Attracting and retaining foreign talent is increasingly important in determining countries’ current and future prosperity. This chapter explains the importance of attracting and retaining foreign talent to fill skills shortages in Luxembourg and provides an overview of current practices and performance. It then explores two opportunities for attracting and retaining foreign talent to fill skills shortages in Luxembourg: facilitating the recruitment of foreign talent in line with Luxembourg’s labour market needs; and facilitating the integration of foreign talent and their families into Luxembourg’s society and labour market.
OECD Skills Strategy Luxembourg
Assessment and Recommendations
OECD Skills Studies
4. Attracting and retaining foreign talent to fill skills shortages in Luxembourg
Abstract
The importance of attracting and retaining foreign talent to fill skills shortages
Attracting and retaining foreign talent is increasingly important in determining countries’ current and future prosperity. In this chapter, and similarly as in Luxembourg’s Roadmap for the development of a National Talent Attraction, Development and Retention Strategy (Ministry of the Economy, 2021[1]) (hereafter, “Talent Attraction Roadmap”) adopted in July 2022 by the Government of Luxembourg (Conseil de gouvernement, 2022[2]), “foreign talent” is understood as all foreign individuals who do (or could, if hired from abroad) help fill shortages in Luxembourg’s labour market, instead of restricting the term “talent” to individuals with a particular level of education.
In Luxembourg, attracting and retaining foreign talent has long been essential for the country’s economic growth and competitiveness (STATEC, 2022[3]). The second smallest European Union (EU) member state by population, with a dynamic economy and a strongly growing labour market1(domestic employment grew by 33% between 2012 and 2022) (STATEC, 2022[3]), Luxembourg remains uniquely dependent on workers from outside its national borders. Some 74% of Luxembourg’s labour force is made up of foreign workers residing inside or outside of Luxembourg (STATEC, 2022[3]). In addition, cross-border workers, who commute to Luxembourg daily from neighbouring regions in Belgium, France and Germany account for approximately 47% of Luxembourg’s labour force (STATEC, 2022[3]).
The importance of attracting and retaining foreign talent in Luxembourg is further underscored by the recruitment difficulties reported by Luxembourg’s employers, who struggle to find the needed candidate profiles within national borders (Chamber of Commerce, 2019[4]; Chamber of Skilled Trades and Crafts, 2019[5]). Evidence from sectoral studies developed by Luxembourg’s national employment agency, (Agence pour le Développement de l’Emploi, ADEM), shows that shortages can be found in traditionally high-skilled occupations,2such as computer engineers or legal experts, as well as certain traditionally medium- and low-skilled occupations,3 such as cooks, head waiters or craft workers (ADEM, 2022[6]) (see also Chapter 1). 40% of chief executive officers (CEOs) in Luxembourg identify the “(in)availability of key skills" as a potential threat to their organisations’ growth prospects, ranking among the five most pressing business, economic, policy, social and environmental threats (PwC, 2021[7]) (see Chapter 1). At the same time, according to data from Luxembourg’s General Inspectorate of Social Security (IGSS), less than half of foreign workers who started working and living in Luxembourg in 2015 were still residents in Luxembourg in 2020, on average, suggesting that retaining foreign talent to help fill skills shortages could be further improved.
Skills shortages imply costs for firms and the economy as a whole. Firms experiencing skills shortages may be constrained in their ability to innovate and adopt new technologies, thus reducing their productivity and overall contribution to economic performance (OECD, 2019[8]). If left unaddressed, skills shortages could pose an obstacle to full recovery from the COVID‑19 pandemic and future economic growth, making it essential that Luxembourg can attract and retain the foreign talent it needs.
This chapter is structured as follows: the following section provides an overview of current practices facilitating the attraction and retention of foreign talent in Luxembourg. The next section assesses Luxembourg’s performance in attracting and retaining foreign talent. The last section conducts a detailed assessment and provides tailored policy recommendations in two opportunities for attracting and retaining foreign talent to fill skills shortages: facilitating the recruitment of foreign talent in line with Luxembourg’s labour market needs; and facilitating the integration of foreign talent and their families into Luxembourg’s society and labour market.
Overview and performance
Overview of Luxembourg’s current practices for attracting and retaining foreign talent
No single institution in Luxembourg is solely responsible for facilitating the attraction and retention of foreign talent. Instead, the roles and responsibilities are divided across different ministries, departments and agencies (Table 4.1).
Table 4.1. Key governmental actors in Luxembourg facilitating the attraction and retention of foreign talent
Key actors and their respective areas of responsibility
Talent attraction is a key part of the mandates of MECO, as well as MTEESS (see more on MTEESS below). MECO is responsible for attracting investment to Luxembourg, financing innovation and research programmes and interlinking with private sector companies (Ministère de l’Économie, 2019[9]). Good access to talent is a key enabler for the better and stronger competitiveness of Luxembourg’s economy, as well as for research and innovation activities. Improving the capacity to attract, retain and develop the skills of skilled workers at all educational levels, as well as researchers and innovators, is one of the key challenges for all business leaders. A key motivation for MECO is to mobilise all engaged stakeholders within a national co-ordination and collaboration effort. MECO also co‑ordinated an inter-ministerial working group (referred to in this chapter as the “Talent Attraction Working Group”), tasked with developing the Talent Attraction Roadmap, and now co-ordinates an inter-ministerial committee (referred to in this chapter as the “Talent Attraction Committee”) tasked with drafting a common national strategy on talent attraction, development and retention, after making this a priority in the Government’s Coalition Agreement 2018-2023 (Government of Luxembourg, 2018[10]) (see more below).
MAEE is responsible for Luxembourg’s migration policy and regulating access to Luxembourg’s territory and labour market. MAEE’s Directorate of Immigration is in charge of handling requests concerning the free movement of persons (EU citizens and their family members) and concerning third country nationals’ (TCNs) entry (i.e. non-EU citizens), residence and work rights in Luxembourg (i.e. applications for temporary authorisations to stay, residence/work permits, visas, etc.).
MAEE also has a network of diplomatic and consular bodies in several countries around the world, which are responsible for handling visa applications of TCNs, among other tasks. In countries where Luxembourg is not directly represented, the duties of the diplomatic or consular bodies, including visa processing, are assumed by other EU member states on Luxembourg’s behalf (Ministry of Foreign and European Affairs, 2022[11]).
While all citizens of the European Union and their family members (who are also EU citizens) have the right to live and work in Luxembourg, TCNs who wish to stay in Luxembourg for more than 90 days to carry out a salaried activity need to apply to MAEE for a permit. Furthermore, each TCN wishing to carry out a salaried activity in Luxembourg needs to have signed an employment contract before coming to Luxembourg and submit a copy of the employment contract to the MAEE when requesting a permit to enter Luxembourg (Government of Luxembourg, 2018[12]).
MAEE is also in charge of processing all residence permit applications, including EU Blue Cards, which are work permits for highly skilled individuals (i.e. individuals with HE qualifications or with at least five years of professional experience of a level comparable to HE qualifications)4 from third (i.e. non-EU) countries (European Commission, n.d.[13]). The EU Blue Card is Luxembourg’s only residence permit for workers with a specific level of skills. In Luxembourg, TCNs become eligible for the EU Blue Card if they possess: 1) HE qualifications or at least five years of relevant professional experience of a level comparable to HE qualifications; 2) a job offer for highly qualified work (corresponding to International Standard Classification of Occupations [ISCO] Level 1 and 2) with remuneration at least equivalent to 1.5 times the amount of the Luxembourg average gross annual salary; or 3) a job offer with remuneration at least equivalent to 1.2 times of the Luxembourg average gross annual salary if they secured employment in a high-skilled profession identified to be in shortage (Government of Luxembourg, 2019[14]; European Commission, n.d.[13]). For applicants, the main difference from the permit for salaried activity is that the EU Blue Card can be issued without the usual labour market test (see below).
In addition, MAEE is involved in facilitating the attraction of international students to Luxembourg and co‑ordinating Luxembourg nation-branding efforts abroad. MAEE has an agreement with the University of Luxembourg to finance scholarships for international students, available to exchange students from the University of Luxembourg’s partner universities and to a limited number of regular students at the master’s level (Ministry of the Economy, 2021[1]; EMN, 2018[15]). In addition, a dedicated unit at the MAEE is tasked with co‑ordinating the design and implementation of Luxembourg’s nation-branding strategy, aiming to raise international awareness about Luxembourg’s assets (Government of Luxembourg, 2018[10]; 2013[16]).
MTEESS plays a role in facilitating foreign talent’s access to Luxembourg’s labour market via ADEM. In Luxembourg, ADEM is responsible for carrying out the labour market test. Labour market tests, a frequent component of labour migration management procedures, assess whether a particular job could be performed by a job seeker available in the national labour market before allowing the existing vacancy to be filled by a foreign worker (OECD, 2014[17]). In Luxembourg, each employer wishing to recruit a TCN has to first declare the vacancy to ADEM (unless the TCN is eligible for the EU Blue Card). All jobs must be posted with ADEM for three weeks before an employer can recruit a TCN unless the job and TCN meet Blue Card requirements. (ADEM, 2020[18]). After three weeks without a relevant candidate, the employer has to request a certificate from ADEM allowing the recruitment of a TCN. The certificate is one of the mandatory documents that must be submitted to MAEE by the non-EU national worker to enter and work in Luxembourg (Government of Luxembourg, 2018[12]).
ADEM is also actively involved in facilitating international job matching. When declaring a vacancy to ADEM, employers may agree to have the job offer published on the online portal of the network of European Employment Services (EURES). The EURES portal allows EU nationals and non-EU residents with work rights to upload their curriculum vitaes (CVs) in a common database. Through national EURES advisors, EU employers can also publish their vacancies and receive candidate information from the national EURES advisor. ADEM also has a number of dedicated EURES advisors (EURES Luxembourg) who co‑ordinate and provide EURES services in Luxembourg. Together with EURES Luxembourg, ADEM also runs Luxembourg’s one-stop-shop online labour migration portal ”Work in Luxembourg” (https://work-luxembourg.public.lu/en.html), represents Luxembourg in international job fairs and holds information events for spouses of foreign workers.
MESR plays a role in facilitating the attraction of international students to Luxembourg and the integration of highly qualified foreign workers into the labour market. Through “excellence grants”, MESR finances scholarship programmes for international students with excellent academic credentials enrolled at the University of Luxembourg at the bachelor, master or PhD level (Ministry of the Economy, 2021[1]). MESR also finances a hardship fund for international students studying in Luxembourg and experiencing financial difficulties. Students can benefit from the excellence grants and hardship fund as long as they do not already receive state financial aid for higher education (AideFi). In addition, MESR is in charge of recognising higher academic qualifications obtained abroad (European Migration Network, 2019[19]).
The Ministry of Finance (MFIN) is responsible for designing and implementing Luxembourg’s financial incentives to attract and retain foreign talent in Luxembourg. In 2014, MFIN introduced a special tax regime for highly qualified foreign employees (the “impatriate regime”). Under the impatriate regime, highly qualified foreign-born residents recruited to work in Luxembourg can be offered a range of tax-free financial contributions from their employers, covering selected recurring and non-recurring expenses (see Opportunity 1 for more details). With the 2021 budget revision, the impatriate regime has also allowed employers to grant eligible foreign employees a bonus that is exempted from tax up to 50% (Ministry of the Economy, 2021[1]). MFIN also oversees Luxembourg for Finance (LFF) and the Luxembourg Financial Industry Federation (Fédération des professionnels du secteur financier, PROFIL). LFF leads the attraction of talent to Luxembourg’s financial centre and has recently launched a talent attraction campaign, “movetolux” (Luxembourg for Finance, 2022[20]).
MFAMIGR, through the Integration Department, established in early 2020, oversees Luxembourg's integration policy. MFAMIGR oversees the implementation of Luxembourg’s two key integration programmes, the Welcome and Integration Contract (Contrat d'accueil et d'intégration, CAI) and the Accompanied Integration Pathway Programme (Parcours d’intégration accompagné, PIA). In addition to implementing CAI and PIA, MFAMIGR works closely with municipalities and offers a whole range of support services for the implementation of integration projects at the local level, in particular, support through the process of implementing the Pakt vum Zesummeliewen (Pact of Living Together), previously known as Communal Integration Plan (Plan communal integration, PCI) (OECD, 2021[21]). In Luxembourg, the municipality is the first point of reference for anyone arriving in the country or moving to another locality. With the Pakt vum Zesummeliewen, the municipality, the Association of Luxembourg Cities and Municipalities (Syndicat des villes et communes luxembourgeoises, SYVICOL) and MFAMIGR commit to working closely through a multi-year and dynamic process that focuses on communication, access to information and the participation of all people who live or work in the area of the municipality.
MENJE also plays a role in Luxembourg’s integration efforts by facilitating the integration of children of foreign talent into the country’s education system and the integration of foreign workers with lower than HE qualifications into the labour market. MENJE’s Department of Schooling for Foreign Children (Service de la scolarisation des enfants étrangers, SECAM) provides comprehensive assistance for foreign-born children who wish to continue their studies in Luxembourg at the post-primary level. To enrol in one of Luxembourg’s public post-primary schools, foreign children have to go through SECAM’s dedicated School Reception Unit for newly arrived pupils (Cellule d'accueil scolaire pour élèves nouveaux arrivants, CASNA), which assesses children’s academic and linguistic knowledge. SECAM also co‑ordinates Luxembourg’s network of public international schools, offer of insertion classes for newly arrived foreign students, and requests for using the services of inter-cultural mediators, who assist newly arrived students and parents (Government of Luxembourg, 2021[22]). Through its Department for the Recognition of Diplomas, MENJE is also responsible for recognising academic or professional education qualifications obtained abroad at the level of general or vocational secondary education (Government of Luxembourg, 2021[23]). In recent years, MENJE also made efforts to extend the network of international schools and introduced cross‑border apprenticeships in collaboration with France and Germany (see Chapter 3).
