Going for Growth - Luxembourg

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Luxembourg GDP per capita still exceeds that of other advanced OECD countries by almost 50%, but the gap has been narrowing in the wake of the global financial crisis. Both productivity growth and labour utilisation have remained flat, while structural unemployment slowly decreased. Income inequality, as measured by the Gini coefficient, is below the OECD average. However, over the past few years disposable income has decreased for the poorest households. Greenhouse gas emissions per capita, while on a downward trend, are among the highest in the OECD. Progress in addressing past priorities identified in Going for Growth has been achieved in the area of social benefit system with the ongoing reform of the minimum income scheme and the introduction in 2018 of additional benefits available to low income groups such as early childcare vouchers and expanded housing assistance. Increased infrastructure investment would help to improve environmental outcomes and the quality of growth. Improvements in the education system and better access to lifelong learning would help to reduce skills mismatches, making growth more inclusive. More competition, especially in professional services and retail, would reinforce the diversification of the economy and medium-term improvements in productivity. Better land planning and stronger incentives to develop land available for construction would help meeting the increasing demand for housing. Growth performance, inequality and environment indicators: Luxembourg Average annual growth rates (%) GDP per capita Labour utilisation of which: Labour force participation rate

A. Growth

Employment rate1 Employment coefficient2 Labour productivity of which: Capital deepening Total factor productivity Dependency ratio

2012-18 0.7 0.3 -0.2 0.1 0.5 0.2 0.1 0.1 0.2

Level

Annual variation (percentage points)

2016 30.4 (31.7)*

2015-16 -0.1 (0)*

30

7.9 (7.6)*

-0.1 (0)*

20

2016 16.4 (10.9)* 0.2 (0.3)* 0.0

Average of levels 2010-16 19.9 (11.3)* 0.2 (0.3)* 0.0

B. Inequality and environment

Gini coefficient3 Share of national disposable income held by the poorest 20%

GHG emissions per capita4 (tonnes of CO2 equivalent) GHG emissions per unit of GDP4 (kg of CO2 equivalent per USD) Share in global GHG emissions4 (%) * OECD simple average (weighted average for emissions data)

C. Income and productivity remain well above the average of leading countries

2002-08 1.9 1.7 0.3 -0.3 1.6 0.1 0.1 0.0 0.1

Per cent 80 70

Gap to the upper half of OECD countries5 GDP per capita

GDP per hour worked

60 50 40

10 0

Source: Panel A: OECD, Economic Outlook Database; Panel B: OECD, Income Distribution and National Accounts Databases; United Nations Framework Convention on Climate Change (UNFCCC) Database and International Energy Agency (IEA), Energy Database; Panel C: OECD, National Accounts and Productivity Databases. StatLink 2 https://doi.org/10.1787/888933955161

ECONOMIC POLICY REFORMS 2019: GOING FOR GROWTH Š OECD 2019


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