a series all about “Why You Should Move to Luxembourg”. We compare Luxembourg to several financial centres & EU locations, presenting new data & findings that will likely surprise you. Whether you’re reading this because you’re considering a relocation, or you’re intrigued about new insights on Luxembourg, these articles are not to be missed.
Summary: Article 1 – “Be Paid What You’re Worth”
Skip around the sub-headings below to find what most interests you.
- Luxembourg: The Richest Country in the World (GDP/capita – 6th by GNI)
- Luxembourg workers are the 2nd Highest Earners in the EU
- Luxembourg Workers Earn €29k Above the EU Average
- Luxembourg Has the Highest Minimum Wage Globally
- Luxembourg: Highest State Pension Globally?
- Luxembourg has the Smallest Gender Pay Gap (GPG) in the World
1. Luxembourg: the Richest Country in the World
Since Luxembourg is a small country with a population of about 640,000; it may surprise you but based on GDP per capita last year, Forbes reported Luxembourg to be the richest country in the world on the 7th August [1a]. Luxembourg GDP per capita stands at $141k, followed by Singapore at $132k GDP per capita, Ireland – $125k, Qatar – $113k, Switzerland at 5th place with $85k GSP per capita, UAE & Norway at $78k, USA with $76k.
However, as many may know, GDP per capita is a somewhat flawed measure as Luxembourg’s tax haven status means a lot of this wealth flows through the country rather than sticking around. A less skewed value to consider would be Gross National Income (GNI), where Luxembourg ranks from 4th (2020) to 6th wealthiest (2021) country globally [1b, 1c]. Bermuda, Lichenstein, Switzerland, Norway and Isle of Man usually rank higher. We’ll take a closer look at cost of living in our next article; for now, let’s focus on pay.
2. Luxembourg workers are the 2nd Highest Earners in the EU
Luxembourg Rises Wages with Inflation
Inflation is such a huge topic at the moment because right now inflation of the Euro is the highest since its creation in 1999 . And in Luxembourg, it’s even more of a debate right now because yesterday our ministers met to discuss the possibility of delaying July’s indexation for a second time . For those unsure about the implications of inflation, briefly; inflation is year-on-year; meaning, a Central Bank target inflation of 2% is compounded to 8% over 4 years, 20% across a decade, based on simple math. The eurozone however hit above 4 year inflation at 8.6%, on top of last year’s inflation, in just a few months of this fiscal year .
For countries like the UK, Germany, France or the Netherlands – where wage indexation doesn’t occur automatically, the impact is that a €100k job in 2011 is now worth approximately 14-23% less in gross salary (depending on which indicator you use CPI, CPE etc. and yearly fluctuations in inflation) .
Amazingly, Luxembourg is one of only 3 countries (that include Greece and Belgium), where indexation of employee wages is mandatory. This means that when inflation rises, employees get an equivalent pay rise as soon as possible, usually within a couple of weeks. Granted, the latest indexation is postponed, but will come, sooner to Luxembourg than other countries . Plus, the Luxembourg government has introduced other measures, including tax credit to ease financial pressure for workers .
Of note, companies based in Belgium have been battling government to revert to non-wage indexation heavily, especially this year. There is a chance that Luxembourg may become one of only two countries with obligatory wage indexation in the coming years, if high inflation persists .
3. Luxembourg Workers Earn €29k Above the EU Average
(in 2021, non-Lux workers earned €7.3k less than they did in 2000)
As highlighted above, high inflation is serious cause for concern. For various reasons, companies and employers are slow to update salaries in line with inflation. That delay in salary rise could be harmful to the common workforce, as theoretically, the wealth of a working population would decrease steadily over time. This is exactly what we’re seeing across the globe; except in Luxembourg.
We found that across the EU, the average yearly wages per adult has decreased by about €7,280 in 2021 when compared to 2000, if inflation is taken into account. But annual company & government pay reports rarely report pay adjusted to inflation. The result is that to the average person, the reports demonstrate that the general working population earns more over the years, but in fact it appears they’re earning less in terms of buying power.
Looking at the Eurostat 2000 report on average hourly earnings across the EU member states  and using the “inflation calculator” noted in , we “assessed” – albeit an amateur “assessment” – the impact of inflation on real wages across the EU from 2000 to 2021. The Eurostat EU average earnings per hour in 2000 was €22.70  but it is worth €32.60 in 2021, according to the inflation calculator we used . Inflation calculator link: https://www.in2013dollars.com/europe/inflation/2001?endYear=2021&amount=1
So, did the average hourly wage across the EU meet the expected target of €32.6 in 2021 you may ask? No. According to Eurostat, the average hourly wage was €29.10 . Therefore, EU employees not in Luxembourg, Belgium or Greece earned an average €3.50 less per hour in 2021 than in 2000. Not a lot you might think; but it amounts to €7,280 reduction in EU average gross yearly earnings in 2021 compared to 2000 (€3.5 x 40hours x 52 weeks).
Luxembourgers Earned More.