With roles and responsibilities divided across different ministries and departments, Luxembourg recognised that the governance of its foreign talent attraction, development and retention efforts could be improved. The government’s Coalition Agreement 2018-2023 mentions in the “Competitiveness" section that in order to address the skill shortages across Luxembourg’s sectors, Luxembourg needs a comprehensive national talent attraction, development and retention strategy (referred to in this chapter as the “Talent Attraction Strategy”). The Coalition Agreement states that the objectives of the strategy should be threefold: 1) attract foreign talent to bring the needed skills and professional experience to Luxembourg; 2) improve Luxembourg’s capacity to retain those talents; and 3) develop the needed skills within Luxembourg going forward (Ministry of the Economy, 2021[1]). To support the development of the strategy, the government proposed to create an inter-ministerial working group tasked with co-ordinating the efforts of all relevant ministries and administrations involved in talent attraction and retention efforts (Government of Luxembourg, 2018[10]).
The inter-ministerial Talent Attraction Working Group was co‑ordinated by the Ministry of Economy and included representatives of the Ministry of Finance; the Ministry of Education, Children and Youth; the Ministry of Higher Education and Research; the Ministry for Digitalisation; the Ministry of State (Department of the Media and Communications); the Ministry of Foreign and European Affairs (Directorate of Immigration); and the Ministry of Labour and Employment (represented by ADEM). The working group also included representatives from the Agency for the Development of the Financial Centre (Luxembourg for Finance), a public-private partnership between the Government of Luxembourg and the Luxembourg Financial Industry Federation seeking to connect international investors to the range of Luxembourg’s financial services, as well as Luxembourg’s National Innovation Agency (Luxinnovation), in charge of helping to attract international investment to Luxembourg. The working group was seeking input for its work from non-governmental stakeholders, in particular from the Chamber of Commerce (Chambre de Commerce, CC) and the Chamber of Skilled Trades and Crafts (Chambre des Métiers, CdM), as well as employee representatives (Chambre des salariés, CSL). The working group has developed the Talent Attraction Roadmap, which will form the basis for Luxembourg’s national Talent Attraction Strategy (Ministry of the Economy, 2021[1]). To implement the Talent Attraction Strategy, the government council decided in July 2022 to put in place a permanent inter-ministerial Talent Attraction Committee under the joint responsibility of the Minister of Economy and the Minister of Labour and Employment in close dialogue with the Minister of Education, Children and Youth, which is chaired by MECO, and, as of Q4 2022, composed of the former members of the Talent Attraction Working Group.
Luxembourg’s performance in attracting and retaining foreign talent
As foreshadowed above, Luxembourg has long depended on foreign talent to sustain its economic performance (Figure 4.1). In 2022, 74% of Luxembourg’s labour force was foreign nationals residing in or outside Luxembourg (Figure 4.1). Between 2012 and 2022, the share of foreign workers (i.e. non‑Luxembourgish residents and cross-border workers) increased by approximately 3 percentage points (Figure 4.1).
Figure 4.1. Share of foreign workers in Luxembourg’s labour force, 2012-22
Note: Foreign workers refers to non-Luxembourgish resident workers and cross-border workers.
Source: STATEC (2022[24]), Domestic payroll employment by citizenship and country of residence - seasonally adjusted data, https://lustat.statec.lu/vis?pg=0&df[ds]=release&df[id]=DF_B3005&df[ag]=LU1&df[vs]=1.0&pd=2012-Q1%2C2022-Q1&dq=Q.&ly[cl]=TIME_PERIOD&ly[rw]=RESIDENCE&lc=en&tm=seasonally%20adjusted%20&vw=tb.
Cross-border workers are the largest group of foreign workers, accounting for approximately 47% of Luxembourg’s labour force (Figure 4.2). Residents with an EU nationality other than Luxembourgish make up 22% of the labour force (Figure 4.2), with French, Portuguese and Italian being the three most common nationalities among foreign newcomers to Luxembourg (OECD, 2021[25]). TCNs (i.e. residents with non‑EU nationality) account for a much smaller share of Luxembourg’s labour market, around 5% (Figure 4.2). However, TCNs have also been the fastest-growing group of foreign talent in Luxembourg’s labour force, with their numbers more than doubling between 2012 and 2022 (Figure 4.3). With the population in the Greater Region already being significantly affected by population ageing, which is expected to further accelerate in the future (Greater Region population aged over 65 is expected to increase by almost 40% by 2050) (Durand, 2020[26]) (see Chapter 1), TCNs are likely to become an increasingly important source of foreign labour for Luxembourg in the future.
Luxembourg’s high reliance on foreign talent manifests itself across all sectors. With the exception of public administration, a majority of employees in each of Luxembourg’s ten largest sectors is made up of residents with non‑Luxembourgish nationality and cross-border workers (Figure 4.4). For example, while 91% of the workforce in the construction sector is made up of residents with non‑Luxembourgish nationality and cross‑border workers (3% non‑EU residents, 30% EU residents [other than Luxembourgish nationals], 58% cross-border workers), the same is true for more than 82% of the workforce in the finance and insurance sector (6% non‑EU residents, 28% EU residents [other than Luxembourgish nationals], 48% cross-border workers) (Figure 4.4).
Luxembourg’s labour market attracts more foreign-born workers into high-skilled occupations (ISCO groups 1‑3) than medium- and low-skilled occupations (ISCO groups 4‑8 and ISCO 9, respectively). Approximately 57% of foreign-born workers in Luxembourg (including cross-border workers) work in high‑skilled occupations (i.e. managers, professionals, technicians and associate professionals) (Figure 4.5). Foreign-born resident EU and non-EU workers are more likely to be employed in high-skilled occupations than cross-border workers. While around 52% of cross-border workers in Luxembourg work in a high-skilled occupation, 63% of foreign-born resident workers with EU or non-EU nationality do the same. The share of foreign-born resident workers in high-skilled employment in Luxembourg is also high in international comparison and significantly above the OECD average (33%) (OECD/European Union, 2018[27]).
Figure 4.2. Share of workers in Luxembourg’s labour force by nationality and place of residence, 2022
Source: STATEC (2022[24]), Domestic payroll employment by citizenship and country of residence - seasonally adjusted data, https://lustat.statec.lu/vis?pg=0&df[ds]=release&df[id]=DF_B3005&df[ag]=LU1&df[vs]=1.0&pd=2012-Q1%2C2022-Q1&dq=Q.&ly[cl]=TIME_PERIOD&ly[rw]=RESIDENCE&lc=en&tm=seasonally%20adjusted%20&vw=tb.
Figure 4.3. Percentage increase in the number of workers in Luxembourg’s labour force by nationality and place of residence, 2012-22
Note: Index Q1 2012 = 100, s.a.
Source: STATEC (2022[24]), Domestic payroll employment by citizenship and country of residence - seasonally adjusted data, https://lustat.statec.lu/vis?pg=0&df[ds]=release&df[id]=DF_B3005&df[ag]=LU1&df[vs]=1.0&pd=2012-Q1%2C2022-Q1&dq=Q.&ly[cl]=TIME_PERIOD&ly[rw]=RESIDENCE&lc=en&tm=seasonally%20adjusted%20&vw=tb.
Figure 4.4. Share of employees by nationality and place of residence in Luxembourg’s ten largest sectors, 2022
Note: Luxembourg’s ten largest sectors refer to the ten sectors with the largest number of active employees. Employees with non-determined nationalities are excluded from the calculations.
Source: IGSS (2022[28]), General Inspection of Social Security - Open Data Portal [Inspection générale de la sécurité sociale - Portail Open Data], https://data.public.lu/fr/organizations/inspection-generale-de-la-securite-sociale/.
Figure 4.5. Foreign-born population in employment in Luxembourg (including cross-border workers) by occupation group, 2020
Source: OECD calculations based on the EU Labour Force Survey (EU-LFS) 2020, https://ec.europa.eu/eurostat/web/microdata/labour-force-survey.
The large number of foreign-born workers in Luxembourg’s labour market suggests that Luxembourg is already an attractive destination for foreign talent. At the same time, the evidence above shows Luxembourg is also relatively successful in attracting foreign talent into the occupations suffering from some of the most pressing skills shortages (i.e. high-skilled occupations) (OECD, 2018[29]), which is positive. There are many "pull factors" that help Luxembourg attract foreign talent, including high quality of life, a safe living environment and attractive incomes (OECD, 2021[30]). Nonetheless, assessing Luxembourg’s attractiveness internationally, there is opportunity for improvement, which should be leveraged to enable Luxembourg to remain competitive in the intensifying “global race for talent”. The OECD Indicators of Talent Attractiveness (ITA), which assess and benchmark countries’ attractiveness to foreign talent, show that while Luxembourg performs above the OECD average, it remains outside the top ten OECD countries most attractive to foreign talent with higher education (HE) qualifications, and lags top performers, such as Australia and Sweden (Figure 4.6).
Figure 4.6. OECD countries’ overall attractiveness to foreign talent, 2019
Note: The OECD Indicators of Talent Attractiveness score seven dimensions: quality of opportunities; income and tax; future prospects; family environment; skills environment; inclusiveness; and quality of life.
Source: Based on OECD (2019[31]), Talent Attractiveness: How does your country compare in each dimension?, www.oecd.org/migration/talent-attractiveness/how-does-your-country-compare-in-each-dimension.htm.
While Luxembourg could further improve its capacity to attract foreign talent, retention will be equally important to ensure that Luxembourg can benefit from the skills and talent it receives from abroad in the long term. According to the World Economic Forum Global Competitiveness Index, capturing the views of business representatives across 140 countries, Luxembourg ranks among the top ten OECD performers in retaining talent (Figure 4.7). Yet, there is still room for improvement to catch up with top performers such as Switzerland and the United States. As mentioned above, IGSS data show that only around 44% of Luxembourg’s residents with an EU nationality (other than Luxembourgish) who started working and living in Luxembourg in 2015 were still living in Luxembourg in 2020, while the figure stands at 42% for non-EU nationals residing in Luxembourg during the same period.
Figure 4.7. Top ten performers in the Global Competitiveness Index, 2018
Note: Capacity to retain talent ranges from 1 to 7, whereby 1 = worst, 7 = best. The values are based on findings from the World Economic Forum Executive Opinion Survey, capturing the views of business representatives across 140 countries on the following question: “Does your country retain talented people?”
Source: World Economic Forum (2018[32]), Global Competitiveness Report 2017-2018, http://reports.weforum.org/global-competitiveness-index-2017-2018/#topic=data.
To support the retention of foreign talent, integration into society and the labour market is essential (OECD, 2020[33]). While Luxembourg has developed targeted policy tools supporting the integration of foreign talent, their take-up could be improved. For example, Luxembourg’s offer of language training (Luxembourgish, French, English, German and others) for foreign talent could be further strengthened, and integration support for spouses of foreign talent could be more ambitious and systematic. Finally, there is space to better facilitate the transition of former international students into Luxembourg’s labour market (see more below).
Opportunities to improve attracting and retaining foreign talent to fill skills shortages
The extent to which Luxembourg succeeds in attracting and retaining foreign talent is a reflection of a range of individual, institutional and systemic factors. However, two key opportunities for improvement have been identified based on a literature review, desk analysis, and data and input from officials and stakeholders consulted in conducting this OECD Skills Strategy.
Luxembourg’s main opportunities for improvement in the area of attracting and retaining foreign talent to fill skills shortages are:
1. facilitating the recruitment of foreign talent in line with Luxembourg’s labour market needs
2. facilitating the integration of foreign talent and their families into Luxembourg’s society and labour market.
Opportunity 1: Facilitating the recruitment of foreign talent in line with Luxembourg’s labour market needs
In the context of the skills shortages felt across Luxembourg’s economy (see this chapter’s first section), it is essential that Luxembourg further improves its performance in recruiting foreign talent that can help meet the needs of its labour market. In addition, Luxembourg is but one of many countries affected by skills shortages. As other countries compete for foreign talent to meet their own skills needs in the context of the global race for talent (European Commission, 2021[34]; Miao, 2021[35]), it will be key for Luxembourg to step up and target its talent attraction efforts going forward.
Luxembourg could better facilitate the recruitment of foreign talent in line with its labour market needs by:
improving the accessibility of Luxembourg to foreign talent
supporting the affordability of living of foreign talent in Luxembourg
strengthening the information provision for, and exchange between, foreign talent and Luxembourg’s employers.
Improving the accessibility of Luxembourg to foreign talent
Accessibility of countries in terms of migration policies and admission procedures (e.g. visa and permit processing times) is an important factor in determining countries’ overall attractiveness to foreign talent. While countries might be exceptionally attractive in terms of work and/or study opportunities, migration policies and admission practices may constrain migrants’ access and can hence undermine the attractiveness of the host country in question (Tuccio, 2019[36]; Ortega and Peri, 2013[37]; OECD, 2019[38]).
As mentioned above, all EU citizens and their family members (who are also EU citizens) enjoy freedom of movement within the European Union, giving them the right to work and reside in Luxembourg. On the other hand, TCNs are subject to Luxembourg’s immigration procedures, depending on the length and purpose of their stay.
TCNs who wish to come to Luxembourg to carry out a salaried activity for more than three months must have already signed an employment contract with an employer in Luxembourg and follow a number of steps before entering the country. First, TCNs have to apply for a temporary authorisation to stay at the MAEE. Second, after having obtained the temporary authorisation to stay, those subject to visa requirements also have to request a type D visa. The application for a temporary authorisation to stay must be submitted on paper either to the Immigration Directorate of the MAEE, a diplomatic or consular representation of Luxembourg, or a diplomatic or consular mission representing Luxembourg. The time required for a response from the MAEE after an application for a temporary authorisation to stay has been submitted can generally take up to four months (maximum threshold defined by MAEE) (Government of Luxembourg, 2018[12]), with some stakeholders reporting even longer waiting times. In the case of a favourable reply, the TCN receives a "temporary authorisation to stay" sent by post. If TCNs also require a visa, the visa processing times need to be added to the processing times required for the temporary authorisation to stay.
Many stakeholders consulted for this review pointed out that the length of the admission procedures complicates the recruitment processes for foreign talent and poses obstacles to employers waiting to hire a TCN in a shortage occupation.
International evidence on work permits shows that the maximum processing time in Luxembourg is higher than statutory times in most OECD countries for which data are available, where the median statutory limit is 90 days. Luxembourg could thus take steps to improve the efficiency of its immigration procedures and consider digitalising visa and permit application and processing. In Sweden, evidence shows that paper processing takes at least twice as long for work applications as online applications (OECD, 2011[39]). The digitalisation of application and processing procedures would also allow foreign talent to track the status of their admission files as they are being processed. This would help further decrease the processing time and increase the transparency of Luxembourg’s immigration procedures. When digitalising the visa and permit application and processing, Luxembourg should comply with data protection standards and consider making the procedures available in English, French and German. Luxembourg could take inspiration from Australia (Box 4.1), one of the front-runners in digitalised admission procedures. Nonetheless, digital procedures should not completely replace, but rather supplement, paper-based procedures to take into account the needs of applicants who might not have computer or broadband access.
