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Luxembourg performs very well in many measures of well-being, as shown by the fact that it ranks among the top countries in several topics in the Better Life Index.
Money, while it cannot buy happiness, is an important means to achieving higher living standards. In Luxembourg, the average household net-adjusted disposable income is higher than the OECD average of 23 047 USD a year.
In terms of employment, nearly 65% of people aged 15 to 64 in Luxembourg have a paid job, slightly below the OECD employment average of 66%. Some 72% of men are in paid work, compared with 57% of women. People in Luxembourg work 1 601 hours a year, less than the OECD average of 1 776 hours. Close to 3% of employees work very long hours, less than the OECD average of 9%, with 4% of men working very long hours compared with just 1% for women.
Having a good education is an important requisite for finding a job. In Luxembourg, 78% of adults aged 25-64 have earned the equivalent of a high-school degree, slightly more than the OECD average of 74%. This is truer of men than women, as 81% of men have successfully completed high-school compared with 75% of women. In terms of the quality of the education system, the average student scored 482 in reading literacy, maths and science in the OECD’s Programme for International Student Assessment (PISA), lower than the OECD average of 497. On average in Luxembourg, girls outperformed boys by 4 points, less than the average OECD gap of 9 points.
In terms of health, life expectancy at birth in Luxembourg is 81 years, one year higher than the OECD average of 80 years. Life expectancy for women is 84 years, compared with 79 for men. The level of atmospheric PM10 – tiny air pollutant particles small enough to enter and cause damage to the lungs – is 13 micrograms per cubic meter, considerably lower than the OECD average of 21 micrograms per cubic meter. Luxembourg also does well in terms of water quality, as 87% of people say they are satisfied with the quality of their water, compared with an OECD average of 84%.
Concerning the public sphere, there is a strong sense of community and high levels of civic participation in Luxembourg, where 91% of people believe that they know someone they could rely on in time of need, slightly higher than the OECD average of 90%. Voter turnout, a measure of public trust in government and of citizens’ participation in the political process, was 91% during recent elections, much higher than the OECD average of 72%.
In general, people in Luxembourg are more satisfied with their lives than the OECD average, with 83% of people saying they have more positive experiences in an average day (feelings of rest, pride in accomplishment, enjoyment, etc) than negative ones (pain, worry, sadness, boredom, etc). This figure is slightly higher than the OECD average of 80%.
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OECD Economic Outlook 2013: Luxembourg
This chapter on Luxembourg provides major economic trends and prospects for the next two years.Read this chapter
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Luxembourg in Detail
Housing – Luxembourg expand
Living in satisfactory housing conditions is one of the most important aspects of people’s lives. Housing is essential to meet basic needs, such as shelter, but it is not just a question of four walls and a roof. Housing should offer a place to sleep and rest where people feel safe and have privacy and personal space; somewhere they can raise a family. All of these elements help make a house a home. And of course there is the question whether people can afford adequate housing.
Housing costs take up a large share of the household budget and represent the largest single expenditure for many individuals and families, by the time you add up elements such as rent, gas, electricity, water, furniture or repairs. In Luxembourg, households on average spend 23% of their gross adjusteddisposable income on keeping a roof over their heads, above the OECD average of 21%.
In addition to housing costs it is also important to examine living conditions, such as the average number of rooms shared per person and whether households have access to basic facilities. The number of rooms in a dwelling, divided by the number of persons living there, indicates whether residents are living in crowded conditions. Overcrowded housing may have a negative impact on physical and mental health, relations with others and children’s development. In addition, dense living conditions are often a sign of inadequate water and sewage supply. In Luxembourg, the average home contains 1.9 rooms per person, more than the OECD average of 1.6 rooms per person. In terms of basic facilities, 99.9% of people in Luxembourg live in dwellings with private access to an indoor flushing toilet, more than the OECD average of 97.8%.
More ResourcesHow's Life? at a Glance
Income – Luxembourg expand
While money may not buy happiness, it is an important means to achieving higher living standards and thus greater well-being. Higher economic wealth may also improve access to quality education, healthcare and housing.