Over the same period of time the average pay for adults in Luxembourg in 2021 were considerably higher than in 2000, with inflation taken into account. In 2000 the average Luxembourg wage was €24.23 , with inflation adjusted that was worth €34.79 in 2021 . Amazingly, in 2021 the average wage in Luxembourg was €43.0 : a whole €8.21 per hour more (inflation adjusted) than in 2000.
Furthermore in 2021 those working in Luxembourg were earning €13.90 more per hour than the EU average (€43.0 minus €29.1). This results in gross earnings for Luxembourg workers of €28,912 above the EU average, annually.
In the UK, the average gross hourly wage across in 2021 was £13.57 (approximately €16.10) for all employees (part-time, full time etc.) according to the government report  and approximately equivalent to €19.34 (the higher rate of £652 weekly earnings for full-time employees divided by a 40 hour work week). 
The USA national average wage was $32.27 in July 2022, which is approximately €32.41 (unfortunately for the value of the euro down against the USD now) . But don’t let this fool you; see the wage adjusted for purchasing power below.
4. Luxembourg Has the Highest Minimum Wage Globally
According to the WSI minimum Wage database 2021 report, which adjusted minimum wages to purchasing power, Luxembourg has the highest minimum hourly wages in the world. The report showed that Luxembourg’s minimum wage was 10:50 was €10.50 /hour adjusted to purchasing power parities (PPP) in 2021 .
A further report from Eurostat supported this; it found that Luxembourg had the highest gross minimum wage across the EU, at €2,313 per month (€27,750) in 2021 . According to the same report, national minimum wages, when expressed in purchasing power standard (PPS), ranged from 604 PPS per month in Bulgaria to 1 707 PPS in Luxembourg . Therefore in 2021 Luxembourg’s minimum wage was almost three times higher than the lowest (in Bulgaria).
Interestingly, if the USA were part of the EU, Eurostat would have grouped it with lower-earning EU countries, where the PPS ranged from 604 in Bulgaria to PPS 949 in Romania . As of January this year, 21 out of 27 EU Member states had minimum wages; Denmark, Italy, Cyprus, Austria, Finland and Sweden are the exceptions.
5. Luxembourg: Highest State Pension Globally?
The Question Of Pensions
Luxembourg’s state pension is likely to be the highest in the world. The full Luxembourg state pension is €3-4k per month, or 90% of your average (net) salary across your working life . In Luxembourg, national healthcare and pensions are a legal obligation; the employee pays a proportion of their salary into healthcare & pension (8%), but the employer & government both top this up, usually to match the 8% deducted from employee wages. Pensions here are also indexed, rising with inflation .
By comparison a full UK state pension is the equivalent of a paltry €877 per month (or just £185 per week), according to the Government website . Employer and state contribute typically 3-4% together. Even the Luxembourg partial state pension, applied to those not making social contributions for 40 years or more, is likely to still be higher than the full UK pension, since the partial Lux pension lies between €746.90 and €1,244.59 per month (a figure likely to have risen since source article publication) . The full US state pension is typically about $1-1.2k per month, with large benefits reserved only for ex-military & ex-police workers .
So, as we know Luxembourg workers earn high salaries, coupled with pension payback of 90% their average (net) wage, Luxembourg pensioners get a good deal . Italy’s state pension pays 91% average net salary earnings , but the average net wage in Italy is much less than in Luxembourg (in fact, it’s about the same as Luxembourg’s minimum wage). So if we make a direct comparison and assume you earn less in Italy than Luxembourg, the pension you receive in Italy is likely to be lower, even after adjusting for purchasing power. Oddly, Luxembourg has been overlooked in other global pension reports .
Pensions are Easily Transferred
If you live & work in Luxembourg, you can quite easily move your total pension amount from any country (or combination of countries) in the world to Luxembourg via the government’s own system. They do most of the work for you; visit or email the Caisse Nationale d’Assurance Pension (CNAP) to ask for more information about this free service  and consider the article by the local paper Luxembourg Times .
Pension estimation calculator and more information: 
6. Luxembourg has the Smallest Gender Pay Gap (GPG) in the World
Luxembourg has the smallest gender pay gap in the EU and very likely, the world, with just 0.7% pay difference between males and females. By comparison, the EU average is 13.0%, about the same as the UK pay gap at 8-14% . Employees in other high earning countries suffer more severe wage discriminations between the sexes; Belgium has a GPG of 5.3%, Sweden 11.2%, Denmark 13.9%, Netherlands 14.2%, France 15.8%, Germany 18.3% and Austria 18.9% .
Pay in Finance
Like the USA, if you’re a female/non-cis-male CFO in the UK, you can expect to receive 30% less than your male colleagues (Spendesk CFO salary Benchmark report 2022). There’s also marked differences in gender pay reported by the US Investment Association . On a side note, contrary to the CFO report findings above, in the Hays Salary guide 2021 UK and Luxembourg reports, we found salaries to be comparable in the finance sector between Luxembourg & the UK finance sectors .
Several other reports confirm a 30% pay discrimination in UK finance at the top level positions. According to a report that analysed over 10,400 finance companies in the UK (about 450 were financial service providers), the average gender pay gap in the UK finance sector is almost 30% (the UK national average is 14%). The average UK bonus gap is nearly 60% (three times the national average), the highest extremes of which were seen at investment banks. The bonus gaps in the UK range from 47% to 65% between males and females across the finance sector & across seniorities. Asset managers and investment banks in the UK have the lowest number of women in high paying jobs compared to other financial companies .