Box 4.1. Relevant international example: Digitalised admission procedures
Online e-visa applications have become commonplace in several OECD countries, including Australia, Canada, Chile, New Zealand, the Republic of Türkiye and the United Kingdom.
Australia
Australia has been undertaking active efforts to support the digitalisation of admission procedures, including by launching an online visa applications platform in 2013. The platform, called ImmiAccount, can be used for submitting, tracking or modifying visa applications or for checking the details of existing visas. Nine years after the introduction of ImmiAccount, over 12 million users have created an account on the platform.
In addition, Australia also developed the Electronic Travel Authority (ETA) visa mobile application and the Visa Entitlement Verification Online (VEVO) system. The ETA visa mobile application can be used to apply for a short-term visa. The VEVO system enables visa holders to check their visa details and conditions and send proof of their visa conditions, where necessary (e.g. to employers, landlords, etc.), among others.
To further incentivise individuals to submit visa applications on line, Australia prioritised processing visa applications lodged on line in 2019/20. In addition, online submission of applications for certain types of visa (e.g. the Work and Holiday visas, with the exception of Chinese applicants) was made mandatory. The automated correspondence services to visa applications and holders have been continuously improved and assisted online visa submission services have been promoted.
As of 31 December 2021, 99% of all temporary visa applications and 93% of permanent visa applications were lodged electronically in Australia, compared to 78% (temporary visa applications) and 74% (permanent visa applications) in 2014‑15.
Source: European Migration Network (2022[40]), The use of digitalisation and artificial intelligence in migration management: Joint EMN‑OECD Inform, www.oecd.org/migration/mig/EMN-OECD-INFORM-FEB-2022-The-use-of-Digitalisation-and-AI-in-Migration-Management.pdf; Department of Home Affairs (2022[41]), The Administration of the Immigration and Citizenship Programs; https://immi.homeaffairs.gov.au/programs-subsite/files/administration-immigration-program-9th-edition.pdf; Department of Home Affairs (2022[42]), Subclass 601 Electronic Travel Authority, https://immi.homeaffairs.gov.au/visas/getting-a-visa/visa-listing/electronic-travel-authority-601#Eligibility; Department of Home Affairs (2019[43]), Check visa details and conditions, https://immi.homeaffairs.gov.au/visas/already-have-a-visa/check-visa-details-and-conditions/check-conditions-online.
Beyond improving the efficiency of admission procedures, the extent to which migration policy reflects labour market needs could also be strengthened. As mentioned above, before being able to hire a TCN, the employer must declare the vacancy to ADEM, which has three weeks to check whether a suitable candidate cannot be found on the national labour market (i.e. carry out a labour market test) (ADEM, 2020[18]). Exemption from the labour market test only exists if both the job and the TCN meet requirements for the EU Blue Card, a special residence permit for workers with HE qualifications from third countries (as discussed above).
However, as employers in Luxembourg are reporting shortages of talent (also) in occupations not necessarily requiring HE qualifications (Chamber of Commerce, 2019[4]; Chamber of Skilled Trades and Crafts, 2019[5]), Luxembourg could consider ways of better reflecting such concerns in migration policy. In the past, Luxembourg used to compile a list of shortage occupations, which ADEM and Luxembourg’s employers drew up. The shortage occupation list was developed, drawing mainly on ADEM’s vacancy and job seeker data, while employers were consulted to validate ADEM’s findings. The shortage occupation list was used for purely informative purposes and to help ADEM better target the design of its training offer for job seekers. However, the shortage occupation list was never linked to migration policy and ceased being produced after a number of years.
Going forward, Luxembourg authorities could consider the introduction and regular updating of a shortage occupation list for talent admission purposes, covering occupations with an ISCO Level from 3 to 9 (ISCO Levels 1 and 2 being already covered by the list giving access to the EU Blue Card). As in most other countries, the preparation of this list should be based on a discussion between national authorities responsible for migration policies, sectoral representatives and ADEM (as the holder of the vacancy data). Having agreed on the occupations to be included on the list, Luxembourg could then consider exempting them from the labour market test. Germany followed a similar approach for a number of years before its labour migration policy was recently liberalised even further, and the labour market test was fully abolished (Box 4.2). While some stakeholders consulted during this review were in favour of fully abolishing the labour market test in Luxembourg too, following Germany’s former approach of compiling a shortage list of occupations used as a basis for exemptions from the labour market test (Box 4.2) would provide a more gradual solution to reflecting labour market needs in Luxembourg’s migration policy. Similarly, sector agreements in New Zealand serve to better facilitate the recruitment of temporary migrant workers in selected sectors (Box 4.2).
Box 4.2. Relevant international example: Shortage occupation lists for labour market test exemptions
Germany
Until 2020, the Federal Employment Agency, in co‑operation with the Federal Ministry of Labour and Social Affairs, drew up the “positive list” based on an analysis carried out on skilled labour shortages. The positive list identified occupations where it was difficult to find skilled domestic workers.
The list was limited to professional categories for which no exemptions from the labour market test (such as exemptions granted on the basis of the EU Blue Card for highly educated workers) were possible in Germany. As long as the vocational qualifications of a job applicant in a shortage occupation were determined to be equivalent to German vocational qualifications, the Federal Employment Agency could issue approval without carrying out the usual priority examination (i.e. the labour market test).
In March 2020, the Skilled Immigration Act further liberalised the labour migration policy by abolishing the labour market test for all skilled workers (defined as workers possessing at least two years of vocational training or a similar qualification) with an employment contract, making the positive list redundant.
New Zealand
From 2022 onwards, selected sectors in New Zealand will be able to negotiate an agreement with the government to facilitate smoother recruitment of temporary migrant workers.
Sectors eligible for concluding these agreements include residential care, meat processing, dairy, forestry, road freight transport, tourism and hospitality, construction, and horticulture and viticulture. These sectors in New Zealand tend to hire large numbers of temporary migrant workers.
Sector agreements will facilitate hiring temporary migrant workers in specified occupations for the duration of the agreement by putting in place special procedures (e.g. exemptions from the labour market test, more generous visa terms, etc.). The agreements will also include plans for employing more New Zealanders in the respective sectors in order to reduce reliance on foreign temporary workers in the long term. Sector agreements will be valid for up to three years. Employers will not have the option to opt out of the sector agreements and use other schemes.
The introduction of sector agreements in New Zealand is a further step towards facilitating low-skilled migration via sector-based policies, which gradually gained prominence after the introduction of the “construction and infrastructure skill shortage list” after the 2010 Canterbury earthquake.
Source: Vollmer, M. (2015[44]), Determining Labour Shortages and the Need for Labour Migration in Germany, www.bamf.de/SharedDocs/Anlagen/EN/EMN/Studien/wp64-emn-bestimmung-fachkrafteenpaesse-und-bedarfe.pdf?__blob=publicationFile&v=15; Government of Germany (2021[45]), How can I recruit a qualified professional from abroad? What employers needs to know www.make-it-in-germany.com/fileadmin/MiiG_Unternehmen/PDFs/Unternehmen/Unterstuetzung_finden/BMWi_Leitfaden‑fuer_Arbeitgeber_EN_02.2021.pdf; OECD (2020[46]), International Migration Outlook 2020, https://dx.doi.org/10.1787/ec98f531-en.
Beyond TCNs, it is important to highlight that cross-border workers also face significant challenges accessing Luxembourg and its labour market on a daily basis. As highlighted above, cross-border workers are a key source of Luxembourg’s labour supply, constituting around 47% of the labour force (Figure 4.2). Moreover, while cross-border workers (with EU nationality) are not subject to immigration procedures, they are affected by significant mobility challenges hampering their daily commutes to Luxembourg and impacting their quality of life (Fick, Gonzales and Oliveira, 2022[47]).
The average time spent commuting by a cross-border worker working in Luxembourg amounts to almost 2 hours per day, compared to the average of 1.07 hours in the case of a French worker working in France, for example (LISER, 2018[48]). On the one hand, the longer commuting times of cross-border workers are a reflection of having to travel longer average distances to work compared to their compatriots, who both live and work in the country of origin (LISER, 2018[48]). On the other hand, the lengthy commuting times also reflect Luxembourg’s mobility challenges, with over-saturated roads and traffic jams that (not only) cross-border workers are facing at peak hours. In turn, the mobility challenges have been significantly exacerbated by the increasing number of cross-border workers coming to work in Luxembourg in recent years (an increase of 40% between 2012 and 2022), most of whom travel to work by car (Thevenot, 2021[49]). In this context, it is not surprising that the time that car users in Luxembourg spend in traffic jams per year is the 15th highest in the world (Schulz, 2020[50]).
Luxembourg should consider ways of better facilitating cross-border workers' daily access to its labour market. Stakeholders consulted in the context of this project have agreed that improving access to Luxembourg’s labour market for cross-border workers is one of the most important policy directions that should be considered to better attract the foreign talent Luxembourg needs. While it is important that Luxembourg’s talent attraction strategies do not “drain” talent from the Greater Region, it is also critical that cross-border transport and, thereby, access to Luxembourg’s labour market improves, which will have benefits for both cross-border and resident populations.
In this context, it is welcome that the Strategy for Sustainable Mobility (Modu 2.0), launched by the Ministry of Mobility and Public Works of Luxembourg in (2018[51]), introduced several measures to facilitate smoother cross-border transport. Among others, the measures include: the launch of an online car-pooling portal and an eponymous mobile application, “CoPilote”; support for the testing of autonomous cross‑border vehicles; the development of “park and ride” spaces in Luxembourg’s border regions; and a EUR 4 billion investment in the railway network between 2013 and 2025 (Ministry of Mobility and Public Works, 2018[51]). Measures for improving cross-border transport, including via sustained support for greater uptake of car pooling (e.g. through the foreseen development of car-pooling motorway lanes (Ministry of Mobility and Public Works, 2020[52])) and further strengthening the railway network, should continue to feature high on Luxembourg’s political agenda.
Luxembourg would also benefit from more numerous co-working spaces (i.e. work environments with shared facilities, services and tools designed to accommodate employees from different firms as well as self-employed individuals) (Hogarty, 2021[53]; Ward, 2020[54]) near its borders. Co-working spaces near the borders could help reduce commuting times for at least those cross-border workers for whom working from a co-working space could be feasible in practice. In light of this, it is positive that Luxembourg’s Ministry of Energy and Spatial Planning is supportive of the idea of developing border co-working spaces, such as a co-working space currently being developed in Esch Belval, near the French border (LIST, 2019[55]; Bauldry, 2018[56]).
In addition, stakeholders consulted during this review agreed that employers could more frequently consider allowing greater flexibility in their employees’ working hours. Luxembourg’s legal framework makes it possible, under certain conditions, for workers in Luxembourg to work beyond the generally applicable limit of 8 hours a day (i.e. 40 hours a week), while it is possible to set lower limits via collective agreements (Government of Luxembourg, 2020[57]). Where feasible, greater flexibility in working hours would help spread the volumes of (not only) cross-border commuters more evenly across the day and/or week.
Finally, Luxembourg could also better facilitate cross-border teleworking to help reduce cross-border workers’ commuting times and alleviate pressure on transport infrastructure. The fact that the uptake of teleworking skyrocketed during the COVID‑19 crisis (OECD, 2021[58]) helped create significant momentum for considering an expansion of teleworking opportunities for workers in many countries on a more permanent basis. According to Luxembourg’s Chamber of Employees (CSL), while 22% of employees in Luxembourg reported teleworking every day or several times a week in 2020, it was 28% in 2021 (CSL, 2020[59]; 2021[60]). However, cross-border workers in Luxembourg engage in teleworking less than Luxembourg’s residents. In 2021, 31% of employees residing in Luxembourg teleworked every day or several times a week, while the same was true for 28% of cross-border workers from France, Belgium (23%) and Germany (22%) (CSL, 2021[60]). While these differences could be at least partly accounted for by the extent to which cross-border workers are employed in jobs conducive to teleworking, stakeholders in consultations underlined that the potential tax and social security implications associated with cross‑border teleworking also pose important obstacles. Therefore, expanding cross-border teleworking possibilities will require active collaboration between the Government of Luxembourg and the neighbouring countries. In this context, Luxembourg can further build on a recent, successful collaboration with the French Government, whereby the Franco-Luxembourg Intergovernmental Commission agreed to raise the maximum number of days that French cross-border workers employed in Luxembourg can spend teleworking from France without tax implications from 29 to 34 days per year (Oget, 2021[61]).
Recommendations
3.1. Improve the efficiency of talent admission processes through greater digitalisation. MAEE should initiate the process of digitalising application and processing procedures for visas, residence and stay permits while complying with national data protection standards. Greater digitalisation of admission processes would simplify, speed up and make the application filing process more transparent and reduce average processing times. Furthermore, when digitalising the visa and permit application and processing, Luxembourg could consider making the procedures available in English, French and German while paying particular attention to strong data protection standards.
3.2. Elaborate a list of shortage occupations for talent admission purposes, updated regularly. The preparation of this list should be based on a discussion between national authorities responsible for migration policies, sectoral stakeholders and ADEM, as the latter collects and holds Luxembourg’s vacancy data. MAEE should consider exempting the occupations placed on the shortage list from the labour market test to better account for labour market needs in labour migration policy.
3.3. Facilitate cross-border workers’ daily access to Luxembourg’s labour market by further facilitating cross-border transport, supporting the creation and use of co-working spaces near the borders, increasing the flexibility of working hours and expanding teleworking possibilities. Measures for improving cross-border transport, including via sustained support for greater uptake of car pooling and further strengthening the railway network, should continue to feature high on Luxembourg’s political agenda. Luxembourg should also further support the creation and use of co-working spaces near the borders. Where feasible, Luxembourg’s employers could give greater consideration to allowing more flexible working hours for employees. In addition, the Government of Luxembourg should further build on the collaboration with neighbouring countries to expand teleworking possibilities for cross-border workers during and beyond the recovery from the COVID‑19 pandemic.
