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Luxembourg

14 March 2018

Luxembourg: activating labour market reform and the Revenue for Social Inclusion Bill

Early 2018 the Government has come up with a final draft to change the so-called Social Inclusion Bill. The modified Bill has to replace the current guaranteed minimum income scheme. The trade unions formulated a critical position; according to the unions there are still many details to clarify.

After the government reached an agreement on the revision of the existing system of a guaranteed minimum income (abbreviated RMG), shortly before Christmas 2016, a long consultation process started. The guaranteed minimum income (RMG) is meant for people and households whose income does not reach a certain threshold, considered as the minimum subsistence level. The aim is to avoid social exclusion, by ensuring sufficient means of existence and measures of professional and social integration. The draft Bill that was formulated sought to make the system more dynamic; therefore the proposal was also to rename the system into Revenue for social inclusion (or Revis).

In January 2018, the family minister presented key changes to the draft Bill to the Family and Integration Commission of the parliament. The differences between the RMG-scheme and Revis are mainly that the new system is based on activating households that receive benefits. In case two adults from a household, which apply for benefits, start with an activation measure the scheme leads to a higher payment (3,997 euro against 2,732 euro in the RMG-scheme). The so-called activation allowance rewards efforts to work a few hours. The objective of the reform is to allow beneficiaries to work more than 10 hours per week (which the RMG-scheme prohibited). In addition, only 25% of the income thus generated will be taken into account when calculating the amount of benefits. the Bill will also increase the benefits for households with one or more children.

The Chamber of Deputies, the country’s parliament, came up with a series of amendments that were handed over for an opinion to the Council of State. The amendments included proposals for state payments to self-employed people facing a drop in income, for example due to an accident, as long as they have contributed at least two years of social security payments. Other suggestions were to provide funds for self-employed people that intend to set up a company, if certain conditions are fulfilled, such as the registration as a genuine entity and the existence of a business plan. In the meantime, also the advices of the Chamber of Trades and Commerce and of the Chamber of Labour were sent to the parliament.

Trade union confederation OGBL followed the legislative procedure with a critical stand and trade union confederation LCGB mentioned the creation of Revis one of its reform priorities for 2018. In a joint statement, the unions said that a critical lecture of the draft makes clear that the way the government has presented the Revis-scheme does not cope with reality; not all benefits will increase and the scheme can lead to a deterioration for some. Revis-payments can be withdrawn based on motives that are not specified. Besides, receiving an inclusion benefit could lead to exclusion from the housing benefits. The draft law also has no clear appeal possibilities that make it possible for those who benefit to defend themselves.

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