In a comparison of Pay in finance between Luxembourg & the UK (Hays Salary guide Luxembourg 2021 and Hays Salary Guide UK 2021), we could see that professionals in the finance sector earn largely the same salaries across the board, with London professionals earning the most (but cost of living in London is higher than in Luxembourg) . More about this in our next article.
PS: Other references not mentioned but further support the UK financial sector pay gap;
1 https://gender-pay-gap.service.gov.uk/viewing/search-results?t=1&search=&orderBy=relevance and 2 https://www.consultancy.uk/news/20420/financial-services-has-worst-gender-pay-gap-of-any-uk-industry
[1a] Forbes, The Richest Countries In The World: Tiny Luxembourg At The Top, 7th August 2022: https://www.forbes.com/sites/ceciliarodriguez/2022/08/07/the-richest-countries-in-the-world-tiny-luxembourg-at-the-top/
[1b] List of Countries by GNI per Capita (Wikipedia) https://en.wikipedia.org/wiki/List_of_countries_by_GNI_(nominal)_per_capita
[1c] GNI per capita, Atlas Methods (access 29th August 2022) https://data.worldbank.org/indicator/ny.gnp.pcap.cd?most_recent_value_desc=true&year_high_desc=true
 New York Times article “Eurozone inflation hits its highest level since the creation of the euro in 1999” https://www.nytimes.com/2022/05/31/business/eurozone-inflation.html
 Paperjam Luxembourg article “First Discussions Around Delayed Indexation” (French) https://paperjam.lu/article/index-grand-ecart-a-veille-ren?utm_medium=email&utm_campaign=morning-2508&utm_content=morning-2508+CID_dd7eb8ca802f3f253f228779a93af24b&utm_source=Newsletter&utm_term=LIRE
 Inflation Calculator https://www.in2013dollars.com/europe/inflation/2001?endYear=2021&amount=1
 Blog Elvinger Hoss Luxembourg; indexation delayed until April 2023 https://www.elvingerhoss.lu/publications/next-wage-indexation-postponed-1-april-2023
 Indexation tax breaks etc. https://wageindicator.org/labour-laws/collective-bargaining/2022/luxembourg-wage-indexation-postponed-june-30-2022 https://today.rtl.lu/news/luxembourg/a/1935615.html
 Belgium & Inflation https://www.politico.eu/article/belgium-wrestles-wage-bomb-rising-inflation/
 Eurostat News Release March 2003: Hourly Wages across the EU https://ec.europa.eu/eurostat/documents/2995521/5104358/3-03032003-AP-EN.PDF/a80f451f-6416-4f7f-9c62-333f6e324bed
 inflation calculator https://www.in2013dollars.com/europe/inflation/2000?endYear=2021&amount=22.70
 Eurostat hourly labour costs March 2022 (Access last 25 August 2022) https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Hourly_labour_costs#Hourly_labour_costs_ranged_between_.E2.82.AC7.0_and_.E2.82.AC46.9_in_2021
 UK Government statistics on hourly pay & ehtnicity (Published 27th July 2022) https://www.ethnicity-facts-figures.service.gov.uk/work-pay-and-benefits/pay-and-income/average-hourly-pay/latest
 Office for national Statistics UK; employee earnings 2021 https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2021
 Indeed Average Hourly Wage in the US (29th Janaury 2021) https://www.indeed.com/career-advice/pay-salary/average-hourly-wage-in-us US Bureau of Labour Statistics, Economics News Release (accessed 25th August 2022) https://www.bls.gov/news.release/empsit.t19.htm
 WSI Minimum Wage Database, January 2021 https://www.boeckler.de/pdf/ta_mwdb_2021.pdf
 Eurostat; First 2022 data on minimum wages in the EU January 28th 2022 https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20220128-2
 Expatica, Pensions, Luxembourg – July 27th 2022 update https://www.expatica.com/lu/finance/retirement/pensions-in-luxembourg-103755/
 Luxembourg Times “Pensions in Luxembourg”, March 31st 2022 https://www.luxtimes.lu/en/money-and-work/pensions-in-luxembourg-602d72fade135b9236c27c42
 UK Government website; “The New State Pension”, accessed August 25th 2022 https://www.gov.uk/new-state-pension/what-youll-get
 Forum Daily on US State Pension, July 27th 2021 (accessed August 25th 2022) https://www.forumdaily.com/en/kak-rabotaet-pensionnaya-sistema-v-ssha/
 “Comparisons of Pensions across the EU by country”, November 2nd 2020 https://www.intotheminds.com/blog/en/comparison-pensions-european-union/
 The Visual Capitalist “Ranked: The best and worst pensions by country”, August 1st 2020 https://www.visualcapitalist.com/ranked-countries-pension-plans/
 National Pension Insurance Fund Luxembourg, info page; https://guichet.public.lu/en/organismes/organismes_entreprises/caisse-nationale-assurance-pension.html