Supporting the affordability of living of foreign talent in Luxembourg
Affordability of living is an important factor impacting the quality of life that countries can offer to residents and workers (OECD, 2021[30]). In the case of foreign talent, the affordability of living in a host country can influence the quality of life that the country could potentially offer, affecting, in turn, the overall attractiveness of the country as a potential emigration destination.
Affordability of living is a reflection of several determinants, including income. In Luxembourg, the household disposable income (gross, including social transfers in kind) is the second highest across OECD countries (OECD, 2022[62]), constituting an important pull factor for foreign talent. While incomes are relatively high in Luxembourg, price levels are also above the OECD average (OECD, 2022[63]). Housing prices, in particular, have been increasing rapidly since the start of 2019 for both new and existing dwellings. On average, prices have risen by 9.7% per year over the last five years, almost double the EU average of 4.9% (OECD, 2022[64]). The sharp increases in housing prices have worsened most household affordability ratios. Price-to-income ratios, which can be considered as a measure of the affordability of housing, are well above their long-term trends, suggesting that the affordability of housing in Luxembourg is deteriorating (OECD, 2022[64]). On an index combining cost of living and rents, Luxembourg is the fifth-most expensive country to live in, after Bermuda, Hong Kong (China), Singapore and Jersey (OECD, 2022[64]).
Evidence shows that foreign-born individuals, and especially those born in a non-EU country, are more impacted by the housing cost burden in Luxembourg than the native-born population. The housing cost burden rate for TCNs in Luxembourg is 17 percentage points higher than that of the native-born population, which is one of the largest differences in the European Union, second only to Spain and Greece (Figure 4.8).
Stakeholders have agreed that the high cost of housing is a key challenge that can discourage foreign talent from considering Luxembourg as a potential emigration destination. In a 2018 survey by Morgan Philips, 51% of employers in Luxembourg identified the cost of living, and especially housing, as one of the principal obstacles to Luxembourg’s attractiveness in the eyes of foreign talent (HR ONE, 2018[65]).
As mentioned above, Luxembourg has financial incentives designed to attract foreign talent, which can also help shoulder the high costs of living in the country. Under the tax regime for highly qualified foreign‑born resident workers (the impatriate regime) implemented by the MFIN, foreign-born highly qualified (i.e. possessing in-depth technical expertise or having at least five years of sector-specific experience) workers recruited to live and work in Luxembourg can be offered, under certain conditions, a range of direct, tax-free financial contributions from the employer. The contributions cover certain recurring as well as non-recurring expenses (Government of Luxembourg, 2021[66]). Among others, eligible expenses can include: the cost of moving to Luxembourg and furnishing a new home; the difference between the tax and housing burden in Luxembourg and the employee's home country; rent; utilities; or children’s school fees, all subject to certain conditions. Employers can deduct such expenses for tax purposes (Government of Luxembourg, 2021[66]). With revisions to the impatriate regime in 2021, employees can now benefit from such advantages for eight years, replacing the previous limit of five years (LPG, 2020[67]).
Figure 4.8. Share of individuals aged 15-54 that spend over 40% of their household disposable income on rent, selected countries, 2019
Source: OECD (2021[21]), Le fonctionnement du système d’intégration et ses acteurs au Grand-Duché de Luxembourg, www.oecd.org/fr/migrations/Le-fonctionnement-du-systeme-dintegration-et-ses-acteurs-au-grand-duche-de-Luxembourg.pdf, based on Eurostat data.
Favourable tax treatment of foreign newcomers is relatively unusual in OECD countries, except in countries with very high tax rates. In Luxembourg, while the tax wedge5is higher than the OECD average (OECD, 2021[68]), high living costs might also be considered an additional, strong disincentive for migration. Moreover, it should be acknowledged that favourable tax treatment can create equity concerns by treating workers with different skill levels differently, as well as foreign and domestic workers (OECD, 2011[69]).
In Luxembourg, stakeholder consultations revealed that the impatriate regime is not widely known. In addition, certain stakeholders suggested that the eligibility conditions for benefitting from the impatriate regime became too restrictive with its 2021 revision. To become eligible for the impatriate regime, the employee must now declare a gross annual income of at least EUR 100 000 (LPG, 2020[67]), a considerable increase from the previous minimum threshold of EUR 50 000. The revised minimum income threshold of the impatriate regime is set even higher than the minimum income threshold required for highly qualified workers to become eligible for the EU Blue Card (see above).
MFIN plans to carry out an evaluation of the impatriate regime, which is positive and should be supported. It is important that MFIN uses the evaluation to thoroughly assess the regime’s impact (e.g. to see how the impact of the revised impatriate regime compares to the impact of the regime’s previous version). MFIN should let adequate time pass before the evaluation is carried out to allow for the accurate capture of the regime’s impacts, particularly as the early years of the implementation of the revised regime were disrupted by the COVID‑19 pandemic.
Kleven et al. (2013[70]) showed that the preferential foreigner tax introduced in 1991 in Denmark doubled the number of highly paid foreigners relative to slightly less paid ineligible foreigners. However, in most other OECD countries with similar incentives, evidence of tax benefits affecting migrants’ choices is weak. In Korea, fiscal incentives for highly skilled immigrants implemented in 2003 included tax-free allowances of up 40% of salary to cover cost of living, housing, home leave and education. In Italy, highly skilled foreign workers and returning Italians have benefited from a reduced income tax since 2015. The taxable income exemption increased from 50% to 70% in 2019, up to 90% for individuals settling in southern Italy. It lasts at least five years and up to ten years for those having purchased a residential real property (Rossi, 2019[71]).
It is not clear whether these personal tax incentives have influenced individuals’ migration choices. In Korea, for instance, the number of highly skilled foreign workers remained relatively low; therefore, incentives started to be gradually withdrawn in 2019 (OECD, 2019[72]).
Based on the results of the evaluation, MFIN should implement appropriate revisions to the regime (i.e. changes to the range and nature of benefits to be granted, the timeframe during which they should be granted, as well as the eligibility conditions for the regime), in addition to determining the need for raising better awareness of the regime.
Independent of the results of the evaluation of the impatriate regime, Luxembourg should improve the general affordability of living in the country, which would especially benefit foreign talent not eligible for the impatriate regime under its current or previous minimum salary threshold. More specifically, Luxembourg should take active steps to expand its supply of affordable housing (OECD, 2019[8]; 2022[64]). Creating more abundant affordable housing opportunities might particularly facilitate the recruitment of foreign talent into medium-skilled shortage occupations and/or into more junior roles, where wages tend to be generally lower than in senior, high-skilled jobs. Going forward, attention should also be paid to the distribution of affordable dwellings across Luxembourg to avoid a too-high concentration of foreign-born individuals in certain areas, which is detrimental to social cohesion and their social integration (OECD, 2021[21]). Recent OECD Economic Surveys (OECD, 2019[8]; 2022[64]) provide recommendations for expanding the supply of affordable housing in Luxembourg, which is not discussed in greater detail here, so as to allow to zoom in onto skills-related issues.
Recommendation
3.4. Review the nature, range, and timeframe of, and eligibility conditions for, the benefits granted under the impatriate tax regime based on the results of the regime’s planned evaluation. MFIN should use the planned evaluation of the impatriate tax regime to thoroughly assess the regime’s impact. Based on the results of the evaluation, MFIN should implement appropriate revisions to the regime (i.e. changes to the range and nature of incentives to be granted, the timeframe during which they should be granted, as well as the eligibility conditions for the regime), in addition to determining the need for raising better awareness of the regime. Independent of the outcomes of the evaluation of the impatriate regime, Luxembourg should take active steps to improve the general affordability of living in the country, especially by expanding the supply of affordable housing. The latter would especially benefit foreign talent not eligible for the impatriate regime under its current or previous minimum salary thresholds.
Strengthening the information provision for, and exchange between, foreign talent and Luxembourg’s employers
Information barriers are one of the key potential obstacles that can hamper international recruitment processes (OECD, 2019[38]). First, in the process of choosing between potential emigration destinations, the image or “brand” that potential migrants associate with a specific country is one of the first factors that starts to shape their migration decisions (Nadeau and Olafsen, 2015[73]; Silvanto, Ryan and Mcnulty, 2015[74]). Second, the availability and transparency of information on employment opportunities, job-hunting strategies, working conditions, available migration schemes, as well as the rights associated with the migration status for the principal migrant and possible family members can significantly facilitate or hamper migration decisions of prospective foreign talent. In addition, the availability and transparency of information on the administrative and legal procedures involved in international recruitment, on the means and tools through which employers can find suitable foreign talent, as well as the abundance of opportunities for in-person information exchange with foreign talent, can significantly influence employers’ decisions to engage (or not) in an international hiring process in the first place (OECD, 2019[38]).
Stakeholders consulted during this project highlighted that Luxembourg lacks a strong “nation brand”. The general awareness of Luxembourg as an attractive emigration destination is low, while certain negative stereotypes (e.g. being a “tax haven”) can still be associated with Luxembourg abroad. In the Gallup World Poll (2015‑21), less than 1% of respondents with HE qualifications who wish to emigrate identified Luxembourg as their preferred emigration destination, significantly lagging leading countries such as the United States (15%) or Canada (9.5%) (Figure 4.9). Similarly, insufficient awareness of Luxembourg and its assets was identified as the primary obstacle to attracting foreign talent by 62% of employers in Luxembourg surveyed by Morgan Philips in 2018 (HR ONE, 2018[65]).
Figure 4.9. Preferred emigration destinations, Gallup World Poll, 2015-21
Note: Survey data cover the emigration preferences of individuals with higher education qualifications.
Source: Gallup World Poll (2015-21), updated from (OCDE, 2017[75]).
As mentioned above, a dedicated unit (hereafter, the “nation-branding unit”) at the MAEE is in charge of developing and implementing Luxembourg’s nation-branding efforts. In 2013, an inter-ministerial and inter‑institutional co‑ordination committee, co‑ordinated by the MAEE, was set up to devise and implement a coherent nation-branding strategy for Luxembourg, with the view of better promoting the country’s assets abroad. Through a participatory process involving a wide array of Luxembourgish stakeholders, the committee defined three key values (reliability, dynamism and openness to others) that should be used to promote Luxembourg internationally. It also developed Luxembourg’s visual identity and slogan (“Luxembourg – Let’s Make it Happen”) as well as a publicly accessible online communications toolbox (with audiovisual material, data, etc.) that can help inform all individual as well as institutional presentations of Luxembourg.
Considering that creating a recognisable nation brand is a long-term process, it is positive that Luxembourg adopted a new nation-branding Action Plan 2021-2025 to build on the previous nation-branding efforts. The Action Plan identifies key foreign countries in which Luxembourg should improve its reputation or increase general awareness based on “image studies” (i.e. surveys) conducted abroad. The Action Plan also foresees the implementation of several promising activities to strengthen the image of Luxembourg abroad through participation at international events (e.g. the World Expo) and targeted communication through social networks and in foreign media, among others. In addition, the Action Plan outlines concrete steps for monitoring Luxembourg’s reputation abroad, including through the continuation of image studies in more foreign countries, monitoring foreign press and the open web, as well as the eventual design of an interactive dashboard based on indicators allowing for the systematic monitoring of Luxembourg’s reputation abroad (Ministry of Foreign and European Affairs, 2021[76]).
While the importance of nation branding is acknowledged in Luxembourg’s Talent Attraction Roadmap (Ministry of the Economy, 2021[1]), the collaboration and co-ordination between the nation-branding unit and Luxembourg’s inter-ministerial Talent Attraction Committee could be improved. Greater collaboration and co-ordination would allow the members of the Talent Attraction Committee to learn about the level of awareness and nature of perceptions of Luxembourg in key foreign countries and how to accurately and consistently promote Luxembourg’s key values in their own foreign talent attraction activities. In Lithuania, for example, nation-branding and talent attraction efforts are closely linked (Box 4.3).
Box 4.3. Relevant international example: Synergies between nation branding and foreign talent attraction efforts
Lithuania
In 2020, Lithuania adopted its nation-branding strategy, “Strategy for presenting Lithuania abroad 2020-2030”. The strategy aims to provide a common basis for coherently and effectively promoting Lithuania through actions of governmental actors involved in four areas identified to be of national importance by the nation-branding strategy: economy, culture, governance and talent attraction.
The strategy was developed based on consultations with key strategic stakeholders and the public in the country, as well as awareness and reputation research conducted in eight foreign countries. The consultations in Lithuania helped to understand which strategic image of Lithuania presented abroad would ensure the strongest support from its citizens. The external research helped Lithuania better understand the level of awareness of Lithuania in their key source markets. Lithuania also developed a foreign media monitoring system to support the implementation of its nation-branding strategy. While preparing the strategy, together with co‑operating institutions, Lithuania agreed on key source markets where general awareness of the country or favourability should be increased. Depending on the goals identified in each country, specific key performance indicators were formulated for each goal.
Promoting Lithuania as an attractive place to live and work among foreign talent is one of the strategy’s four priorities. The strategy summarises the key barriers and enablers related to attracting talent to Lithuania in target foreign countries based on the awareness and reputation research. It also provides recommendations for improving the visibility and coherence of communication related to Lithuania’s talent attraction efforts, which are led by Invest Lithuania (Lithuanian Investment Promotion Agency managed by the Ministry of the Economy and Innovation) through the Work in Lithuania initiative.
Source: City National Place (2021[77]), Building a data-centric nation branding strategy, www.citynationplace.com/building-a-data-centric-nation-branding-strategy; Government of Lithuania (2020[78]), Strategy for presenting Lithuania abroad 2020-2030, https://lrv.lt/uploads/main/meetings/docs/1788539_imp_900b199b13ce657f8cce6fe74337e6fc.pdf.
Luxembourg could also strengthen its information provision on working and living opportunities in Luxembourg available to foreign talent, as well as the information on international recruitment processes for employers. In this regard, it is positive that LFF recently launched the “movetolux” campaign, which focuses on talent attraction to the financial sector, as mentioned above (Luxembourg for Finance, 2022[20]).
