Country profile - Societal developments (Luxembourg)

For many years, Luxembourg has been characterised by high economic and demographic growth rates.

Over the period 1995-2009, the economy grew strongly, with GDP at constant price increase by 75.6 % for an average of 4 % per year [Notes 1 and 2]. This spectacular growth – compared to EU15 – was the result of an economic model based on attractive fiscal rates and good infrastructures that allowed a smooth transition from an agricultural and heavy industries (steelworks) economy to an economy mainly driven by the tertiary sector. Nowadays, Luxembourg is the richest country in the EU as well as in OECD – when looking at GDP per capita expressed in purchasing power parities. Its gross value added is largely generated in the financial and corporate service sector. The share of total gross value added in this branch has increased from about 39 % in 1995 to 48 % in 2009. While the commercial sector has maintained a constant share at about 20 to 22.5 %, the share of the industry sector has decreased significantly from 15 % in 1995 to slightly less than 8 % in 2009. Other service activities ranged between a share of 15 to 17.5 % and construction kept a constant share in total gross value added at a low level of about 5.5 % to 6 %. The contribution of the agricultural sector is negligible with less than 1 % [Figure 1].

Luxembourg’s economic model attracted numerous investors, which in turn created new high-profile jobs that were, and still are, mostly taken on by foreigners. Some of them are settling in the country and others commute from abroad [Note 3]. As a result, Luxembourg has experienced dramatic demographic changes over the last 20 years.

Since 1990, the resident population has increased by slightly less than 31 %, to reach 502 100 inhabitants end 2009 [Note 4]. This represented an average annual growth rate of 1.4 % over the period. As stressed above, this demographic growth is dominated by immigration. At the end of 2009, about 43 % of the resident population did not have citizenship of Luxembourg. Nationals themselves saw their number stagnating, and without immigrants taking the citizenship of Luxembourg they would even have fallen [Figure 2].

In addition to the population growth, at the end of 2009, 145 250 cross-border commuters from neighbouring regions were working in Luxembourg: just under 50 % of the commuters came from France and the remaining half is almost equally distributed between Belgium and Germany. In total, in 2009, the commuters accounted for 43.5 % of all paid workers in Luxembourg and for about 30 % (i.e. almost a third) of the residential population. Since 1990, cross-border commuters have increased by almost 340 % [Figure 3].

Figure 1 - Sectoral gross value added at current prices: 1995 and 2009

Source: STATEC, Statistical Yearbook, Table E.2304.

Figure 2 - Population growth on 31st December: 1960-2050

Sources: STATEC, Statistical Yearbook, Table B.1100 and projections prepared for the EU Economic Policy Committee's Working Group on Ageing Populations and Sustainability.

Figure 3 - Cross-border commuters growth: annual cumulative averages 1980-2009

Source: STATEC, Indicateurs rapides, Série L.