Household net-adjusted disposable income is the amount of money that a household earns each year after tax. It represents the money available to a household for spending on goods or services. In Luxembourg, the average household net-adjusted disposable income is much higher than the OECD average of 23 047 USD.
Household financial wealth is the total value of a household’s financial worth. In Luxembourg, the average household net financial wealth is estimated at 66 917 USD, much higher than the OECD average of 40 516USD. While the ideal measure of household wealth should include real assets (e.g. land and dwellings), such information is currently available for only a small number of OECD countries.
Better Policies for Better Lives
Maintaining low income inequality
Luxembourg performs well in fighting income disparities. While several OECD countries have seen a substantial increase in income inequality since at least the mid-1980s, Luxembourg faced only a modest rise, while maintaining social cohesion in a strong growth environment. Although poverty rates have increased in Luxembourg, the change has been small and income inequality remains in the lower half of OECD countries.
Several factors are likely to have contributed to this outcome. Wage growth has been similar at all earnings levels. Also, social benefits are generous, although they should be better targeted to benefit both growth and equity.
Despite rapid overall employment growth, the rise in the overall unemployment rate points to structural problems in the labour markets. Wage indexation has notably been associated with a rise in wage costs in Luxembourg over the past decade and a reduction in the demand for labour. Therefore, the OECD recommends ending the current system of automatic legislated wage indexation to allow for the required adjustment in relative wages across firms and industries.
More ResourcesHow's Life? at a Glance
Jobs – Luxembourg expand
Having a job brings many important benefits, including: providing a source of income, improving social inclusion, fulfilling one’s own aspirations, building self-esteem and developing skills and competencies. In Luxembourg, close to 65% of the working-age population aged 15 to 64 has a paid job. This figure is close to the OECD employment average of 66%. Employment rates are generally higher for individuals with a higher level of education; in Luxembourg, an estimated 83% of individuals with at least a tertiary education have a paid job, compared with an estimated 43% for those without an upper secondary education. This 40 percentage point difference is slightly larger than the OECD average difference of 37 percentage points and suggests the job market in Luxembourg is relatively restrictive.
Women are still less likely than men to participate in the labour market. In Luxembourg, 57% of women have jobs. This is close to the OECD average of 60% but less than the 72% employment rate of men in Luxembourg. This 15 percentage point gender difference is slightly larger than the 12 percentage point OECD average gap.
Young people aged 15-24 in Luxembourg face an unemployment rate of 16.8% compared with the OECD average of 16.2%.
Unemployed persons are defined as those who are not currently working but are willing to do so and actively searching for work. Long-term unemployment can have a large negative effect on feelings of well-being and self-worth and result in a loss of skills, further reducing employability. In Luxembourg, the percentage of the labour force that has been unemployed for a year or longer is currently at 1.4%, lower than the OECD average of 3.1%. There is little difference on average between men and women in the OECD area when it comes to long-term unemployment. In Luxembourg, the long-term unemployment rate for men is slightly lower than for women, with respectively 1.3% and 1.6%.
The wages and other monetary benefits that come with employment are an important aspect of job quality. In Luxembourg, people earn 52 847 US dollars per year on average, much more than the OECD average of 34 466 USD.
Another essential factor of employment quality is job security. Employees working on temporary contracts are more vulnerable than workers with an open-ended contract. In Luxembourg, around 5% of total employees have a contract of 6 months or less, lower than the average of 10% for 30 OECD countries. This figure suggests Luxembourg has been successful in stabilising working contracts and encouraging open-ended contracts.
More ResourcesWell‑being in the workplace: Measuring job quality
Community – Luxembourg expand
Humans are social creatures. The frequency of our contact with others and the quality of our personal relationships are thus crucial determinants of our well-being. Helping others can also make you happier. In Luxembourg, 44% of people reported having helped a stranger in the last month, less than the OECD average of 48%.