The Work in Luxembourg portal (work-in-luxembourg.lu) aims to serve as a one-stop-shop portal with information for foreign talent potentially interested in working in Luxembourg. The Work in Luxembourg portal is run by EURES Luxembourg and was recently redesigned, with a new version launched at the start of 2022. The portal features selected information on upcoming online job-matching events held by EURES Luxembourg, which will be hosted on the portal. On the portal, foreign talent is invited to register and upload their CVs, which become visible to employers legally established in Luxembourg. When declaring their vacancies to ADEM, Luxembourg's employers can ask to have their vacancies published on the Work in Luxembourg portal free of charge. The vacancies become publicly visible on the portal. The portal also enables direct communication between registered users and employers via dedicated chat and video platforms. In addition, it includes information about Luxembourg’s labour market, society, and immigration procedures, sourced from several websites of Luxembourg’s government agencies (e.g. ADEM, MAEE, etc.) (ADEM and EURES Luxembourg, 2022[79]). Such a one-stop-shop portal, which is usually part of proactive talent attraction strategies in several OECD countries, is welcome.
However, the Work in Luxembourg portal provides little information for employers potentially interested in hiring foreign talent. Employers looking for information on international recruitment need to separately search for information on ADEM’s general website or within ADEM’s Guide for Private Sector Employers, which provides a brief overview. ADEM could consider integrating advice for employers on its website, following the example of Estonia (Box 4.4). Information should be regularly updated to reflect changes to relevant policies (e.g. immigration, tax, etc.) affecting international recruitment procedures. The Work in Luxembourg portal would also be ideally placed to promote the financial measures that employers can make use of to attract foreign talent (e.g. the impatriate regime), the awareness of which is low (see above). To further increase the Work in Luxembourg portal’s potential and improve its visibility and reach, a link to the portal could be featured on the main website of the Grand Duchy of Luxembourg (luxembourg.lu). In Estonia, for example, the Work in Estonia portal is featured on Estonia’s main website (estonia.ee), which synthesises the key information about living and working in the country.
Box 4.4. Relevant international example: One-stop-shop labour migration information portals
Estonia
In Estonia, the “Work in Estonia” portal provides tailored information to both prospective foreign employees and employers considering hiring foreign talent.
The portal includes abundant information and support for employers considering hiring an employee on the international market, including, among others: 1) information on tools and platforms for finding suitable foreign candidates; 2) an international hiring checklist; 3) an interactive roadmap for international recruitment; 4) a relocation guide and sample administrative documents in Estonian and English, which can be shared with newly hired foreign employees; and 5) information on foreign recruitment meet-ups where Estonian companies share experiences on the international recruitment process.
Source: Work in Estonia (2021[80]), Services for employers, www.workinestonia.com/for-employers/.
In addition, links between the Work in Luxembourg portal and websites run by sectoral stakeholders dedicated to foreign talent attraction in specific sectors should be established. For example, LFF has been running a communications campaign on living and working in Luxembourg to attract foreign talent into Luxembourg’s financial sector and has a dedicated website section promoting working and living in Luxembourg, which could be featured on the Work in Luxembourg portal (Luxembourg for Finance, 2022[81]). Furthermore, the Talent Attraction Committee could be a suitable mechanism for taking stock of the existing online platforms in Luxembourg dedicated to attracting foreign talent, which could be included on the Work in Luxembourg portal.
Information on the available platforms through which Luxembourg’s employers can find suitable foreign talent should be equally improved. As described above, all employers who submit their vacancies to ADEM are asked to post their job offers on the EURES portal (which is public, as opposed to ADEM’s job board, which is only available to registered job seekers).
The Luxembourg section on the EURES portal is currently Luxembourg’s most comprehensive job portal, with 5 544 open vacancies (as of 29 June 2022). In addition, employers in Luxembourg can independently consult the EURES portal to access a large pool of readily available candidates. As of November 2021, around 800 000 CVs were available on the EURES portal (European Commission, 2021[82]). All candidates on the EURES portal are EU citizens or EU residents and, therefore, not subject to immigration processes if hired by an employer in Luxembourg. However, stakeholders consulted during this review indicated that the general awareness of the EURES portal among employers in Luxembourg is low, and its potential is thus not fully utilised. Going forward, Luxembourg should actively raise awareness of the EURES portal among employers, including by featuring EURES and guidance for using it prominently on the Work in Luxembourg portal.
Luxembourg could also consider alternative methods beyond online information tools and strategies, and create opportunities for direct information exchange between foreign talent and employers. International job-matching events (e.g. international job fairs) provide in-person opportunities for promoting a host country’s available job opportunities among foreign talent and help reduce the information barriers between employers and prospective foreign employees by allowing them to meet in person (OECD, 2019[38]).
Certain actors in Luxembourg are active in creating their own opportunities for direct information exchange with foreign talent. For example, in 2019, the Luxembourg House of Financial Technology (LHoFT) held recruitment fora, masterclasses and workshops across Europe where students, fintech companies and large financial institutions had the opportunity to meet and discuss recruitment opportunities in Luxembourg (LHoFT, 2019[83]). Some of Luxembourg’s audit companies also hold recruitment days at universities abroad. In 2019, Luxembourg, represented by ADEM, also participated in international job fairs in Lisbon and Paris for the first time. However, the participation of Luxembourg’s employers was weak. Moreover, ADEM reported difficulties persuading most employers to participate in international job fairs, despite the reported skills shortages across Luxembourg’s sectors.
To improve employers’ interest in in-person international job-matching opportunities, ADEM could consider targeting sector-specific international job fairs, which are likely to attract applicants with relevant, sector-specific education and/or professional background and/or interests, and invite a selection of employers representing the respective sectors to attend. In addition, organising targeted international job-matching programmes in Luxembourg could provide an alternative opportunity for improving the information provision and exchange between foreign talent and employers and could help bring foreign talent closer to employers in Luxembourg. In this context, Luxembourg could take inspiration from New Zealand’s LookSee Wellington Programme (Box 4.5), developed to respond to pressing information and communication technology (ICT) shortages. The potential appeal of similar initiatives in Luxembourg could be tested with employers in the framework of an employer survey that ADEM is planning to carry out, in order to learn about the tools and practices that Luxembourg’s employers would welcome the most in recruiting foreign talent to help fill skills shortages.
Box 4.5. Relevant international example: Targeted international job-matching events organised in the host country
New Zealand
In New Zealand, the Wellington Regional Economic Development Agency (WREDA) and the Wellington Council, in collaboration with the Haines Attract Recruitment Agency, created the LookSee Wellington Programme in 2017. Through the programme, funded by WREDA and the Wellington Council, meetings with prospective employers with roles matching a candidate's skills were arranged, and flights and accommodations were covered.
In its first year, the programme received 48 000 applications from all over the world, which were pre-screened to select 1 000 candidates for consideration by registered Wellington employers. Employers then nominated the applicants they wanted to interview for mid- to senior-level positions in ICT-related roles. Out of the 100 selected candidates, the majority were offered and accepted job opportunities by Wellington’s employers.
In 2019, the second round – and the last round before the outbreak of the COVID‑19 pandemic – of the LookSee programme was launched. This time, LookSee Wellington was rebranded LookSee Tech and expanded nationwide. In comparison to LookSee Wellington, LookSee Tech was designed on a rolling basis, with up to 100 pre-selected candidates invited for a week of pre-arranged job interviews and cultural activities in New Zealand every month. The candidates were pre-selected by drawing on the database developed during the implementation of LookSee Wellington. While LookSee Tech did not cover participants’ flights and accommodation costs, individuals hired through the programme each received a reimbursement of USD 1 000. LookSee Tech was funded and implemented by Haines Attract and New Zealand’s information technology (IT) recruitment provider, Absolute IT.
Source: Winter, C. (2017[84]), First LookSee Wellington offers accepted, more to come, WREDA says, www.stuff.co.nz/business/94290232/first-looksee-wellington-offers-accepted-more-to-come-wreda-says; Wright, H. (2019[85]), LookSee 2.0 targets tech skills shortages - junket excluded, http://istart.co.nz/nz-news-items/looksee-targets-nz-tech-skills-shortage/.
Finally, information provision for, and exchange between, foreign talent and Luxembourg’s employers (as well as Luxembourg’s other foreign talent attraction efforts) would benefit from better co‑ordinated governance arrangements, as highlighted by stakeholders consulted in this project. Developing strong co‑ordination and collaboration links among the different public authorities as well as the main stakeholders from business and employee associations is key. In this context, the establishment of the inter-ministerial Talent Attraction Committee constitutes a step in the right direction. It is positive that the Talent Attraction Committee has been awarded a permanent status, and is tasked with co-ordinating the different talent attraction, development and retention efforts in Luxembourg (starting with overseeing the implementation of the Talent Attraction Strategy).
Recommendations
3.5. Strengthen synergies between nation branding and foreign talent attraction strategies. Interaction between Luxembourg’s nation-branding unit at the Ministry of Foreign and European Affairs (MAEE), and the inter-ministerial Talent Attraction Committee, could be improved. Closer involvement of representatives of the nation-branding unit in the work of the Talent Attraction Committee would, among others, allow the Talent Attraction Committee to learn more about the level of awareness and nature of perceptions of Luxembourg in key foreign countries, and about how to accurately and consistently promote Luxembourg’s key values in talent attraction activities aimed at foreign audiences (e.g. economic missions, international job fairs, etc.). The nation-branding unit could also by these means better integrate talent-related aspects in international promotion activities.
3.6. Expand the provision of information on international job-matching processes and opportunities by further improving the Work in Luxembourg portal, and by raising awareness of the EURES portal. Information for employers, which could facilitate international recruitment (e.g. on migration regulations, foreign employee on-boarding and integration, available financial support measures for hiring foreign talent, etc.) could be integrated on the Work in Luxembourg one-stop-shop portal (work-in-luxembourg.lu/fr/). To improve visibility and outreach, consideration could also be given to prominently featuring the portal on the main website of the Grand Duchy of Luxembourg (luxembourg.lu). In addition, links between the Work in Luxembourg portal and websites run by sectoral stakeholders dedicated to foreign talent attraction to specific sectors should be established. ADEM should also actively raise awareness of the EURES portal among employers. ADEM could actively encourage employers to make use of the EURES portal to find suitable foreign candidates during job days and other employer events, as well as in the context of the ADEM/Union des Entreprises Luxembourgeoises (UEL) partnership. EURES, and guidance for using it, could also be featured prominently in a separate section on the Work in Luxembourg portal.
3.7. Support opportunities for direct information exchange between foreign talent and employers by participating in targeted international job fairs and by considering the organisation of international job-matching programmes. Luxembourg’s participation in targeted international job fairs should be supported in order to encourage employers from the respective sectors to participate. A list of reputable sector-specific international job fairs could be established and regularly updated. To help bring foreign talent closer to employers in Luxembourg, organisation of targeted international job-matching programmes (such as in New Zealand [see Box 4.5]) within Luxembourg could also be considered. The potential appeal of similar initiatives in Luxembourg could be tested with employers in the framework of an employer survey that ADEM is planning to carry out, in order to learn about the tools and practices that Luxembourg’s employers would welcome the most in recruiting foreign talent to help fill skills shortages.
Opportunity 2: Facilitating the integration of foreign talent and their families into Luxembourg’s society and labour market
As the impacts of global megatrends, combined with the rapid growth of Luxembourg’s economy, contribute to the exacerbation of skills shortages in Luxembourg’s labour market, designing effective policies for attracting foreign talent is essential. As highlighted above, the importance of well-designed and proactive talent attraction efforts is further magnified in the context of the intensifying global race for talent. However, all policies seeking to attract foreign talent must go hand in hand with sustained efforts aimed at retaining foreign talent in order to reap the full benefits of the contributions that foreign talent can make to Luxembourg’s economy and society.
Luxembourg can better facilitate the integration of foreign talent and their families into society and labour market by:
supporting the integration of foreign talent into Luxembourg’s society
facilitating the integration of foreign talent’s spouses into Luxembourg’s labour market and society
facilitating the transition of former international students into Luxembourg’s labour market.
Supporting the integration of foreign talent into Luxembourg’s society
Effective social and cultural integration is key for the retention of foreign talent. Foreign talent’s sense of belonging to society, access to information, and participation in the host country’s local and national political and community activities significantly influence decisions about remaining in a host country in the long term. Harvey (2014[86]) points out that in the long term, as the global race for talent intensifies, foreign talent will prefer locations that enable them to integrate better, if all other things are equal.
As mentioned early in this chapter, the Welcome and Integration Contract (CAI) is one of Luxembourg’s two key integration programmes, together with the Accompanied Integration Pathway (PIA) Programme. While PIA was designed specifically for applicants for international protection, CAI is intended for all foreign-born individuals legally settled in Luxembourg who are at least 16 years old. A strictly voluntary programme, CAI offers financial support for language training in at least one of Luxembourg’s three official languages (Luxembourgish, French and German). It is offered by training providers approved by MENJE or by the National Institute of Languages (Institut national des langues, INL) directly, as an interactive civic training on Luxembourg's history, traditions and common values alongside an "orientation day" that allows participants to familiarise themselves with administrative procedures in Luxembourg (OECD, 2021[21]).
Integration programmes similar to the CAI exist in most OECD countries but are generally open only to newcomers, and in Europe, most often only to TCNs. In this respect, Luxembourg’s CAI is a unique case since it is open to all EU nationals, TCNs, newcomers and foreign individuals who have been living in Luxembourg for a longer period of time. Despite these advantages, only 1 664 individuals signed a CAI in 2019, while more than 20 000 immigrants enter Luxembourg permanently each year (with about three‑quarters of them from EU countries) (OECD, 2021[21]). Even though the 20 000 immigrants entering Luxembourg each year also include children who are non-eligible, the take-up of CAI remains low nonetheless.
The low take-up of CAI might not be an issue per se, assuming that most foreign-born individuals in Luxembourg do not have a real need to access its services. For example, there is evidence showing that 90% of immigrants in Luxembourg report being proficient in one of Luxembourg’s official languages (OECD, 2021[21]). While immigrants’ respective proficiency levels in Luxembourg’s three official languages (Luxembourgish, French and German) cannot be determined, it is reasonable to assume that most immigrants might report fluency in French or German, but only a small share is fluent in Luxembourgish. Luxembourgish, however, is considered the key language for social and cultural integration in Luxembourg (TNS Ilres, 2018[87]). Such evidence suggests that even immigrants fluent in French or German could significantly benefit from CAI. Moreover, evidence shows that those immigrants who might benefit the most from CAI (e.g. individuals with low levels of education) are under-represented among CAI participants. For instance, non-tertiary educated immigrants comprised one-third of CAI participants, representing 44% of recent migrants.
