Luxembourg wages are known for their attractiveness, but life there remains expensive. More and more often, negotiations between candidates and employers focus on “disposable income,” meaning the income left after fixed expenses. This is increasingly pushing recruiters to take on, in a way, the role of “accountant” or “tax advisor” to optimize the terms being offered.
Every day, tens of thousands of cross-border workers commute to Luxembourg. This influx is explained in part by salaries that are significantly higher than those in neighboring regions.
In 2022, the gross median salary in Luxembourg reached €58,126 per year - about €4,843 per month - according to Statec data. This means half of employees earn less than this amount while the other half earn more.
The average salary stands at €75,919, reflecting the presence of higher wages in certain sectors. In addition, Luxembourg benefits from one of Western Europe’s most favorable personal tax regimes, which further strengthens its appeal to foreign workers.
Accounting for the cost of living
Higher salaries and an advantageous tax system… On paper, Luxembourg has everything it needs to attract workers. However, there’s a caveat: the cost of living, a factor job candidates are increasingly taking into account when considering roles in the country.
The cost of living in Luxembourg is relatively high. “These days, the candidates we meet don’t necessarily discuss the salary amount. They negotiate what we call disposable income,” a Luxembourg HR director recently shared.
In other words, candidates are more concerned with what remains once everyday expenses are paid: housing, utilities, transportation, and groceries. This shift in priorities reflects a growing awareness of the financial realities of life in one of Europe’s most prosperous countries.
37% of income goes to “mandatory expenses”
What is your household income in Luxembourg? The latest “Work and Social Cohesion” report from STATEC, published at the end of September, offers some insight. It shows that half of households have a monthly income of €6,073 after taxes and social contributions. For a single person, the median standard of living is €3,970 per month after taxes and social benefits.
What about spending? A large share of household income is absorbed by mandatory expenses such as insurance, energy bills, phone subscriptions, and above all rent or housing. In 2023, these expenses accounted for 37% of the total household budget, according to STATEC.
However, there are inequalities. The least-well-off households devote more than 56% of their income to these non-discretionary costs, which limits their ability to spend on other essential needs: food, transportation, clothing, or leisure.
This finding highlights a common question: what is my real day-to-day spending capacity? With growing inequality and a rising risk of poverty, that question is becoming crucial for many households.
Factoring in a wide range of costs
When it comes to convincing specific profiles to join their companies, recruiters no longer hesitate to put on a real tax-advisor or accountant’s hat. Their goal: to best assess a candidate’s disposable income and provide a clear picture of their future financial situation.
To do so, they need to analyze several factors, such as housing costs in the candidate’s current or future area of residence, the average supermarket basket for a household, and household composition - which directly influences the applicable taxation.
“These are the aspects we discuss today,” an HR director explains. “It makes our job much more complex, because it depends on each candidate’s situation. But if we want to convince them, we have to go that far, sometimes even advising them on how to optimize their disposable income.”
This approach relies on precise data and aims to help candidates project themselves into the future. It also enables them to find solutions that match their needs and constraints.
For recruiters, merely offering an attractive salary is no longer enough. The aim is to guarantee each employee an income that allows them to live decently and sustainably. By factoring in these aspects, companies increase their chances of attracting talent while protecting themselves against the risk of seeing hires leave in the short or medium term.