A strong social network, or community, can provide emotional support during both good and bad times as well as provide access to jobs, services and other material opportunities. In Luxembourg, 91% of people believe that they know someone they could rely on in a time of need, close to the OECD average of 90%. There is little difference between men and women, as 90% of men believe they have this kind of social support, compared with 91% of women. There is however a relationship between the availability of social support on the one hand, and people’s education level, on the other. In Luxembourg, 87% of people who have completed primary education report having someone to count on for help in times of need, compared to 92% for people who attained tertiary education.
A weak social network can result in limited economic opportunities, a lack of contact with others, and eventually, feelings of isolation. Socially isolated individuals face difficulties integrating into society as a contributing member and fulfilling personal aspirations.
More ResourcesHow's Life? at a Glance OECD Insights: Human Capital
Education – Luxembourg expand
A well-educated and well-trained population is essential for a country’s social and economic well-being. Education plays a key role in providing individuals with the knowledge, skills and competences needed to participate effectively in society and in the economy. Most concretely, having a good education greatly improves the likelihood of finding a job and earning enough money. Across OECD countries, 83% of people with university-level degrees have a job, compared with just below 56% for those with only a secondary school diploma. Lifetime earnings also increase with each level of education.
Following a decline in manual labour over previous decades, employers now favour a more educated labour force. High-school graduation rates therefore provide a good indication of whether a country is preparing its students to meet the minimum requirements of the job market. In Luxembourg, 78% of adults aged 25-64 have earned the equivalent of a high-school degree, higher than the OECD average of 74%. This is truer of men than women, as 81% of men have successfully completed high-school compared with 75% of women. This 6 percentage point difference is higher than the OECD average of 2 percentage points and suggests women’s participation in secondary education could be strengthened. Among younger people – a better indicator of Luxembourg’s future – 84% of 25-34 year-olds have earned the equivalent of a high-school degree, also higher than the OECD average of 82%.
People in Luxembourg can expect to go through 14.9 years of education between the ages of 5 and 39, less than the OECD average of 16.5 years and one of the lowest in the OECD.
But graduation rates, while important, speak little to the quality of education received. The OECD’s Programme for International Student Assessment (PISA) reviews the extent to which students have acquired some of the knowledge and skills that are essential for full participation in modern societies. In 2009, PISA focused on examining students’ reading ability, skills in maths and level in sciences, as research shows that these skills are more reliable predictors of economic and social well-being than the number of years spent in school.
The average student in Luxembourg scored 482 in reading literacy, maths and sciences, lower than the OECD average of 497. On average, girls outperformed boys by 4 points, less than the average OECD gap of 9 points.
The best-performing school systems manage to provide high-quality education to all students. In Luxembourg, the average difference in results, between the 20% with the highest socio-economic background and the 20% with the lowest socio-economic background is 125 points, much higher than the OECD average of 99 points and one of the largest gaps amongst OECD countries. This suggests the school system in Luxembourg tends to provide higher quality education for the better off.
More ResourcesHow's Life? at a Glance
Environment – Luxembourg expand
The quality of our local living environment has a direct impact on our health. Having access to green spaces for example, is essential for quality of life. An unspoiled environment is a source of satisfaction, improves mental well-being, allows people to recover from the stress of everyday life and to perform physical activity. In Luxembourg, 6% of people feel they lack access to green spaces or recreational areas, half the 12 % average of OECD European countries.
Outdoor air pollution is one important environmental issue that directly affects the quality of peoples’ lives. Despite national and international interventions and decreases in major pollutant emissions, the health impacts of urban air pollution continue to worsen, with air pollution set to become the top environmental cause of premature mortality globally by 2050. Air pollution in urban centres, often caused by transport and the use of small-scale burning of wood or coal, is linked to a range of health problems, from minor eye irritation to upper respiratory symptoms in the short-term and chronic respiratory diseases such as asthma, cardiovascular diseases and lung cancer in the long-term. Children and the elderly may be particularly vulnerable.
