Report on ‘Work and Social Cohesion’ 2025

STATEC has published the 2025 edition of its report on social cohesion. In 2024, the average disposable income of Luxembourg households reached nearly EUR 7,700 per month, and the average standard of living stood at EUR 4,900, confirming an improvement in purchasing power despite inflation. However, income inequalities remain marked: the wealthiest 20% have a standard of living 4.7 times higher than that of the least wealthy 20%. The persistent poverty risk rate stands at 6.1%, rising to 26.9% once pre-committed expenses are deducted. The report also highlights the growing challenges associated with ageing: a quarter of pensioners receive a pension below the legal minimum, with women and foreign nationals being particularly affected. Often, their low pension is offset by their spouse's higher pension. The employment rate for people aged 55 to 64 has increased by 57% since 2004, as has the length of working life, which has risen from 30 to 35 years. However, the average retirement age remains lower than that observed in the European Union (60.4 years compared to 61.3 years), and a significant proportion of the population leaves the labour market before the legal retirement age.

Living conditions improving despite inflation

The standard of living of households, also known as household disposable income, continued to rise in 2024, reaching an average of EUR 7,700 per month. The average standard of living per person stood at EUR 4,900, confirming an improvement in purchasing power despite price increases in 2022 and 2023. This finding confirms previous analyses by STATEC, which already reported an improvement in purchasing power over these two years, despite the gloomy economic climate[1].

Income inequalities remain marked

Disparities in living standards remain significant: in 2024, the richest 20% had a living standard 4.7 times higher than that of the poorest 20%. This ratio rises to 10.9 when comparing the richest 5% to the poorest 5%. The persistent poverty risk rate stands at 6.1%, rising to 26.9% when taking into account the ‘disposable income’ after payment of pre-committed expenses, which represent on average 30% of household income, three-quarters of which is related to housing. Certain categories of the population are more vulnerable to poverty in Luxembourg. Children under the age of 18, single-parent families, people of Portuguese or non-European nationality, and individuals with a low level of education are particularly affected. In 2024, the at-risk-of-poverty rate stood at 18.1%, meaning that nearly one-fifth of the population was living on a monthly income of less than EUR 2,540 per person.

Multidimensional precariousness to watch

In 2024, 20% of the population was facing poverty or social exclusion, representing more than 130,000 people. This includes monetary poverty, severe material or social deprivation, or low work intensity in the household. In addition, 23% of households report having difficulty making ends meet, a figure that exceeds one-third among people born in Portugal. Energy poverty affects 4.1% of households, a rate that has remained stable since 2023.

Ageing: a growing challenge for social cohesion

This year's report focuses on the ageing population, a phenomenon that is still moderate in Luxembourg (15% aged 65 and over in 2024 compared to 21.6% in the EU-27), but is on the rise. This phenomenon is the result of two main dynamics: the sustained decline in fertility (ageing from below) and the increase in life expectancy (ageing from above). However, this trend is being slowed by the arrival of young workers through migration.

[1] See also: Has purchasing power increased or decreased? on statistiques.lu

Longer careers, but still early retirement

The employment rate for 55-64 year olds has increased by 57% since 2004, and working life has increased from 30 to 35 years. However, the average retirement age remains low (60.4 years), below the European average (61.3 years), and many people leave the labour market before the legal retirement age.

Contrasting living conditions among senior citizens

5.6% of people aged 65 and over live in institutional care, a proportion that increases with age. The feeling of disability becomes more common from the age of 70, reaching 80% among those aged 95 and over. While the average standard of living of pensioners is 14% higher than that of non-pensioners, a quarter of them receive a pension below the legal minimum. These small pensions mainly affect women and foreign nationals, often due to interrupted careers or low qualifications. In most cases, these people live as a couple, which allows them to compensate for their low pension with their spouse's pension, which is generally higher.

Other less visible but revealing aspects of social vulnerability

The TCS 2025 report is not limited to the most visible indicators mentioned above. It also highlights aspects that receive less media coverage but are essential to understanding living conditions in Luxembourg, such as households' perception of economic difficulties, the cost of housing, energy poverty and differences in retirement trajectories. All these elements can be found in STATEC's Work and Social Cohesion 2025 report, the result of the ongoing work of the social statistics department team, which strives each year to enrich and improve the quality of this publication, in particular by increasingly integrating administrative data into their estimates.