Luxembourg businesses are facing mounting pressure from weak growth, rising unemployment and structural challenges, says industry federation Fedil in a call for “decisive reforms” to restore competitiveness.
Although Luxembourg’s economy recorded modest growth over four consecutive quarters in 2025, expansion remained limited at around 1% annually, Fedil representatives said on Monday during a press conference ahead of the group’s annual general meeting.
The industry federation warned that geopolitical tensions, new trade barriers, high energy prices and increasing regulatory pressure are weighing heavily on businesses.
Unemployment has risen to over 6%, industry leaders said, underscoring what they described as “structural weaknesses in the economy”.
While member companies expect to hire over 3,000 new employees by 2027, the shortage of skilled workers, demographic change, and unresolved pension issues are exacerbating the pressure, Fedil said.
Energy policy also remains a central concern, with the association welcoming recent government measures to reduce electricity grid costs and improve industrial electricity pricing from 2026, while also calling for greater technological openness in climate policy and the use of carbon capture technologies for energy-intensive industries.
With regard to the EU’s climate target of a 90% reduction in CO₂ emissions by 2040, Fedil urged realistic transition periods to avoid deindustrialization.
EU proposes further energy measures to mitigate Iran war crisis
Artificial intelligence and competitiveness
Artificial intelligence has emerged as a decisive competitive factor in the past year, Fedil executives said. More than 100 companies took part in a national AI survey, and over 50 projects were submitted to the inaugural “Luxembourg AI Excellence Awards”, according to Fedil.
The implementation of the European AI Act must be pragmantic, the federation urged, saying the national AI strategy must promote rather than hinder innovation.
It has never been easy, but it has never been as difficult as it has been over the last five years
Alex Schumann
For 2026, outgoing Fedil President Georges Rassel, as well as his successor, Alex Schumann, made competitiveness one of the political priorities, “as Prime Minister Luc Frieden also stated at Fedil’s New Year’s celebration.”
More than ever, Europe must take the step from intention to action and heed the call of the entire industry, which demands that the European competitiveness agenda be accelerated and lead to urgent, concrete, and coherent measures. “It has never been easy, but it has never been as difficult as in the last five years,” Schumann said.
Finance sector outsourcing reflects ‘skills scarcity’ says economy ministry
A look at the Tripartite
Given the difficult economic situation and social challenges, Fedil called for the preparation of a so-called tripartite as early as the beginning of April to anticipate the economic shocks of the US-Israel war in Iran, rising petrol prices and inflation.
“When businesses are doing well, people are doing well too,” Georges Rassel said on Monday.
As public finances are also under strain, “we need to look at where the euro is best spent”, said Fedil managing director René Winkin. Various scenarios will need to be examined during the tripartite to determine which measures benefit whom, the Fedil executives said.
Frieden confirms tripartite meeting for June
The industry association is not approaching the tripartite meeting with specific expectations or demands, as it is participating alongside employer group UEL (Union des Entreprises Luxembourgeoises). “It is therefore still too early to make demands,” it said.
According to Frieden, the aim of the tripartite meeting is to limit the consequences of the international energy crisis “as much as possible, and that sets the framework for the tripartite meeting,” Winkin said.
“We are in a difficult situation – and it could get even more difficult,” he concluded.
(This article has first been published by the Luxemburger Wort. Translated using AI, with editing by Lucrezia Reale.)