Raising awareness of the benefits CAI can offer immigrants should thus be strengthened, especially in areas outside Luxembourg’s capital. While foreign residents of the canton of Luxembourg represented on average 39% of the country's foreign population between 2011 and 2020, they accounted for 61% of the participants in the CAI over the same period (OECD, 2021[21]). In this context, it is positive that different initiatives to improve communication around CAI, including at the regional level, are currently being undertaken in Luxembourg.
At the local level, communication on CAI could be further strengthened when newcomers register in their municipality upon arrival. In addition, efforts to increase exchanges between former CAI participants willing to share their experience and potential CAI beneficiaries can serve to further improve CAI’s uptake (OECD, 2021[21]). Developing targeted communication through social media would also be useful. In addition, the benefits of CAI could be better promoted among international students to support their retention and eventual transition into the labour market (see below), as well as among workers in the private sector who could benefit from targeted communication directly in the workplace. In addition, CAI could be featured prominently on the Work in Luxembourg portal to help potential newcomers to Luxembourg’s labour market learn about its benefits early on in the recruitment process.
As mentioned above, facilitating participation of foreign talent in the political processes of the host country might also be an important factor impacting the decision of foreign talent to remain in the host country or not. It is, therefore, positive that in 2021, the Government of Luxembourg submitted a proposal to the parliament to open voting rights in local elections to foreigners as soon as they arrive in the country. Before this, foreigners had to spend at least five years in Luxembourg before they could vote in the local elections. The new law was passed in July 2022.
Despite many positive efforts undertaken in Luxembourg to support the integration and, thereby, retention of foreign talent, it is surprising that the share of native-born population reporting having interacted at least once a week with immigrants (defined here as individuals living in Luxembourg but born outside of the European Union) in their neighbourhood (40%) is lower than the EU average (almost 44%) (Figure 4.10), particularly in view of the large number of foreign-born population residing in Luxembourg (It is therefore important that Luxembourg improves its efforts to strengthen the inclusiveness of its society, by promoting exchanges between foreign-born and native-born individuals, inter-cultural dialogue and combating ethno‑racial and/or cultural stereotypes.
Figure 4.10. Share of native-born individuals who interact at least once a week with immigrants in the neighbourhood, EU countries, 2018
Note: Immigrants are defined here as individuals living in a country but born outside of the European Union. The figure shows data for EU countries prior to the departure of the United Kingdom from the EU in 2020.
Source: OECD/European Union (2018[27]), Settling In 2018: Indicators of Immigrant Integration, https://dx.doi.org/10.1787/9789264307216-en.
In order to increase citizen participation and strengthen the interaction of citizens at the local level, Luxembourg has strengthened its integration activities in co‑operation with municipalities. As mentioned above, a new programme, the Pakt vum Zesummeliewen (Pact of Living Together), has been introduced, where municipalities sign a charter together with MFAMIGR and SYVICOL. The charter is based on a participative approach where citizens are encouraged to participate at the local level in workshops to define priorities related to integration and to translate them into concrete activities. About one-third of Luxembourgish municipalities will have signed the charter by 2022, showing strong involvement on the part of municipalities, as the programme was only launched in 2021.
Moreover, Luxembourg has measures for promoting inter-cultural exchanges, integration and diversity within companies. The Diversity Charter Lëtzebuerg, part of the European platform of Diversity Charters, encourages firms to commit to promoting diversity in their companies through concrete actions that go beyond legal obligations (Charte de la Diversité Lëtzebuerg, n.d.[88]). The Diversity Charter has been signed by more than 150 companies, a much higher number than in similar initiatives in neighbouring countries (OECD, 2021[21]).
Further efforts to support exchanges between native- and foreign-born individuals in Luxembourg include inter-cultural initiatives and related social events, which are most frequently co‑ordinated by municipalities, associations and non-governmental organisations (NGOs). For example, “We want to show you our heritage” (Mir wëllen iech Ons Heemecht weisen) is a Luxembourgish NGO that organises inter-cultural events and workshops for refugees to get to know locals and vice versa. (Onsheemecht, n.d.[89]). Moreover, the Liaison Committee of Associations of Immigrants (Comité de Liaison des Associations d'Étrangers, CLAE) organises the annual Festival of Migration, Culture and Citizenship, aiming to promote integration of foreign-born population in Luxembourgish society, and to strengthen its overall inclusiveness (OECD, 2021[21]). The festival includes numerous debates, a book fair and an art exposition. Each year the festival is promoted by NGOs in Luxembourg, and counts on strong participation by civil society, including some of Luxembourg’s trade unions (European Commission, 2019[90]).
Going forward, it is important that inter-cultural events, such as workshops and festivals, are supported and promoted by all stakeholders in Luxembourg. Beyond supporting inter-cultural events to promote inter-cultural exchanges between native-born and foreign-born populations, Luxembourg could also consider introducing more ambitious, dedicated peer-to-peer integration programmes in which both native-born and foreign-born populations play an active role, and which exist in a number of OECD countries (Box 4.6). Inter-cultural exchanges should also be facilitated between foreign-born populations themselves, as well as between residents and non-residents in Luxembourg.
Box 4.6. Relevant international example: Peer-to-peer integration programmes for foreign talent
Ireland
In Ireland, the Fáilte Isteach (“Welcome in”) programme of the NGO “Third Age” is designed to teach English to immigrants through the recruitment of volunteers from the older Irish population.
Fáilte Isteach was piloted in 2006 to help new immigrants in Ireland develop their English language skills since lacking such skills made integration into the local community more difficult. The programme was launched nationally two years later.
The aim of Fáilte Isteach is not only to help migrants develop the necessary English language skills in a welcoming and inclusive fashion but equally to engage older volunteers in meaningful activities whereby their skills, expertise and contribution to the wider community are recognised. The programme also facilitates the establishment of new social relations and promotes inter-cultural learning and acceptance.
At present, Fáilte Isteach encompasses 127 tutor groups spread across 104 locations in Ireland, counting over 1 200 volunteer tutors and 3 200 migrant students. Over 96 000 hours of free English language tuition are delivered annually.
Sweden
In Sweden, the Kompis Sverige (“Friend Sweden”) is a non-profit association that connects established Swedes with new arrivals to Sweden on a voluntary basis.
New and established Swedes are “matched” based on several criteria, such as place of residence, professional and educational background, and common interests. They initially commit to staying in touch (physically or virtually if physical meetings are not possible) for six months, during which Kompis Sverige checks in regularly with both parties and provides support where necessary. After six months, seven out of ten participants in the programme state that they want to continue to remain in touch.
Kompis Sverige offers a large number of free-of-charge social activities to facilitate and encourage meetings between new and established Swedes. The activities are organised across eight Swedish cities or on line and help the new arrivals practice the Swedish language and allow for a mutual exchange of thoughts and experiences by all participants.
Source: OECD (2021[21]), Le fonctionnement du système d’intégration et ses acteurs au Grand-Duché de Luxembourg, www.oecd.org/fr/migrations/Le-fonctionnement-du-systeme-dintegration-et-ses-acteurs-au-grand-duche-de-Luxembourg.pdf; Fáilte Isteach (n.d.[91]), About, www.thirdageireland.ie/failte-isteach/about; Kompis Sverige (2022[92]), Kompis Sverige, https://kompissverige.se/.
Finally, to facilitate a greater degree of interaction between native-born and foreign-born populations while supporting the successful integration of foreign talent in society and the labour market, language is one of the key enabling conditions (OECD/European Union, 2018[27]; OECD, 2021[93]). As mentioned above, 90% of immigrants in Luxembourg report fluency in one of the country’s official languages (OECD, 2021[21]), which is positive. However, it is reasonable to assume that the data reflect a high share of immigrants fluent in French or German, rather than in Luxembourgish. While French is the legal language and key language for successful integration in the labour market, and German is used more in the media and publishing, the Luxembourgish language is key for successful social and cultural integration in the Luxembourgish community.
Luxembourgish, which became the national language in 1984, has gradually gained importance, including in writing, and is increasingly seen as the language of the country's political and cultural identity. It is spoken by three-quarters of the population and by 94% of young people aged 16‑24 (TNS Ilres, 2018[87]; OECD, 2021[21]). Luxembourgish is the language most used for communication in everyday activities in private life (TNS Ilres, 2018[87]), including in households (STATEC, 2019[94]), and fluency is necessary to obtain naturalisation (OECD, 2021[21]). In 2018, 70% of Luxembourgish speakers considered Luxembourgish the main language of integration (i.e. the key language for successfully integrating into society and everyday life) against 24% of non-speakers (TNS Ilres, 2018[87]).
The Government of Luxembourg actively promotes the learning and use of the Luxembourgish language. In 2018, MENJE created the Centre for Luxembourgish Language (Zenter fir d’Lëtzebuerger Sprooch) to set spelling and grammar norms and promote the use of the language (Toussaint, 2021[95]). In 2022, the INL rolled out an online self-learning platform for learning Luxembourgish, accessible in four languages (www.llo.lu) (INL, 2022[96]; Forman, 2022[97]).
Over the last ten years, the number of learners learning Luxembourgish in Luxembourg has been on the rise (RTL, 2022[98]).
To support foreign talent in strengthening their language skills (including but not limited to the Luxembourgish language), Luxembourg has several key measures in place, including (but not limited to) leave for linguistic purposes, government-sponsored language training provided within the framework of the CAI (as mentioned above), language training sponsored by ADEM or other actors, subsidies for employers who offer language courses to their employees and individual training leave. In addition, the House of Guidance, INL and language schools offer an individual orientation and evaluation of language skills.
The leave for linguistic purposes, introduced in 2009, is overseen by MTEESS and intended to offer the working population of Luxembourg the opportunity to learn or improve the Luxembourgish language. Each beneficiary is entitled to maximum of 200 hours of linguistic leave, divided into 2 stages of 80‑120 hours, respectively, throughout their career (Government of Luxembourg, 2016[99]). Two categories of workers can legally benefit from the leave for linguistic purposes: 1) private sector employees who work in Luxembourg and who have been employed by the same employer established in the country for at least six months at the time of application; or 2) people who have been self-employed in Luxembourg for at least six months. There is no age limit, or residence condition, to be eligible for the leave for linguistic purposes (i.e. cross-border workers can also apply).6Furthermore, there is no specific condition regarding the employee’s employment contract type for the purposes of being eligible for linguistic leave.
However, MTEESS data show that the uptake of linguistic leave has been modest. In 2021, 212 individuals benefitted from linguistic leave. Between 2009 and 2022, fewer than 3 800 individuals benefitted from linguistic leave. The uptake of linguistic leave has been particularly low in the culture, insurance and banking sectors, according to MTEESS data.7 Even though Luxembourgish is not strictly required to work in these fields, the command of Luxembourgish remains important for social integration purposes. Therefore, MTEESS should work with employers (e.g. the UEL) to raise awareness of the opportunities for learning Luxembourgish available under linguistic leave, with a view to incentivising greater uptake. Linguistic leave could also be featured prominently on the Work in Luxembourg portal (see above) to help potential newcomers to Luxembourg’s labour market learn about language training options early on in the recruitment process.
Under CAI, the target group of which are all foreign nationals legally settled in Luxembourg who are at least 16 years old (as mentioned above), Luxembourg subsidises language training in one of Luxembourg’s three official languages (Luxembourgish, French and German) until the A.1.1 level in the Common European Framework of Reference for Languages (CEFR) is reached. Going forward, Luxembourg could consider extending the scope of subsidised training by increasing the proficiency level needed to receive the CAI subsidy. Across OECD countries, integration programmes tend to subsidise language training for foreign talent until A2/B1 level is reached, on average (see Box 4.7).
Beyond raising awareness of linguistic leave and extending the scope of subsidised training under CAI, stakeholders consulted for this review in Luxembourg highlighted that the supply of language training courses needs to be expanded to accommodate the demand, and their monitoring (with respect to collecting data on the profile of learners, satisfaction, course completion, learners’ labour market outcomes, etc.) reinforced. Going forward, Luxembourg could also consider offering a wider set of tailor-made language training courses – including in a digital format (OECD, 2021[21]) – targeting the needs of specific groups (e.g. job-related language training, language training better targeted to individuals’ current language levels, etc.). Box 4.7 details several examples of other countries’ approaches to language training for foreign talent.
Box 4.7. Relevant international example: Extensive and targeted language courses for foreign talent
Many OECD countries offer generous support when it comes to language courses for foreign talent. For example, in Finland, immigrants can take up to 2 100 hours of Finnish or Swedish, while Australia, Canada, Denmark and Sweden impose no limit. In France, the Contrat d'intégration républicaine (CIR) includes 400 hours of French (600 if a literacy course is required).
In Quebec (Canada), where the official language is French, the Ministry of Immigration, Francisation and Integration offers many different learning opportunities without or at little cost. This offer includes French courses before arrival (costs can be reimbursed at entry); the core French speaking programme (1 320 hours full-time); special courses for immigrants with no or low literacy and education (1 100 hours full-time); special courses for immigrants with low numeracy or IT skills; part-time courses with many different hours options; on-the-job language trainings; and occupation- or sector-specific language trainings. All courses are open to both permanent and temporary migrants and may include financial assistance to cover participation in the courses, transportation and childcare.
At the same time, more and more countries are targeting a minimum language level to be reached rather than focusing on a minimum number of hours of learning. Across the OECD, the target level for integration programmes is around CEFR A2/B1 on average. Italy gives newcomers two years to reach the A2 level. Austria, Germany, Greece, and the United Kingdom all target B1. The recent trends in integration policies in the OECD point towards a trend of further increasing these levels, recognising that lower levels may be insufficient for allowing immigrants to participate fully in society. The Netherlands and Norway, for example, are expected to soon adjust their own targets to B1.
To better incentivise participants to reach a minimum language level, certain countries make use of financial incentives. Austria reimburses 50% of course costs for migrants who reach A2-level German within 18 months. Denmark gives back the deposit that migrants have to pay for language learning upon completion of the course. Participants can carry over this deposit to new courses as long as they want to continue them. If participants reach a B1 level, a financial bonus is granted. In addition, a tax-free “Danish language bonus” of 6 242 Danish krones (DKK) (in 2019), is available to refugees and family reunited with refugees who do not receive social benefits and have passed a Danish language course level 2 or higher. Municipalities receive subsidies when a refugee or family member obtains employment, starts education or passes a final test in Danish. For each eligible migrant to pass a final test in the Danish language, the municipality receives a subsidy of DKK 33 959 (in 2019).
