Housing prices in Luxembourg – the Commission is fully committed to doing nothing

*Update 07.11.2022 we add a list of all available state aid in Luxembourg.* *Update 09.09.2022: the Luxembourg state has taken action on housing costs* Colleagues in Luxembourg are well aware of the housing situation there: prices are so high that an increasing number of colleagues are unable to afford accommodation in or close to the city of Luxembourg. Generation 2004 has raised this point repeatedly and so we were very eager to see what (if any) measures the Commission might propose in its report to the Parliament and the Council on the application of the salary method (document COM(2022) 180 final). Calling this report a disappointment would be an understatement: dear Commissioner Hahn, if you don’t want to do anything for the colleagues in Luxembourg, just say so and don’t put up smokescreens. That would at least be an honest statement, instead of the current beating around the bush.

Why this harsh assessment of the situation? Let’s look at that report:

‘However, AIRNC concluded that Luxembourg is in a unique situation in that it has thousands of European institutions’ staff members residing in bordering regions, where the cost of living is significantly lower than in Brussels. These staff members nonetheless still reside at no greater distance from what would be compatible with the proper performance of their duties. As a result of this geographical particularity of Luxembourg, the introduction of a correction coefficient calculated on the basis of the costs observed in Luxembourg may not fully grasp the particularities of Luxembourg as an EU place of employment.’ (p. 13, COM(2022) 180 final) [Thousands was corrected to 20% 08.04.2022 Eursostat: see Consultation ISC/2022/02404 from DG HR Answers]

This is, quite frankly, nonsense at its best. If you move 30 km away from the BECH building (Kirchberg, home of Eurostat, the force behind the yearly salary updates), you are in most cases already outside the country of Luxembourg. Don’t believe it? Look for yourself: on the linked map, the entire border of the 30km circle below the line established by connecting Trier (Germany) and Habay (Belgium) is outside the Luxembourg national border. Lower housing costs there have nothing to do with them being bordering regions, but everything to do with the simple fact that housing costs are lower the further away you get from the city centre. This is not a particularity of Luxembourg: it applies to every city, even to Brussels. How many colleagues in Brussels live 30 km away from their place of employment? And do we take their lower rents into account when setting the baseline for the correction coefficients? No! Then why is the Commission suddenly using this argument for Luxembourg? Because they are desperately trying to come up with some sort of excuse for not doing anything to remedy the problem.

But this is just one argument: why do colleagues move 30km away from their workplace in the first place? Because they cannot afford to live in Luxembourg itself: housing costs in the city and surrounding areas are prohibitive.

‘The average rent paid in 2021 is around 27% higher for staff working in Luxembourg than in Brussels. It should be remembered that these are six-year average values, not just the observed rent for the current year.’ (Eurostat Staff Housing Survey, 2021) [1]

Indeed, the Luxweb site has a whole page explaining how to apply for national aids for low incomes. And there is even a special certificate available upon request to show to the Luxembourgish authorities that your Commission salary is so low that you qualify for these social aids.

Maybe we should change the slogan ‘Luxembourg – a great place to work’ [2]  into ‘Luxembourg – where we will help you to apply for social aids because we cannot be bothered to pay you a decent salary’. Admittedly, this slogan doesn’t have the same ring to it, but at least it’s an honest statement [3].

Let’s go back to the COM(2022) 180 report quote at the start of this article. Just as is the case for the majority of reports, the most important thing is what is NOT written in the report. In this particular case, we are talking about some remarks that Eurostat made during the interservice consultation (i.e. referring to all Luxembourg-based staff in all EU Institutions) and that are not reflected at all in the report. E.g., Eurostat pointed out that the ‘thousands’ of staff members mentioned, those who are living at a distance in order to find cheaper housing, are merely 20% of the total Luxembourg-based staff (some 740 colleagues out of a total of 3700 Commission staff in 2021). In other words, those 740  colleagues are used as an excuse not to do anything for the remaining 2960. Further, Eurostat also highlighted the fact that it is not ‘cost of living’ at large that is significantly lower, but only accommodation. This is fully in line with the cited AIRINC study:

‘Overall we could not find any significant difference in price level for goods and services, Brussels being slightly more expensive than Luxembourg, Thionville, Arlon and Trier. The most significant difference being that housing rental costs are higher in Luxembourg, while significantly less expensive in the cross-border towns.’ (p. 17)

But the best comes last. Again from the COM(2022) 180 report:

‘Moreover, some staff members may have acquired their dwellings at a time when the housing costs were lower or similar in Luxembourg compared to Brussels and have potentially experienced an asset price movement which sets them apart from new arrivals/existing staff who did not previously own property35.’

