Luxembourg’s hourly labour costs of €56.80 remain EU’s highest

Luxembourg had the highest average hourly labour costs of any country in the European Union last year, according to data published by the bloc’s official statistics agency Eurostat on Tuesday.

Hourly labour costs in the Grand Duchy were €56.80 in 2025, up from €55.20 the previous year, Eurostat said. This was way ahead of the EU’s average hourly labour costs last year, which stood at €34.90. The Eurozone average was €38.20.

Hourly labour costs across Europe in 2025 © Photo credit: Eurostat

To calculate labour costs Eurostat combined wage and non-wage costs, such as employers’ social contributions, at companies with 10 or more employees.

Only Iceland, which is a member of the European Economic Area but not the EU, had higher hourly labour costs than Luxembourg, at €59.30. Norway, another non-EU country, was the next closest to the Grand Duchy’s rate, with €56.20 hourly labour costs in 2025, the data showed.

Luxembourg’s three neighbouring countries all posted significantly lower hourly labour costs, ranging from €48.20 in Belgium to €45 in Germany and €44.30 in France.

The last time average hourly labour costs in the Grand Duchy were still below the €50 threshold was back in 2021, when the rate stood at €48.40.

Luxembourg’s high wages are cemented by the automatic indexation policy. Indexation is triggered when inflation exceeds an annualised rate of 2.5% for more than two quarters, and the policy is set to kick in again in the second quarter.

Luxembourg’s government announced last week that minimum wage earners will see their pay rise by 3.8% from 1 January 2027, in response to an European Court of Justice ruling on the European Minimum Wage Directive.

The country’s lobby group for employers, Union des Entreprises Luxembourgeoises (UEL), previously said that any further rises to the minimum wage could damage growth and productivity.

Certain sectors, such as public administration – where the most highly paid civil servants earn well over €100,000 a year in Luxembourg – and agriculture were excluded from the Eurostat calculations on labour costs.