Some OECD countries have also implemented a more tailor-made modular approach to language courses to better match the offer with individual needs. For example, in Denmark and Finland, immigrants are individually assessed and guided towards the learning path that better fits their language proficiency and initial degrees. In both countries, learning is organised through successive modules with more and more advanced learning goals. Sweden and Germany also offer step-by-step modules for immigrants with personal or professional projects. In addition, Germany offers dedicated learning paths for young people, parents and women.
Source: OECD (2021[21]), Functioning of the integration system and its actors in the Grand Duchy of Luxembourg, www.oecd.org/fr/migrations/Le-fonctionnement-du-systeme-dintegration-et-ses-acteurs-au-grand-duche-de-Luxembourg.pdf; OECD (2020[33]), Integrating Immigrants to Stimulate Innovation in Quebec, Canada, https://doi.org/10.1787/2b41b9e8-fr.
Recommendations
3.8. Raise awareness of the benefits of the Welcome and Integration Contract (CAI). The awareness-raising activities should be targeted especially to areas outside of Luxembourg’s capital, to workers in the private sector and to international students at Luxembourg’s universities in order to facilitate the students’ eventual transition into the labour market (see section below). CAI could also be featured prominently on the Work in Luxembourg portal (see section above) and would benefit from the development of a social media communications plan. MFAMIGR should further support the recently launched initiatives promoting CAI at the regional level and through the creation of a network of CAI ambassadors. Consideration could also be given to establishing a network of former CAI participants willing to share experiences with participating in the programme.
3.9. Create better opportunities for inter-cultural exchanges. Inter-cultural initiatives and activities, such as migration festivals and workshops, should be supported to promote inter-cultural exchanges between native-born and foreign-born populations. Such exchanges should also be facilitated between foreign-born populations themselves, as well as between residents and non-residents in Luxembourg. Consideration could also be given to introducing dedicated, peer-to-peer integration programmes actively involving both native-born and foreign-born individuals.
3.10. Strengthen language training for foreign talent by raising awareness of the linguistic leave, extending the scope of subsidies for language training under CAI and boosting the supply and monitoring of language courses. MTEESS should work with employers (e.g. the UEL) to raise awareness of the opportunities to learn Luxembourgish available under linguistic leave to incentivise greater uptake. Linguistic leave could also be featured prominently on the Work in Luxembourg portal. The subsidies for language training provided under CAI should be further extended by MFAMIGR to incentivise foreign talent to improve their language skills to an even higher level. In addition, the supply of language training in Luxembourg should be expanded to accommodate the demand, and the monitoring of the training (with respect to collecting data on the profile of learners, satisfaction, course completion, learners’ labour market outcomes, etc.) reinforced. In monitoring the training, Luxembourg could make use of the suggested establishment of a centralised training register (see Chapter 5 ).
Facilitating the integration of foreign talent’s spouses into Luxembourg’s labour market and society
Labour market opportunities and social integration of spouses can have important impacts on the decision of the principal migrant to remain in the host country of choice (OECD, 2016[100]; Hornak and Doan, 2019[101]). While the employment prospects and integration support for spouses might not be a decisive factor in the choice of a foreign worker’s temporary emigration destination, it is unlikely that the principal migrant will decide to remain in a country where such opportunities are limited in the long term. Evidence from the Netherlands shows that the probability of a foreign-born worker staying in the Netherlands 5 years after arrival is 18 percentage points higher for an individual with a partner who is working relative to those with a partner who is unemployed or inactive (OECD, 2016[100]). At the same time, spouses of foreign talent constitute an untapped source of talent that Luxembourg could benefit from to address skills shortages.
According to the EU Labour Force Survey, 75% of married working-aged migrants (EU and non-EU born) lived with their spouses between 2016 and 2020 in Luxembourg. Moreover, the residence permits annually issued to family members, including spouses, make up the most important share (31%) among all types of resident permits issued to TCNs. The number of permits issued to family members is even higher than the number of permits issued to foreign workers from third countries. In 2020, the Ministry of Foreign and European Affairs (MAEE) issued 1 486 first permits for the purposes of family reunification, while 1 205 permits were issued to salaried workers (Ministry of Foreign and European Affairs, 2021[102]).
In Luxembourg, more could be done to support the integration of foreign spouses into the labour market and society. The employment rate of foreign spouses in Luxembourg is 16 percentage points lower than the employment rate of the principal migrant whom they accompany. The difference is even higher for non‑EU migrants, where the spouse employment rate lags the employment rate of the principal migrant by more than 22 percentage points (Figure 4.11).
Figure 4.11. Employment rates of principal migrants and their spouses in Luxembourg, 2020
Note: Migrants refer to foreign-born residents in Luxembourg. Principal migrants refer to foreign-born residents in Luxembourg who arrive in Luxembourg first in their household.
Source: OECD calculations based on the EU Labour Force Survey (EU-LFS) 2020, https://ec.europa.eu/eurostat/web/microdata/labour-force-survey.
In the first half of 2022, TCNs’ spouses did not have automatic access to Luxembourg’s labour market. Spouses of foreign workers from third countries wishing to carry out a salaried activity in Luxembourg had to apply for the salaried worker residence permit, which also served as a work permit. However, unless the spouse accompanying the third country worker had been residing in Luxembourg for one year or more, the spouse was still subject to the labour market test when looking for employment. Against this background, it is positive that the MAEE has been preparing a reform to lift the requirement of the labour market test for spouses of foreign workers from third countries, which, at the time of writing, was foreseen to come into force towards the end of 2022 and which should be duly implemented. In almost two-thirds of OECD countries, spouses of foreign workers who are permanent residents are automatically granted full access to the labour market (OECD, 2017[103]). Almost half of OECD countries also grant full access to the labour market to family members of temporary foreign workers with a renewable permit (OECD, 2017[103]).
While formal access to Luxembourg’s labour market should be simplified for spouses of third country workers with the foreseen exemption from the labour market test, spouses of both EU and third country workers could benefit from more systematic support and information on work opportunities and daily life in Luxembourg. In recent years, as mentioned above, ADEM has held a small number of information events for spouses of foreign workers. In addition, a group of private sector actors established the Luxembourg International Dual Career Network (IDCN) in 2018 to provide guidance and information to spouses of international employees of IDCN’s corporate members (IDCN, 2018[104]). Going forward, Luxembourg could consider establishing more comprehensive programmes offering systematic support to spouses of all foreign workers in their integration in Luxembourg’s labour market and society. In Finland and Estonia, programmes supporting the integration of foreign workers’ spouses into the labour market and society include regular workshops and networking events, social and cultural meet-ups, individual work-related counselling and peer-learning mentoring (Box 4.8).
Box 4.8. Relevant international example: Integration programmes for spouses of foreign workers
Finland
In Finland, the Spouse Programme is an initiative run by the city of Helsinki. The programme is implemented within the context of the Talent Boost programme of the Ministry of Economic Affairs and Employment (TEM) and the Ministry of Education and Culture (OKM) of Finland. During 2020‑21, the programme was funded by the European Social Fund.
The Spouse Programme offers professional and community support for spouses of foreign workers living in Helsinki, Espoo or Vanta for less than two years. The content of the programme is tailored to newly arrived spouses, but also welcomes those living in Finland for more than two years. The programme lasts one year and starts with on-boarding events, where spouses can learn about settling in Finland, Finnish (working) culture and employment services, and participate in workshops for designing CVs and cover letters and social activities such as sightseeing, among others.
Following the onboarding events, the programme provides spouses with further opportunities to participate in workshops, networking events and meet-ups on a monthly basis. As part of the programme, spouses living in Helsinki also have access to a career coaching service, offering individual career support provided by a professional career coach. After one year, spouses can remain in the programme as Spouse Programme Ambassadors.
Estonia
In 2019, Estonia initiated the Re-invent Yourself programme, with the aim of supporting the integration of foreign spouses into the labour market and society. Shortly after the completion of the programme, more than half of the participants had found a job or other professional activities, while many participants highly recommend the programme.
The four-week programme aims to make the transition to living and working in Estonia easier by providing a number of different activities. There are dedicated training sessions helping foreign spouses kickstart their entrepreneurship careers, learn about the local business culture or about business networking. Networking meetings with local professionals, human resource managers and recruiters help spouses understand the labour market in Estonia and establish individual business contacts. In addition, individual career and networking consultations delivered by Töötukassa (Estonia’s Public Employment Service) support spouses in planning their careers and establishing business contacts in the fields of their professional interests.
All events of the Re-invent Yourself programme are held in English, and the programme is free of charge for participating spouses. Participating spouses are expected to attend all of the programme’s sessions.
Source: Spouse Programme (2022[105]), For Spouses, https://spouseprogram.fi/for-spouses/; Work in Estonia (2022[106]), Re-Invent Yourself,'www.workinestonia.com/reinvent-yourself/#articleblock-Registrationofinterestfor2022groups.
Recommendation
3.11. Develop comprehensive integration programmes for accompanying spouses of foreign talent. The programmes could include regular networking events, social and cultural meet-ups, individual work-related counselling, peer-learning mentoring or support in application processes for the recognition of foreign qualifications. The programmes could be developed and implemented through a collaboration of a number of governmental actors, including MAEE, MFAMIGR, ADEM and departments responsible for the recognition of foreign qualifications at MENJE and MESR, as well as relevant NGOs in Luxembourg.
Facilitating the transition of former international students into Luxembourg’s labour market
In knowledge-based economies, attracting and retaining international students can help expand the highly educated workforce. Even though students themselves reap most of the gains, mainly through higher earnings, student migration can positively affect economic growth in both sending and receiving countries (Chevalier, 2022[107]). In Luxembourg, the importance of facilitating a smooth transition of international students into the labour market is further magnified by shortages in high-skilled occupations (see the first section of this chapter).
The share of international students in Luxembourg’s higher education system (49%) is the highest in the OECD (Figure 4.12). Students from non-EU countries represent one-third of all international students. The presence of international students is particularly pronounced at the master’s and PhD levels, where international students make up 78% and 87% of the total student body in Luxembourg, respectively (OECD, 2021[108]).
The extent to which international students succeed in transitioning into the labour market can be approximated based on graduate tracking data collected by the University of Luxembourg (UoL)8via its recently concluded “employment study” of graduates (see Chapter 5). The results of the employment study show that between 2014 and 2019, 52% and 49% (lower-bound estimate)9of master’s graduates from the European Union (excluding Luxembourg) and from third countries respectively, have succeeded in finding employment on Luxembourg’s labour market following the completion of their studies. The figure stands at 31% and 36% (lower-bound estimate) for PhD graduates during the same time period. Therefore, there is still room for improvement in facilitating the transition of international students into Luxembourg’s labour market.
To allow international students to establish employment links even before the completion of their studies, students’ formal access to Luxembourg’s labour market during their studies could be improved. The authorised number of working hours of HE students (irrespective of nationality) during studies is limited to 15 hours a week for bachelor, master and PhD students, which is low by international comparison (Figure 4.13). Luxembourg could thus consider increasing the authorised number of working hours for bachelor, master and PhD students. Career guidance services at HE institutions should highlight to students that their studies remain a priority, and students should carefully evaluate the workload that they are capable of taking on.
Figure 4.12. Incoming student mobility in higher education, by level of study, 2019
Note: Higher education includes short-cycle higher education programmes.
1. Data on short-cycle higher education programmes are based on nationality and refer to the Flemish community only.
2. Year of reference 2018.
Source: OECD (2021[108]), Education at a Glance 2021: OECD Indicators, https://dx.doi.org/10.1787/b35a14e5-en.
Moreover, Luxembourg has no career guidance or counselling services specifically designed to help current international students establish links with Luxembourg’s labour market during their studies in order to support their eventual transition to employment. The UoL runs several initiatives to help all current and former students, regardless of nationality, enhance their employability. Through its Career Centre, the UoL aims to support students in their job search with a wide range of services (e.g. an online platform that connects recruiters and students, counselling, organisation of workshops and dedicated events, such as jobs fairs, etc.). The UoL’s Internships service acts as an intermediary between students and employers and provides advice to students on career choices while ensuring that students are adequately supported during their placements. Partnerships have been concluded in this regard with several institutional and high-level professional partners, such as the “Big Four” (Deloitte, PricewaterhouseCoopers, Ernst & Young, and KPMG) (EMN, 2018[15]).
In addition to general career guidance and counselling support available to all students, the development of services dedicated specifically to international students should be considered. International students tend to face larger barriers in their transition to the host country’s labour market than native-born students, including insufficient language skills, lack of knowledge of the host country’s employment opportunities, job-hunting strategies and workplace culture. Several OECD countries have taken active steps to help international students and graduates address such challenges. In the United States, the University of California, Berkeley, is among many universities that dedicate career guidance services to international students (Box 4.9). In Japan, the public employment service has signed an agreement with a local university to explain the Japanese recruitment process to international students in a bid to encourage them to work in the country (Box 4.9). To facilitate developing dedicated career guidance services for international students in Luxembourg, UoL should strengthen the capacity of its career guidance service, which is currently constrained.
Figure 4.13. Maximum number of hours per week that international students in higher education are authorised to spend working (during the semester), OECD countries, 2022
Note: The figure includes OECD countries for which data are available. In Australia, international students can work 40 hours per fortnight. In Denmark, the limit is 20h/week for BA/MA students and full-time for PhD students. In Israel, only international students in high-tech related fields of study can request part-time employment in relevant companies during their studies. In the United States, employment is only allowed on campus or in an off-campus worksite affiliated with the institution. In Latvia, the limit is 20h/week for BA students and 40h/week for master’s/PhD students. In Korea, the limit is 20h/week for BA students and 30h/week for master’s/PhD students. The data for Denmark, Portugal and Spain refer to non-EU students, whereas there is no limit on maximum number of working hours alongside studies for EU and domestic students. Estonia, Lithuania, Poland, Slovenia and Sweden set no limits on the maximum hours of working alongside studies.
Source: OECD (2022[109]), International Migration Outlook 2022, https://doi.org/10.1787/30fe16d2-en.
