Luxembourg faces a shortage of skilled workers in critical sectors despite rising unemployment and challenges in attracting international talent due to language barriers and high living costs.
Luxembourg, a tiny European nation known for its robust financial sector and diverse economy, is grappling with a significant shortage of suitable candidates across 24 specific job segments, ranging from banking and auditing to engineering and education. The national job agency, Adem, has identified these shortages despite an increasing unemployment rate, presenting challenges for employers seeking to fill critical positions in key sectors of the economy.
According to Adem’s report, these job profiles have been designated on the official shortage list, allowing companies to expedite the hiring process for non-EU nationals in an effort to address the pressing need for skilled workers. The shortage of qualified candidates in vital sectors poses a threat to Luxembourg’s economic competitiveness and growth potential.
In 2023, sought-after job titles and roles included credit and risk analysts, front office workers, and customer management staff in banking, as well as roofers, engineers, care workers, nurses, psychologists, educators, auditors, and accountants, among others. Adem classified a job profile as in high demand if, on average, seven vacancies were registered with the agency monthly over one year, and if fewer than between 10% and 25% of job offers remained unfilled.
Despite efforts to address the shortage, challenges persist, particularly in the IT sector. Adem reported that IT workers were in high demand last year; however, international IT workers expressed feeling excluded from the job market due to a lack of proficiency in French, highlighting language barriers as a significant obstacle to employment opportunities in Luxembourg.
Luxembourg’s struggle to attract highly skilled staff is not a new phenomenon and is attributed in part to the country’s high cost of living, particularly its expensive housing. Adem’s findings on job shortages contrast with the rising trend of unemployment in the country, with the unemployment rate reaching 5.6% in February. However, there are fewer job seekers compared to January, indicating a complex labor market dynamic.
The slowdown in Luxembourg’s labour market growth in 2023 is notable, with the economy experiencing a rare recession, particularly impacting the construction sector, according to the national statistics office. Despite an overall increase in employment of 2.2% last year, down from 3.4% growth in 2022, the construction sector saw a decline of 0.9% in jobs between 2022 and 2023, following a 2.7% growth from 2021 to 2022.
The challenges in Luxembourg’s labour market underscore the need for comprehensive strategies to address skills shortages, improve labor market participation, and enhance the country’s attractiveness for both domestic and international workers. Efforts to streamline immigration policies, invest in education and training programs, and address housing affordability could contribute to alleviating the pressure on key sectors and fostering sustainable economic growth in Luxembourg.
