The Draft Law amending Article L. 222-9 of the Labour Code proposes an increase of the minimum social wage of 3.8% as from 1 January 2027.
Background and scope
The Draft Law No. 8837 amending Article L. 222-9 of the Labour Code (the “Draft Law”) has been prepared by the Minister of Labour and proposes to adjust the rate of the minimum social wage (the “MSW”) to reflect the change in average wages recorded during 2024 and 2025. The Draft Law was submitted to the Luxembourg Parliament (Chambre des Députés) on 5 October 2026.
Under Article L. 222-2(1) of the Labour Code, the level of the MSW is set by law. Article L. 222-2(2) requires the Government, every two years, to submit to the Luxembourg Parliament a report on general economic and income trends, accompanied, where applicable, by a draft law raising the level of the MSW. This power to propose an increase of the MSW does not, however, entail any legal obligation to raise the entire salary scale within companies.
The indicator used to measure the change in average wages, namely the average hourly wage of the reference population reduced to index 100 of the sliding wage scale, shows an increase of 3.8% between 2023 and 2025. At its meeting of 27 March 2026, the Government in Council considered that economic and social conditions allowed for an increase of the MSW.
An increase set against a mixed economic backdrop
The biennial report on general economic and income trends accompanying the Draft Law paints a mixed picture of the Luxembourg economy for 2024 and 2025: after near-stagnation in 2023 (+0.1%), GDP in volume grew by only 0.4% in 2024 and 0.6% in 2025, remaining below euro area growth for the fourth consecutive year.
The average wage cost rose by 3.5% in 2024 and then 4.4% in 2025, following a marked slowdown in inflation (+2.1% in 2024 and +2.3% in 2025, compared with +6.3% in 2022). The unemployment rate, after a low of 4.8% in 2022, increased to 6.0% in 2025.
The proposed new amounts
In practical terms, the Draft Law provides that, for a full-time unskilled adult employee, the monthly MSW, currently set at EUR 2,771.33 gross (index 992.24), would increase to EUR 2,876.60 gross, an additional EUR 105.27. The skilled MSW, which is 20% higher, would reach approximately EUR 3,451.96 gross per month, an increase of EUR 126.33 compared with the EUR 3,325.59 currently applicable. These amounts remain subject to any applicable indexation adjustments.
A slightly smaller share of employees affected
As at 31 January 2026, 70,383 employees (excluding civil servants), or 15.5% of employees on the labour market, were paid close to the MSW, a proportion slightly down from the 15.9% recorded a year earlier. The sectors most affected remain accommodation and food services (48.2% of employees in the sector) and trade, which accounts for the largest number of employees paid close to the MSW (16,881 employees, or 24% of all employees paid close to the MSW).
Taking into account the employment growth estimated at 1.6% for 2026, the explanatory memorandum estimates that 71,415 employees will be paid close to the MSW as at 31 December 2026.
A significant cost for businesses
According to the explanatory memorandum, the total wage increase resulting from the MSW revaluation is estimated at EUR 89.45 million. In addition, the increase in the employer's share of social security contributions is estimated at EUR 23.61 million, resulting both from the wage increase for employees paid close to the MSW and from the change in the contribution ceiling (set at five times the MSW).
The total annual additional cost of this 3.8% MSW revaluation is thus estimated at EUR 113.05 million for Luxembourg businesses as a whole.
Conclusion
This Draft Law, which forms part of the biennial MSW adjustment mechanism set out in Article L. 222-2 of the Labour Code, is expected to result in a significant increase in wage costs for employers with employees paid close to the minimum wage, particularly in the accommodation, food service and trade sectors. Affected businesses are advised to start anticipating the budgetary impact of this revaluation now, ahead of its expected entry into force on 1 January 2027.
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