OECD Skills Strategy Luxembourg

Executive summary

OECD-Luxembourg collaboration on the OECD Skills Strategy project

This OECD Skills Strategy Assessment and Recommendations project identifies priority areas for action for Luxembourg and provides tailored recommendations for improving its skills outcomes. The Skills Strategy has benefited from the insights of a wide range of government and stakeholder representatives through a background questionnaire, written input on the four priority areas, bilateral meetings, two workshops and site visits in Luxembourg. This process provided invaluable input that shaped the findings and recommendations in this report.

Key findings and opportunities for improving Luxembourg’s skills system

Megatrends such as digitalisation, globalisation, demographic change and climate change are transforming jobs and the way society functions and people interact. These megatrends have many repercussions in Luxembourg, including employers often struggling to find the skills they need and productivity becoming a more important driver of further economic growth. The COVID‑19 crisis has accelerated the digitalisation of learning and work, disrupted the economy, and increased the risk of inequalities in education and labour markets in Luxembourg. In addition, the Russian Federation’s (hereafter “Russia”) war against Ukraine has led to high volatility in the stock market, contributing to a rise in inflation and wage pressures, further exacerbating prevalent skills shortages in Luxembourg’s economy.

These megatrends and challenges reinforce the need for Luxembourg to design forward-looking and dynamic skills policies. To thrive in the world of tomorrow, people in Luxembourg need high-quality adult learning opportunities to develop a comprehensive set of skills and successfully manage transitions in the labour market. Moreover, given its relatively small domestic labour supply, Luxembourg needs to effectively attract and retain foreign talent from the Greater Region, the rest of the European Union and beyond. Luxembourg has already put in place a range of relevant strategies and initiatives: the Roadmap for the development of a National Talent Attraction, Development and Retention Strategy (2022); the Recovery and Resilience Plan of Luxembourg (2021); and the Digital Skills and Jobs Coalition (2017). Other strategies have a strong focus on skills as well. In the context of these ongoing initiatives, the country has a unique window of opportunity to put skills at the top of the agenda to positively influence the megatrends, tackle the challenges and seize the opportunities facing the country.

To support these efforts, the OECD and the Government of Luxembourg have identified four priority areas to further improve Luxembourg’s skills system. These priorities and the key findings are summarised below.

Priority 1: Providing labour-market-relevant adult learning opportunities in Luxembourg

Building a strong adult learning system in Luxembourg requires all relevant actors to work more closely together, learn from each other and avoid unnecessary overlaps, contradictions and gaps in providing adult learning opportunities. These adult learning opportunities should be provided in a flexible and tailored manner to ensure that all adults, regardless of their socio-economic background, can access them. Equally, adult learning opportunities need to be continuously reviewed and updated so that they respond to the evolving needs of the labour market and meet clearly defined quality standards. Luxembourg can strengthen providing labour-market-relevant adult learning opportunities by:

• improving the coherence and accessibility of adult learning opportunities

• increasing the relevance and ensuring the quality of adult learning opportunities.

Priority 2: Guiding and incentivising skills choices in Luxembourg

Career guidance services are growing in importance to help individuals successfully navigate and make informed skills choices in a constantly evolving labour market and throughout life. Guidance services need to be regularly updated, co‑ordinated amongst diverse providers and customised to the needs of different individuals. Besides guidance, individuals also need personalised financial incentives to support greater participation in adult learning. Similarly, employers also need targeted financial incentives to provide adult learning opportunities. Luxembourg can strengthen guiding and incentivising skills choices by:

• improving guidance services for adult learning

• improving financial incentives for adult learning.

Priority 3: Attracting and retaining foreign talent to fill skills shortages in Luxembourg

The large number of foreign workers in Luxembourg’s labour market suggests that Luxembourg is already an attractive destination for foreign talent. Many “pull factors” help Luxembourg attract foreign talent, including high quality of life, a safe living environment and attractive incomes. Nonetheless, there are opportunities to further improve Luxembourg’s attractiveness to foreign talent, which should be seized to help Luxembourg remain competitive in the “global race for talent”.

Retention of foreign talent will be as important as attraction to ensure that Luxembourg can benefit from the skills and talent it receives from abroad in the long term.

The country can strengthen its policies to attract and retain foreign talent to fill skills shortages by:

• facilitating the recruitment of foreign talent in line with Luxembourg’s labour market needs

• facilitating the integration of foreign talent and their families into Luxembourg’s society and labour market.

Priority 4: Strengthening the governance of skills data in Luxembourg

Luxembourg collects a wide variety of quantitative and qualitative skills data (e.g. labour market, education and training data), which can be used to inform the design of skills policies. To allow data users (both in and outside of the government) to unlock the full potential of available skills data, Luxembourg should work on improving the quality of its skills data collection. Luxembourg also has space for strengthening the co‑ordination of its approach to skills data collection and management. Given the cross-border nature of Luxembourg’s labour market, exploring synergies with international data sources will be equally important for Luxembourg. Luxembourg can strengthen the governance of skills data by:

• improving the quality of Luxembourg’s skills data collection

• strengthening co‑ordination of, and synergies between, skills data within and beyond Luxembourg.