Box 4.9. Relevant international examples: Targeted career guidance services for international students
United States
The University of California, Berkeley, provides various types of dedicated career guidance services for international students. For example, it has a dedicated Career Counsellor for International Students, who provides support to international students in several areas, including career exploration, job/internship search and graduate school preparation. International students can access further support via the Career Centre Workshops and Programmes, which are specialised programmes created to meet the unique challenges faced by international students in their career, job and internship search processes. International students are encouraged to attend the programmes and other relevant events related to their professional interests.
The University has also developed an e-newsletter dedicated to international students, called the CareerMail for International Students, which allows international students to learn about upcoming career workshops, immigration-related workshops and employer events, as well as job and internship vacancies, among others.
The University’s International Student Career Action Plan provides step-by-step guidance over a four-year period on the necessary steps (e.g. meeting with a career counsellor, applying for employment authorisation, etc.) that international students could undertake in order to help them achieve their professional or academic plans (e.g. find employment at the end of their studies, get accepted into graduate school, etc.). The Action Plan also provides resources about work authorisations for international students with F‑1 and J‑1 visas.
Japan
In 2020, Sophia University, a private university in Tokyo, and Japan’s public employment service Hello Work in Tokyo’s ward of Shinjuku, signed an agreement to explain Japanese recruitment processes to foreign students in order to support the students’ eventual integration into the Japanese labour market.
The co‑operation is meant to provide a policy response to a low share of international students joining the Japanese labour force after graduation. According to the Ministry of Health, Labour and Welfare of Japan, around 65% of international students said they would like to work in Japan following the completion of their studies. Yet, only about 35% of graduates succeeded in securing employment. The reason for this appears to be an insufficient familiarity with Japanese job-hunting processes. In Japan, the recruitment processes of many employers tend to take place around the same time each year, with companies hiring prospective graduates in bulk. Therefore, to secure a job, university students should be engaging in active job-hunting while they are still enrolled in their studies, for example by attending relevant job fairs and interviews.
Source: UC Berkeley (2022[110]), International Students, https://career.berkeley.edu/IntnlStudents/IntnlStudents; The Japan Times (2020[111]), University allies with Hello Work to help foreign students find jobs, www.japantimes.co.jp/news/2020/11/06/national/university-job-office-help-foreign-students-find-employment-japan/.
Luxembourg should support the transition of international students into the labour market through dedicated career guidance services from the beginning of their studies rather than solely towards the end of their studies. In the case of PhD students (both native-born and international), Luxembourgish labour law stipulates that they can spend a maximum of five years of employment on fixed-term contracts in academia or research, after which young researchers who have not secured a permanent contract at their research institution have to leave Luxembourg to be able to continue their career in academia or research. Therefore, it is important that international PhD students are prepared for this reality from the beginning of their studies and have sufficient time, information and support to acquaint themselves with prospective non-academic employment opportunities available in Luxembourg’s labour market. At the same time, support services should help international students close the “skills awareness gap” – i.e. the lacking recognition of the skills the students do have, or how to translate these skills to the workplace (Council of Canadian Academies, 2021[112]).
Luxembourg could also better support international students who do not succeed in finding employment during their studies. Empirical evidence suggests that open migration policies and labour markets, whereby students can remain in the host country post-study are crucial for successfully attracting international students (Chevalier, 2022[107]). While international students from the European Union face no legal constraints preventing them from seeking employment in Luxembourg after completing their studies, it had not been the case for TCNs until 2018. In 2018, the introduction of a job-search visa made it possible for third country HE graduates from master’s or PhD programmes to remain in Luxembourg for nine months following the completion of their studies in order to look for employment or set up a business (Government of Luxembourg, 2021[113]).
Data from the MAEE suggests that the uptake of job-search visas among international students has been low. Since their introduction in 2018, the MAEE received only 40 applications for the job-search visas, 26 of which in 2019, which accounts for approximately 11% of international students from third countries who completed a master’s or a PhD degree that same year (OECD, 2021[108]). Given the relatively high share of international students entering the labour market after graduation (see the above estimate based on the UoL data), this low uptake may be due to a high number of direct transition to work after graduation. Other reasons for the low uptake might include difficulty finding housing without having an employment contract and lack of language skills to succeed in Luxembourg’s multilingual labour market. That notwithstanding, such reasons cannot fully explain such low numbers of job-search visa issuances. Luxembourg should thus consider better raising awareness of the recently introduced job-search visas, to encourage a larger proportion of third country HE students to find employment and remain in Luxembourg.
Equally, Luxembourg should examine the extent to which the nine-month job-search visa limit does not act as an obstacle to international students (TCNs) successfully integrating into Luxembourg’s labour market following the completion of their studies. Based on the results of such an assessment, Luxembourg could consider prolonging the validity of job-search visas beyond nine months. In France, former international students are allowed to remain in the country to seek employment or set up a business 12 months after graduation (Campus France, 2021[114]), while this possibility is open for 18 months to international graduates in Germany (Government of Germany, 2021[115]). In France, the increase in the validity period of job-search visas from 6 to 12 months in 2013 raised the number of job-search visas from around 5 500 in 2013 to 13 000 in 2015, i.e. 33% of the number of TCN students who graduated with a master’s or PhD degree (OECD, 2021[108]). Two-thirds of job-search visas resulted in a change of status towards a labour migration category (OECD, 2017[116]).
Finally, in the long term, Luxembourg could support a smoother transition of international (as well as native‑born) HE students into the labour market by better supporting the alignment of the HE offer to labour market needs. Stakeholder interviews have pointed out that Luxembourg makes little use of incentives for better aligning the HE offer to labour market needs. Such incentives can take the form of funding arrangements (e.g. linking funding to graduates’ employment outcomes) or regulatory mechanisms (e.g. making accreditation of study programmes conditional upon their labour market relevance) (OECD, 2017[117]). In Luxembourg, labour market relevance is taken into account in the accreditation processes of study programmes of private HE institutions, whereas study programmes offered by the UoL are automatically accredited (European Quality Assurance Register for Higher Education, n.d.[118]). In addition, public funding is allocated to the UoL (the only state-funded university in Luxembourg) based on a performance-based funding formula, yet without taking graduate employability into account. In comparison, a number of OECD countries use incentives to better align the HE offer to labour market needs. In Estonia, for example, graduates’ employment outcomes are taken into account in the funding of HE institutions (Box 4.10).
Box 4.10. Relevant international example: Financial incentives for supporting alignment between the higher education offer and labour market needs
Estonia
In Estonia, a new funding model of higher education was introduced in 2017. Under the new funding model, up to 20% of HE funding began to be allocated through performance-based funding. The performance-based funding is based on six performance criteria.
Among the performance criteria, the largest weight (35%) is assigned to the proportion of students graduating on time, given that Estonia has been struggling with low HE completion rates. However, 20% of the performance-based funding is tied to the proportion of graduates who are employed or continuing to study at the master’s or PhD level, and 15% to the share of students studying in “priority fields” (i.e. fields of study identified to be of national importance in Estonia). Other performance-based funding criteria include: the proportion of foreign (10%) and mobile (10%) students, and revenues from educational activities (10%).
Data collected one year after the introduction of the reform showed slight improvements in the proportion of students studying in “priority fields”, as well as in the proportion of students graduating on time, an increase in the proportion of foreign students studying at Estonian universities, and of Estonian students participating in mobility abroad.
Source: OECD (2017[117]), In-Depth Analysis of the Labour Market Relevance and Outcomes of Higher Education Systems: Analytical Framework and Country Practices Report, www.oecd.org/education/skills-beyond-school/LMRO%20Report.pdf; European Commission (2017[119]), Education and Training Monitor 2017, https://op.europa.eu/en/publication-detail/-/publication/38e7f778-bac1-11e7-a7f8-01aa75ed71a1/language-en; European Commission (2018[120]), Education and Training Monitor 2018: Country analysis, https://education.ec.europa.eu/sites/default/files/document-library-docs/volume-2-2018-education-and-training-monitor-country-analysis.pdf.
At least in part, the limited emphasis on the labour market relevance of the HE offering in Luxembourg is driven by data-related challenges. Therefore, it will be important for Luxembourg to work on strengthening the governance of skills data (see Chapter 5 for detailed recommendations). Moreover, given that certain stakeholders consulted in the framework of this project expressed concerns about the introduction of regulatory and/or financial incentives potentially impacting university autonomy in Luxembourg, MESR should initiate discussions with UoL about the potential use of such incentives, and work closely with UoL in determining the scope, nature and timeframe of potential policy changes.
Recommendations
3.12. Support international students in establishing connections with Luxembourg’s labour market during their studies by increasing the authorised number of hours for working alongside studies and developing targeted career guidance services. MESR could consider increasing the number of hours that HE students in Luxembourg (both native-born and international) are allowed to spend working during their studies beyond 15 hours a week. UoL should also consider developing targeted career guidance services (e.g. information sessions on legal ways to work during/after studies, language requirements and workplace culture in Luxembourg’s labour market, available integration and language support – see Recommendation 3.8, networking sessions with international alumni, etc.) for international students. The career guidance services should be provided continuously from the beginning of international students’ studies. To facilitate developing dedicated career guidance services for international students, UoL should strengthen the capacity of its career guidance service.
3.13. Expand opportunities for former international students from third countries to legally remain in Luxembourg to look for a job following the completion of their studies. MAEE should raise awareness of the recently introduced job-search visa for HE students from third countries to strengthen their take-up. MAEE, in collaboration with other ministries, should also examine the extent to which the nine month job-search visa limit does not act as an obstacle to international students (TCNs) successfully integrating into Luxembourg’s labour market following the completion of their studies. Based on the results of such an assessment, MAEE should consider extending the validity of the job-search visas beyond nine months.
3.14. Support the alignment of the higher education offer to labour market needs by considering introducing funding and/or regulatory incentives. MESR should initiate discussions with UoL about the use of funding (e.g. taking into account graduates’ employability in the performance-based funding of the UoL) or regulatory incentives (e.g. making accreditation of study programmes conditional on their labour market relevance), where relevant, and work closely with the UoL in determining the scope, nature and timeframe of potential policy changes. To help inform the design and implementation of the proposed incentives, strengthening the governance of Luxembourg’s skills data (see Chapter 5) will be crucial.
Overview of recommendations
Attracting and retaining foreign talent to fill skills shortages is essential for sustaining Luxembourg’s economic competitiveness and supporting future prosperity. Two opportunities have been selected indicating where Luxembourg’s foreign talent attraction and retention efforts could be further strengthened:
1. facilitating the recruitment of foreign talent in line with Luxembourg’s labour market needs
2. facilitating the integration of foreign talent and their families into Luxembourg’s society and labour market.
This chapter presented a total of 14 recommendations in order to seize these opportunities in the area of foreign talent attraction and retention. A high-level overview of the recommendations can be found in Table 4.2. This selection is based on input from a literature review, desk research, discussions with the Luxembourg National Project Team, and broad engagement with a large variety of stakeholders, including two workshops in Luxembourg, and various related meetings and group discussions.
Two recommendations have been selected that could be considered to have the highest priority based on potential impact, relevance in the current context in Luxembourg, as well as overall support for implementation. To attract and retain foreign talent to fill skills shortages, the OECD recommends that Luxembourg should:
Elaborate a list of shortage occupations for talent admission purposes, updated regularly (Recommendation 3.2)
Strengthen language training for foreign talent by raising awareness of the linguistic leave, extending the scope of subsidies for language training under CAI and boosting the supply and monitoring of language courses (Recommendation 3.10).
Table 4.2. High-level overview of recommendations to attract and retain foreign talent to fill skills shortages in Luxembourg
Note: MAEE: ministère des Affaires étrangères et européennes; MinDigital: ministère de la Digitalisation; ADEM: Agence pour le développement de l’emploi; MTEESS: ministère du Travail, de l'Emploi et de l'Économie sociale et solidaire; MECO: ministère de l’Économie; MFIN: ministère des Finances; EURES: European Employment Services; MFAMIGR: ministère des Affaires familiales, de l’Intégration et de la Grande Région; MENJE: ministère de l’Éducation nationale, de l'Enfance et de la Jeunesse; MESR: ministère de l'Enseignement supérieur et de la Recherche.
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Notes
← 1. While the COVID‑19 crisis has unsurprisingly slowed down Luxembourg’s employment growth, the number of new hires in Luxembourg surpassed pre-pandemic levels already in Q3 2020 (see Chapter 1). The data do not distinguish between new job creations, jobs retirements and job replacements (STATEC, 2022[3]).
← 2. High-skilled occupations are defined as occupations in ISCO groups 1‑3. These occupations tend to require tertiary education qualifications (ILO, 2012[121]).
← 3. Medium- and low-skilled occupations are defined as occupations in ISCO groups 4‑9. These occupations tend to require education qualifications below the tertiary level (ILO, 2012[121]).
← 4. Only certain EU members allow for relevant professional experience to be taken into account in the assessment of eligibility of foreign-born workers for the EU Blue Card, while the number of years required can sometimes vary (e.g. Malta requires ten years of professional experience) (European Commission, n.d.[13]).
← 5. Tax wedge is defined as the ratio between the amount of taxes paid by an average single worker (a single person at 100% of average earnings) without children and the corresponding total labour cost for the employer. The average tax wedge measures the extent to which tax on labour income discourages employment. This indicator is measured in percentage of labour cost (OECD, 2021[68]).
← 6. Between 2009 and 2022, almost 58% of beneficiaries of linguistic leave were cross-border workers.
← 7. Uptake of linguistic leave has also been modest among workers in Luxembourg’s public administration and municipalities, which is understandable, as both are dominated by Luxembourgish nationals.
← 8. The University of Luxembourg is Luxembourg’s only public HE institution, with the UoL student population representing 99% of total student population in higher education in Luxembourg (Eurostat, n.d.[121]).
← 9. Lower bound estimate is used due to missing information in the UoL employment study (see Chapter 5 for more details). A different methodology comparing annual education permits issued in the previous year with data collected on the type of permits issued to former education permit holders shows that almost 40% of non-EU students in Luxembourg changed their education permit to a different one (including post-study work) in 2019, compared to 30% in the OECD on average (OECD, 2022[109]). These results, measuring changes in immigration status based on administrative data covering only non-EU students at the bachelor, master’s and PhD levels as well as students who have not obtained a diploma, are not fully comparable with the data from the UoL. The UoL data covers both EU and non-EU students who have obtained a master’s or a PhD diploma and measures entry into employment.