‘[35] Arguably this may be true in other duty stations but to a much more limited extent as a result of recruitment turnover.’

This statement is of course correct. Some (by now quite senior) colleagues may have acquired their dwellings many years ago. Some may have won the lottery. Some may have married a millionaire. And some may have found a pot of gold at the end of the rainbow. Why do we give this enumeration of hypothetical arguments? Because it shows that what the Commission is presenting here is pure speculation. ‘Some may have …’ is not an argument, but wishful thinking. And it is obvious from the AIRINC study:

‘AIRINC’s own historic data on rental prices goes back even further and shows prices in Luxembourg increasing 42% more than in the city of Brussels between the years of 2001 and 2018.’ (p. 17)

So, in order to profit from this asset price movement, you must have been in Luxembourg for more than 20 years. (By the way, this rules out each and every one of the 580 contract agents – this category of colleagues was only introduced in the 2004 staff regulations. It also rules out secretary and clerk (AST/SC) colleagues, since the AST/SC function group was introduced in 2014) [4].

The footnote #35 above is a sign that the Commission is fully aware of the weakness of its arguments. Why does this argument apply to other duty stations only to a limited extent? Because nowhere else have housing prices exploded like in Luxembourg.

One final quote from the COM(2022) 180 report:

‘Thus, it is considered that introducing a correction coefficient at this stage might not contribute to  ensure equality of purchasing power among EU staff. In addition, introducing a correction coefficient solely on the basis of a divergent price level/trend for a single component may introduce an element of instability, if the price level/trend of that single component ceases to diverge in future.’ (p. 14)

Yeah, sure. Housing prices have increased in Luxembourg more than in Brussels for 20+ years in a row and today, new supply of accommodation is falling short by at least 2000 units each year. Now is of course the time to worry about a potential future where housing prices no longer diverge between the two cities. How do we know about the lack of new housing? Well, it is written directly in the HR-commissioned AIRINC study:

‘Available housing stock: sources reported that there is a need for five to seven thousand new units each year, in and around the capital city. And yet, the view of the real estate professionals was that new supply is falling short by at least two thousand units each year.’ (p. 9)

So, the difference is at 50+% and will probably increase further in the future. How one can worry at this point about a hypothetical situation where the difference will no longer be there is a mystery to us here. But, dear Commissioner Hahn, we can help you here with a plan:

  • Introduce a housing allowance in Luxembourg (action number 5 of the 12 most-recently proposed: see footnote 2)
  • Let Eurostat regularly calculate a hypothetical correction coefficient for Luxembourg as part of the normal calculation of all correction coefficient.
  • Once the difference in housing between Luxembourg and Brussels falls below a pre-agreed threshold, the Commission can react and re-assess the situation of the housing allowance.

There, problem solved, with an early-warning system that will detect a situation where housing prices in Luxembourg and Brussels cease to diverge. And with minimal additional overhead and using the well-established machinery of calculations for the correction coefficients.

Can we now please do something for the colleagues in Luxembourg who are no longer able to live in the duty station where the Commission is employing them?

We leave you with the parody news story Shocking discovery: hundreds of corporate juniors living in tunnel below Kirchberg.

As always, we would love to hear from you. Please do not hesitate to get in touch with us or leave a comment below.

If you appreciate our work, please consider becoming a member of Generation 2004.

If you are interested in becoming more involved or if you are thinking of standing in the November 2022 Luxembourg Local Staff Committee elections, please get in touch!

*This article was updated 12.09.20222 to clarify that which figures refer to all institutions and which to the Commission only.

[1] Final validation of those results was expected in autumn 2021 but are, to date, unpublished. See also the examples we gathered in our  ‘Wild West of Teleworking’ Photography Contest: winners!

