The Left in Europe - Rosa-Luxemburg-Stiftung

The Left in Luxembourg
Sascha Wagener
The country’s economic and social situation
Luxemburg
If in the past Luxembourg’s economy depended on the steel industry, today
it depends on globalization and banking. To these vagaries of history Luxembourg
owes not only its tremendous prosperity, but also its comparatively
strong working-class movement and multicultural population. Of
Luxembourg’s 483,800 inhabitants those gainfully employed number
361,089, of whom 150,909 live across the border and drive in to work
every day. A large proportion of those who live in Luxembourg are foreigners.
Apart from the 63.1% native Luxembourgers, 13.3% have Portuguese,
4.5% French, 4.3% Italian and 2.3% German passports.
For a long time those who lived between the Moselle and the Ardennes
eked out a meagre existence from agriculture. It was not until the discovery
of large reserves of iron ore in the second half of the 19th century that
things began to change. The steel industry became the most important
branch of Luxembourg’s economy, employing up to thirty thousand people
in the 1960s and 1970s. Even today the world’s largest steel corporation
Arcelor-Mittal is based in Luxembourg. When the mining and processing of
iron ore became unproductive, Luxembourg’s government adapted the
country’s economy to fill a niche in the international finance system. The
European Union granted the country important economic and political
functions. Luxembourg became a tax haven, luring foreign capital into the
country with low minimum reserves and numbered bank accounts.
The budget expenditure scheduled for 2008 came to 8.5 billion euros. At
the same time the national debt comes to just under ten percent of the Gross
Domestic Product, which rose from 33.9 billion euros in 2006 to 36.3 in
2007. Since 1993 inflation has been constant between 2.3 and 3.4 percent.
In 2007 the country’s foreign trade balance has shown a surplus of 3.6 billion
euros. Luxembourg supplies 56 percent of its exports to its three
neighbours, Germany, France and Belgium and another 30 percent to the
remaining EU member states. Its exports have more than doubled since
1993.
The Luxembourg social model is based on the institutionalization of a
social compromise and a strong trade union movement. Representatives of
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