Income Inequality in Luxembourg-- Its presence and causes

    Luxembourg, once a great example of the equity available for citizens of European countries, has begun to distance itself from its peers. From 2006 to 2016, Luxembourg's Gini Index rose from 30.9 to 33-- a stark increase and a quantitative example of their rising inequality. Understanding the reasoning for this rising inequality is vital to combating it (Gini Index (World Bank Estimate) - Luxembourg).

    Luxembourg has an incredibly complicated economy. They have the highest disposable income per capita in the EU, but their poverty has risen at an extreme rate since 2000, 21.% of people are living at risk of poverty or social exclusion, and 18.7% of people in Luxembourg are considered a part of the working poor. This generation runs the risk of being the first generation to see a declining standard of living (Georgi et al. 3). 

    So what causes this complex, and increasingly unequal, economy. The main reasons, of which the definitions are defined in Blink's Economics, are inequality of opportunities and and government tax and benefits policies (Blink 333, 337)(Social Justice...)(Georgi et al. 3). 

    Luxembourg faces a crisis when it comes to affordable housing and childcare, and these two crises are leading to inequality of opportunities. Housing accounts for 36% of the average household, and 42% of the average low-income household. There are only 5,000 units of social housing for a population of 615,000. There is very little state support for childcare, and single-mothers face high taxes. All of this means that low-income households see their income zapped away by human necessities, and are forced to spend their time working to stay above the poverty line rather than pursuing education, other jobs, and higher incomes. If the government doesn't take drastic steps towards fighting the housing and childcare crisis, then income inequality will continue to rise (Georgi et al. 3,4).

    The other reason of inequality, being governmental tax and benefits policies, is just as harmful to the people of Luxembourg. Luxembourg has low taxes on the richest individuals and corporations, which forces them to utilize austerity in their budget (Social Justice...). Because of this austerity and tax rates, they are unable to provide or subsidize housing, childcare, and they cannot properly regulate big business and stop human trafficking (Social Justice...)(Georgi et al. 4). 

    Overall, Luxembourg is a fairly equal country that provides many opportunities and benefits for their citizens (Georgi et al. 3). However, they have recently taken a turn towards an unfair tax system and higher economic inequality. If they don't curb this soon, then their standing as a country with low poverty and a high standard of living will disappear. 

    

    

Works Cited

Georgi, Julia, et al. “Inequalities in Luxembourg.” SDG Watch Europe, 2019, www.sdgwatcheurope.org/wp-content/uploads/2019/06/15.3.a-report-LU.pdf.

“Gini Index (World Bank Estimate) - Luxembourg.” World Bank, 2017, data.worldbank.org/indicator/SI.POV.GINI?locations=LU.

“Social Justice: Inequality Is on the Rise in Luxembourg, Says Green Party.” RTL Today, 2020, today.rtl.lu/news/luxembourg/a/1578489.html.