  • a Contract Agent (CA) colleague (FGII) spending >44% of take-home pay on the cheapest flat available after moving from a flat share (Luxembourg)
  • another colleague not being considered for a rental property (again in Luxembourg) because take-home pay (AST3) is not even close to the 3 x (rent + charges) increasingly insisted upon by landlords.

For a slightly worn 2 bedroom flat rental the AST3 colleague required EUR 5400 as take-home pay: this might be possible in 2036 when our colleague might have reached the grade of  AST6 step 2 (15 years (?): slide 37)) if accommodation costs were to remain static. Unfortunately, in Luxembourg things have gotten more than a little out of hand:

‘House price developments in the EU Member States Among the Member States for which data are available, the highest annual increases in house prices in the fourth quarter of 2020 were recorded in Luxembourg (+16.7%), Denmark (+9.8%) and Lithuania (+9.4%).’ Eurostat, 8 April 2021, euroindicators, 40/2021.

[2] This promotional slogan is from 2014-15. The 2015 ‘Georgieva-Asselborn’ agreement between the Commission and the Luxembourg authorities is also about increasing the number of Luxembourg-based staff (to 12.5% of the Commission total by 2022: that would be 4029 out of the total of 32233 staff (July 2022) instead of the real figure of 3685). There were corresponding actions taken but nevertheless the percentage of staff in Luxembourg continues to fall. The count went from 11.7% to 11.5% 2017-2020 (HR report 2020, p. 78) and reached 11.4% in July 2022.  The European Personnel Selection Office (EPSO) was Promoting working and living in Luxembourg to potential new recruits with a cycling video in 2020. Consider also that Luxembourg, in addition to difficulties recruiting, has significant difficulties in retaining staff.

Following up on these promotional activities, in 2022  Luxembourg was promised an(other) action plan:

‘What will we do? Design action plans to improve the appeal of specific Commission sites; this work has started for our Luxembourg site in 2020 (e.g. preparation of inter-institutional agreement on Luxembourg-specific open competitions).’ (p. 8, C(2022) 2229 final, A new Human Resources Strategy for the Commission).

Most recently we have a(nother) list of 12 actions proposed to address the attractiveness of the Luxembourg site from the Heads of Administration (Chefs d’Administration) of EU institutions and bodies based in Luxembourg (CALux). 1: Launching site-specific EPSO competitions, 2: Job shadowing initiatives for career guidance officers, 3: Creation of a common job platform 4: Inter-institutional excellence hubs (e.g. financial, digital, legal) 5: Housing allowance, 6: Offer of temporary housing, 7: Jobs for spouses, 8: Interinstitutional cooperation of Welcome Desks, 9: Future of interinstitutional creches in Luxembourg 10: Common communication strategy, 11: Collaboration with the national authorities, 12: Cooperation with top European universities. Read the Luxembourg LSC’s notes and evaluation of those proposed actions. See also Luxembourg ranked as one of the worst choices in the world for expats.

Contrast this promotional work with actions which undermine this push: e.g. allowing Luxembourg DG SANTE jobs to be done from any site (2021: did these posts still count towards the 12.5% target of Luxembourg-based staff?), or the fact that some of the assistant base-grade salaries were below the national poverty threshold until 2020 and are now just above that threshold.

[3] Some of the assistant base-grade salaries were below the national poverty threshold and in 2020 rose to just above that threshold.

[4] In spite of the name of this function group, remember these colleagues are also e.g. drivers and body guards. AST/SC corresponds to the pre-2004 staff function groups C secretaries and clerks and D those carrying out manual roles e.g. ushers or drivers.

One thought on “Housing prices in Luxembourg – the Commission is fully committed to doing nothing

  1. Housing put aside, “Overall we could not find any significant difference in price level for goods and services, Brussels being slightly more expensive than Luxembourg”
    Services more expensive in Brussels than in Luxembourg? Have they really tried calling a plumber or an electrician to check the prices in Luxembourg? Or even looked at the mechanic’s hourly rate for servicing the car?
    I suppose someone living in Luxembourg could always call a plumber in France to try to save some money, but even if you find a plumber who agrees to come, one can expect some hefty travel expenses, especially now with the high petrol price.

    I really can’t think of a single service that would be less expensive in Luxembourg compared to Brussels.

Leave a Reply