Luxembourg to Hire 1,500 New State Employees Amid Rising Pension Costs

Luxembourg plans to hire 1,500 new civil servants, with half in education, despite concerns over rising costs and calls to trim spending. The government faces pressure to balance public services and fiscal responsibility.

author-image
Mahnoor Jehangir
Updated On
New Update
Luxembourg to Hire 1,500 New State Employees Amid Rising Pension Costs

Luxembourg to Hire 1,500 New State Employees Amid Rising Pension Costs

Minister Serge Wilmes announced that Luxembourg intends to recruit around 1,500 new state employees this year, with half of the positions in the education sector. This hiring spree comes despite concerns from national bodies and the EU about the government's swelling expenditures, with calls for the government to trim its spending and reduce the deficit.

The cost of Luxembourg's civil service has risen by €4.2 billion between 2018 and 2023, and the Ministry of Civil Service's budget will swell to €1 billion this year, with the overwhelming majority covering pension costs. Around 14,000 people will receive a civil service pension this year, up from 12,000 in 2020, and pension expenditures are expected to reach €1.17 billion by 2027.

Why this matters: The rising cost of Luxembourg's civil service and pension obligations highlights the challenges faced by governments in balancing the need for public services with fiscal responsibility. The European Commission's call for an end to energy support subsidies this year underscores the pressure on Luxembourg to rein in spending.

Minister Wilmes presented the 2024 civil service budget, which amounts to roughly €1 billion, a €47 million increase from 2023. The majority of this expense, around €904.3 million, is allocated to the pension fund, an €11 million increase from last year. Over the course of the coming year, the State plans to employ another 1,500 new people, including 750 for education, 90 for the police, 52 for the army, and 570 for the ministries.

The government has been urged to exercise restraint in its long-term expenditure, with the European Commission calling for an end to energy support subsidies this year. As the number of former civil servants receiving pensions continues to grow, the budgetary pressure on Luxembourg's government is likely to intensify in the coming years.

Key Takeaways

  • Luxembourg plans to hire 1,500 new civil servants, half in education.
  • Civil service costs rose by €4.2 billion from 2018-2023, with pensions a major driver.
  • Pension recipients to increase from 12,000 in 2020 to 14,000 in 2027.
  • Government faces pressure to rein in spending amid EU calls to end energy subsidies.
  • Civil service budget to reach €1 billion in 2024, with 75% for pensions.