The changing labor force and gender pay gap in Luxembourg

This policy brief examines the gender pay gap (GPG) and workforce dynamics in Luxembourg's labor market, characterized by its reliance on cross-border workers and unique demographic structure. Over the past three decades, Luxembourg has seen significant growth in its workforce, with cross-border workers constituting nearly half of the labor force. While the overall representation of women in the workforce has increased from 36.2% in 1994 to 40.7% in 2022, disparities persist across worker categories, age groups, and economic sectors. Luxembourg boasts the lowest GPG in Europe, at -0.7% in 2021, indicating that women, on average, earn slightly more than men. This trend reflects a consistent reduction in the gap since 2006. However, sectoral analysis reveals notable disparities: while female-dominated sectors like health and education exhibit minimal or negative GPGs, male-dominated sectors such as finance and professional services continue to show significant gaps favoring men. The brief highlights that younger workers tend to experience equitable or favorable pay gaps, while older cohorts face increasing disparities. Additionally, although women are better represented in higher-paying sectors, they are underrepresented in management roles, which contributes to persistent inequalities within sectors. The findings underscore Luxembourg’s progress in addressing the GPG while emphasizing the need for targeted policies to bridge remaining gaps and ensure equitable pay across all economic activities.