Luxembourg is known for its high but unequally distributed living standards. It is not the first anti-poverty plan of Minister Max Hahn (Family Affairs, Solidarity, Living Together and Reception of Refugees), that has borne fruit just a few months after its adoption. Rather, it is an improvement in the database compiled by STATEC which is responsible for this happy achievement.
It is a matter of fact that the population coverage through surveys is deficient at the extremes of the income distribution: poor people struggle to keep track record of all benefits and credits they get, while rich people are reluctant to disclose the full extent of their wealth. The official statisticians managed to get administrative statistics from IGSS and to combine those with their traditional surveys. The result is awesome.
Monetary poverty rate drops to 14,8%
The 2025 risk of (monetary) poverty rate is reduced by 3,5% points compared to the official rate in 2024. The European “risk of poverty or exclusion” (AROPE), a broader measure, is downsized to 18,2%. The adjusted numbers should embellish the ranking of Luxembourg on the international poverty hit parade. If you take into account that Luxembourg offers lots of services for families free of charge (take child care) studies suggest that the risk of poverty rate would be reduced by an additional 2 percentage points! I guess the actual monetary poverty rate hovers around 13%!
Structural challenges remain
The STATEC study shows that the structural vulnerabilities described in former reports remain unchanged: families with children, in particular lonely parents with children, women and young people are relatively more exposed to the risk of poverty.
What proportion of inequality a rich, open, democratic society should be willing to accept?
Aiming for a fair society
The real political and philosophical challenge is : what proportion of inequality a rich, open, democratic society should be willing to accept? Tricky question. John Rawls, an American philosopher, pointed out a list of conditions to fulfill so that society guarantees fairness to its members. One is the “difference principle”: economic and social inequalities are only fair if they maximally benefit society’s least advantaged members. Sustainable economic growth, offering good jobs and wages, is key. But be careful: there is no “trickle down effect”. It is up to sound fiscal and social public policies to level the playing field.
This column was published in the 10th edition of Forbes Luxembourg.
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