PM10 – tiny particulate matter small enough to be inhaled into the deepest part of the lung – is monitored in OECD countries because it can harm human health and reduce life expectancy. In Luxembourg, PM10 levels are 12.7 micrograms per cubic meter, much lower than the OECD average of 20.9 micrograms per cubic meter and the annual guideline limit of 20 micrograms per cubic meter set by the World Health Organization. In larger cities, such as Luxembourg City and Esch-Alzette, the annual PM10 averages in have dropped from 30 micrograms per cubic meter in the 1990s to 25 micrograms per cubic meter in recent years.
Access to clean water is fundamental to human well-being. Despite significant progress in OECD countries in reducing water pollution, improvements in freshwater quality are not always easy to discern. In Luxembourg, 87% of people say they are satisfied with water quality. This figure is slightly higher than the OECD average of 84% and suggests Luxembourg has been successful in providing good quality water to its inhabitants.
More ResourcesHow's Life? at a Glance OECD Environmental Outlook to 2030
Governance – Luxembourg expand
A cohesive society is one where citizens have a high degree of confidence in their governmental institutions and public administration. In Luxembourg 73% of people say they trust their political institutions, more than the OECD average of 56% and one of the highest rates in the OECD area. High voter turnout is another measure of public trust in government and of citizens’ participation in the political process. In the most recent elections for which data is available, voter turnout in Luxembourg was 91% of those registered. This figure is one of the highest in the OECD, where average turnout is 72%.
Ensuring that government decision making is not compromised by conflicts of interest is key to maintaining trust in government. Transparency is therefore essential to hold government to account and to maintain confidence in public institutions.
Freedom of information laws (FOI) – also referred to as access to information laws – are one of these fundamental pillars of open government. Freedom of information laws (FOI) allow the possibility for individuals to access undisclosed information. For such policies to be successful, the public should have a clear understanding of their rights under the law, should be able to file requests with ease and should be protected against any possible retaliation. Luxembourg is currently drafting a law on access to information.
More ResourcesHow's Life? at a Glance
Health – Luxembourg expand
Most OECD countries have enjoyed large gains in life expectancy over the past decades, thanks to improvements in living conditions, public health interventions and progress in medical care. Since 1960, life expectancy at birth in Luxembourg increased by more than 11 years. Life expectancy at birth in Luxembourg now stands at 81 years, one year above the OECD average of 80 years. Life expectancy for women is 84 years, compared with 79 years for men, a slightly smaller difference than the OECD average gender gap of six years with a life expectancy of 83 years for women and 77 for men.
Higher life expectancy is generally associated with higher healthcare spending per person, although many other factors have an impact on life expectancy (such as living standards, lifestyles, education and environmental factors). Total health spending accounts for 7.9% of GDP in Luxembourg, less than the OECD average of 9.5%. However, Luxembourg ranks well above the OECD average in terms of total health spending per person, at 4786 USD in 2010, compared with an OECD average of 3268 USD. Between 2000 and 2009, total health spending in Luxembourgincreased in real terms by 3.4% per year on average, a slower growth rate than the OECD average of 4.7%.
Throughout the OECD, tobacco consumption and excessive weight gain remain two important risk factors for many chronic diseases. The proportion of daily smokers among adults has shown a marked decline over the past twenty-five years in most OECD countries. Smoking rates among adults in Luxembourg stand at 18.0%, lower than the OECD average of 21.1%. In many OECD countries, large proportions of the population are overweight or obese. In Luxembourg, the obesity rate among adults has increased from 15% in 1997 to 22.5%, higher than the OECD average of 17.8%. Obesity’s growing prevalence foreshadows increases in the occurrence of health problems (such as diabetes, cardiovascular diseases and asthma), and higher health care costs in the future.
