CSL Calls for Stronger Action on Social Issues in 2026 State Budget

On Thursday 20 November 2025, the Chamber of Employees (Chambre des Salariés - CSL) presented its official opinion on Luxembourg's 2026 state budget, stressing that despite relatively healthy public finances, the budget falls short in addressing key social challenges.

CSL President Nora Back and Director Sylvain Hoffmann, joined by Vice-Presidents Jean-Claude Reding and Patrick Dury, as well as several advisors, delivered the analysis. The opinion - unanimously adopted by the CSL - evaluates aspects such as the economic situation, labour market, public finances, investment policy, defence, housing, ecology and social cohesion.

In her introduction, Nora Back highlighted the current "difficult" and "uncertain" international context, but noted that Luxembourg is still performing comparatively well. She warned, however, that while forecasts show gradual economic improvement and public finances remain healthy, the budget contains few concrete measures to tackle social issues such as poverty, precarity, housing and environmental challenges. She added that the CSL is still awaiting the government's national anti-poverty action plan.

Sylvain Hoffmann then presented the official opinion in more detail.

Economic Situation

The CSL's analysis shows that real economic growth remains weak and largely dependent on household and public consumption. Private sector investment has stagnated, while job creation slowed and unemployment rose in 2024-2025 - although this trend is expected to improve.

Older and less-qualified jobseekers face particular difficulties, and precarious employment (such as fixed-term contracts) is increasing. Some sectors, notably public administration and health, remain strong. The CSL welcomed the increase in funding for professional reskilling, but stressed the need to improve access to training and quality of work.

Public Finances

Public finances in Luxembourg remain stable overall. The country has retained a relatively low debt level (projected at around 27% of GDP) and current deficits remain below Maastricht limits. The CSL thus argued that public finances remained healthy and the current deficit situation (projected to increase but still below 3% of GDP) "should not be used as an alarmist argument or justify social cuts".

However, the CSL criticised what it described as a misleading presentation of social spending: while the government indicates that over 46% of expenditure counts as “social transfers”, the CSL argued that when excluding certain subsidies and non-household transfers, the real share benefitting households is closer to 34%.

The CSL generally welcomed the inclusion of a GDP-well-being aspect in the budget (estimated at about 14.9% of spending).

Investment 

The CSL praised the fact that public investment remains at a high level, although it only partially compensates for the "weakness" of private investment. If one subtracts direct and indirect investment expenditures from the central government, it would indicate an annual surplus of about €3 billion for 2026-2029. While the CSL welcomed continued investment in the road network, it noted that the budgeted amounts were "significantly lower" than those planned in the past. On the other hand, rail infrastructure is expected to benefit from expanded budget allocations through the rail fund (nearly €1 billion by 2029), but only 40% of the budgeted amounts will go towards new investments; another 40% will be dedicated to infrastructure management.

Defence vs Housing

The CSL noted the planned increase in defence spending from 2% to 5% of GNI by 2035 (€3.2 billion foreseen for 2026), in line with Luxembourg's NATO obligations. It expressed regret over this trend in military spending, acknowledging international commitments but arguing that part of this investment could instead support efforts in climate protection, reducing inequality, development aid and strategic autonomy (e.g. energy independence).

The CSL particularly highlighted the worsening housing situation, arguing that Luxembourg needs structural measures to mobilise available land, protect tenants and substantially increase public investment in affordable housing. Additional action is also needed to help lower-income households improve their energy efficiency.

Ecological Transition

The CSL warned that Luxembourg risks missing its 2030 emissions targets and called for stronger support for low-income households, especially in energy-efficient renovation, pre-financing for solar panels and accessible climate loans. It also criticised the lack of transparency in climate fund projections.

Family, Inclusion & Social Cohesion

Social indicators remain "worrying", according to the CSL, particularly for: young adults (nearly 30% risk of poverty); single-parent households (31.8%); large families (38.5%); the working poor (1 in 7 - the highest in the eurozone); women, whose poverty risk has recently increased.

The CSL thus called for concrete measures, including: a structural increase in family benefits; an increase in the minimum wage (in line with EU directive); a higher minimum pension; changes to financial aid schemes for geriatric care; targeted support for young adults and single parents; better protection for low-income households in the ecological transition.

Fiscal Policy

The CSL praised tax measures such as the CO2 tax credit but argued that the budget was limited in this area. It called for a fairer tax system, with better balance between the different sources of public funding. The CSL argued in favour of the regular adjustment of deduction measures, tax credits and their eligibility thresholds to maintain tax fairness and maintain household purchasing power.

Conclusion

The CSL concluded that while Luxembourg is relatively well positioned compared to other EU countries, in a globally "fragile" economic situation, the 2026 budget misses the opportunity to redirect policy toward poverty reduction, housing, social cohesion and climate action through concrete measures and a fair tax system.

A more detailed summary of the opinion (in French) is available here.

For further details about the 2026 state budget, see https://chronicle.lu/category/finance-1/57224-2026-state-budget-sees-increased-defence-fintech-spending-new-social-support-measures