When asked, “How is your health in general?” 72% of people in Luxembourg reported to be in good health, higher than the OECD average of 69%. Despite the subjective nature of this question, answers have been found to be a good predictor of people’s future health care use. Gender, age and social status may affect answers to this question. On average in OECD countries, men are more likely to report good health than women, with an average of 71% for men and 66% for women. In Luxembourg, the average is of 75% for men and 70% for women. Not surprisingly, older people report poorer health, as do those who are unemployed, or who have less education or income. About 83% of the top 20% of the adult population in Luxembourg rate their health as ‘good’ or ‘very good’, compared to about 63% for the bottom 20%.
More ResourcesHow's Life? at a Glance
Life Satisfaction – Luxembourg expand
Happiness or subjective well-being can be measured in terms of life satisfaction, the presence of positive experiences and feelings, and the absence of negative experiences and feelings. Such measures, while subjective, are a useful complement to objective data to compare the quality of life across countries.
Life satisfaction measures how people evaluate their life as a whole rather than their current feelings. It captures a reflective assessment of which life circumstances and conditions are important for subjective well-being. When asked to rate their general satisfaction with life on a scale from 0 to 10, people in Luxembourg gave it a 7.0 grade, higher than the OECD average of 6.6.
There is little difference in life satisfaction levels between men and women across OECD countries. This is true in Luxembourg, where both men and women gave their life a 7.0 grade. Education levels do, however, strongly influence subjective well-being. Whereas people who have only completed primary education In Luxembourg have a life satisfaction level of 6.4, this score reaches 7.7 for people with tertiary education.
Happiness, or subjective well-being, is also measured by the presence of positive experiences and feelings, and/or the absence of negative experiences and feelings. In Luxembourg 83% of people reported having more positive experiences in an average day (feelings of rest, pride in accomplishment, enjoyment, etc) than negative ones (pain, worry, sadness, boredom, etc). This figure is higher than the OECD average of 80%.
More ResourcesHow's Life? at a Glance
Safety – Luxembourg expand
Personal security is a core element for the well-being of individuals, and largely reflects the risks of people being physically assaulted or falling victim to other types of crime. Across the OECD, assault rates have generally declined in the past five years. In Luxembourg, almost 4.3% of people reported falling victim to assault over the previous 12 months, slightly more than the OECD average of 4.0%. There is little difference between men and women in assault rates, at respectively 4.7% and 3.9%.
The homicide rate (the number of murders per 100,000 inhabitants) is a more reliable measure of a country’s safety level because, unlike other crimes, murders are usually always reported to the police. According to the latest OECD data, Luxembourg’s homicide rate is 2.5, higher than the OECD average of 2.2. In Luxembourg, there is a difference of 2 percentage points between the homicide rate of men and women, at respectively 3.4 and 1.4.
Fear of crime is another important indicator as it can constrain behaviour, restrict freedom and threaten the foundation of communities. Despite a general reduction in assault rates in the past five years, in many OECD countries feelings of security have declined. In Luxembourg, 52% of people feel safe walking alone at night, lower than the OECD average of 67%. While men are at a greater risk of being victims of assaults and violent crimes, women report lower feelings of security than men. This has been explained by a greater fear of sexual attacks, the feeling they must also protect their children and their concern that they may be seen as partially responsible.
More ResourcesHow's Life? at a Glance
Work-Life Balance – Luxembourg expand
Finding a suitable balance between work and life is a challenge for all workers, especially working parents. Some couples would like to have (more) children, but do not see how they could afford to stop working. Other parents are happy with the number of children in their family, but would like to work more. This is a challenge to governments because if parents cannot achieve their desired work/life balance, not only is their welfare lowered but so is development in the country.
An important aspect of work-life balance is the amount of time a person spends at work. Evidence suggests that long work hours may impair personal health, jeopardize safety and increase stress. People in Luxembourg work 1 601 hours a year, less than the OECD average of 1 776 hours. The share of employees working more than 50 hours per week is not very large across OECD countries. In Luxembourg, some 3% of employees work very long hours, less than the OECD average of 9%. Overall, men spend more hours in paid work: in Luxembourg 4% of men work very long hours, compared with 1% for women.