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2017 OECD ECONOMIC
SURVEY OF LUXEMBOURG
Better skills for more inclusive growth
Paris, July, 21th
@OECD
@OECDeconomy
http:...
2
Main messages
• Luxembourg’s economic performance is strong.
• The short-term fiscal stance is adequate. However, Luxemb...
3
Well-being is high
Life is good in Luxembourg
Note: Indicators are normalised to range between 10 (best) and 0.
Source: ...
4
Unemployment is low and declining
Unemployment rates, per cent of labour force
Source: OECD Economic Outlook 101 databas...
5
There is ample fiscal space
General government fiscal balance, per cent of GDP
Source: OECD (2017), OECD Economic Outloo...
6
But ageing costs are projected to rise
Gross public pension expenditure, per cent of GDP
Source: European Commission (20...
7
House prices are growing strongly…
Real house prices, index 2007=100
Source: OECD, Analytical house prices indicators da...
8
…and household indebtedness is rising also
Household debt, per cent of GDP or GNI
0
10
20
30
40
50
60
70
80
90
100
0
10
...
9
Economic growth is strong, but relies heavily
on the financial sector
Real GDP growth, year-on-year percentage changes
S...
10
Green growth requires further investment
Congestion times are among the highest in Europe
Hours spent in road congestio...
11
The demand for skills is changing
Average annual change in total employment requiring different tasks (thousands)
- 6
-...
12
Luxembourg has long attracted immigrants
to fill vacancies
Net migration flows, % of total population
0.0
0.5
1.0
1.5
2...
13
Recommendations for more resilient and
greener growth
1. The linkages between banks and investment funds need to be clo...
BETTER SKILLS FOR MORE INCLUSIVE
GROWTH
14
15
Computer skills are high
0
5
10
15
20
25
30
35
40
45
50
0
5
10
15
20
25
30
35
40
45
50
FIN
LUX
NOR
DNK
SWE
ISL
EST
LTU
...
16
Skill mismatches are high
Note: Workers are classified as underskilled (overskilled) if they report that they need furt...
17
Education scores show a persistent gap
Average PISA scores, 2009-2015
Source: OECD (2016), PISA 2015 Results (Volume I)...
18
Grade repetition is high
Share of 15-years old who repeated a year at least once, per cent
0
5
10
15
20
25
30
35
0
5
10...
19
The share of training in active labour market
policy spending is low
Per cent of GDP, average 2010-15 (or last availabl...
20
High marginal tax rates create disincentives to
work
Marginal Effective Tax Rates on increasing working hours, 2014
0
1...
21
Work disincentives for second earners are
high
Net personal average tax rates on second earners, 2015
0
5
10
15
20
25
3...
22
Recommendations for better skills for more
inclusive growth
1. Reduce grade repetition by providing earlier individuali...
IMPROVING FURTHER THE INTEGRATION OF
IMMIGRANTS
23
24
The large immigrant population has a high
employment rate
0
5
10
15
20
25
30
35
40
45
50
POL
SVK
CZE
HUN
FIN
PRT
ITA
DN...
25
Non-EU immigrants face higher
unemployment
Unemployment rate by country of origin, age group 15-74, per cent
0
5
10
15
...
26
The risk of poverty is high among non-EU
immigrants
Age 18-64, 2015
0
10
20
30
40
50
60
0
10
20
30
40
50
60
POL ISL CZE...
27
Immigrants are under-represented in public
sector jobs
Share of employment in the public services sector, aged 15- 64, ...
28
Processing times for immigration of highly-
skilled non-EU workers is high
Time in weeks
0
2
4
6
8
10
12
14
16
18
0
2
4...
29
Socio-economic status has a large impact on
student performance
Impact of socio-economic background, Performance in sci...
30
Performance of students with immigrant
background is lagging behind
Note: At the end of primary school, children are as...
31
Disadvantaged schools face greater
shortages of educational resources
Index of shortage of education staff
Difference b...
32
Recommendations for improving the
integration of immigrants
1. Improve the availability of high-quality child care and ...
33
For more information
http://www.oecd.org/eco/surveys/economic-survey-luxembourg.htm
OECD
OECD Economics
Disclaimers:
Th...
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Lux 2017-oecd-economic-survey-en

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Luxembourg is an advanced economy with the highest per capita income in the OECD, reflecting the dynamic services sector, notably in banking and other financial services.

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Lux 2017-oecd-economic-survey-en

  1. 1. 2017 OECD ECONOMIC SURVEY OF LUXEMBOURG Better skills for more inclusive growth Paris, July, 21th @OECD @OECDeconomy http://www.oecd.org/eco/surveys/economic-survey-luxembourg.htm
  2. 2. 2 Main messages • Luxembourg’s economic performance is strong. • The short-term fiscal stance is adequate. However, Luxembourg faces high age-related costs. • The modernisation strategy will require improvements in education outcomes, especially for immigrants, and better upskilling of workers over their lifetime. • Inclusive growth would also benefit from reducing work disincentives faced by low-skilled youth, women and older workers.
  3. 3. 3 Well-being is high Life is good in Luxembourg Note: Indicators are normalised to range between 10 (best) and 0. Source: OECD (2016), OECD Better Life Initiative 2016, www.oecd.org/statistics/better-life-initiative.htm 0 2 4 6 8 10 Income and wealth Jobs and earnings Housing Work and life balance Health status Education and skillsSocial connections Civic engagement and governance Environmental quality Personal security Subjective well-being Luxembourg OECD
  4. 4. 4 Unemployment is low and declining Unemployment rates, per cent of labour force Source: OECD Economic Outlook 101 database. 0 5 10 15 20 2007 2009 2011 2013 2015 2017 Luxembourg Euro area
  5. 5. 5 There is ample fiscal space General government fiscal balance, per cent of GDP Source: OECD (2017), OECD Economic Outlook: Statistics and Projections (database). -2 -1 0 1 2 3 4 5 6 7 -2 -1 0 1 2 3 4 5 6 7 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 % of GDP% of GDP
  6. 6. 6 But ageing costs are projected to rise Gross public pension expenditure, per cent of GDP Source: European Commission (2015), The 2015 Ageing Report: Economic and budgetary projections for the 28 EU Member States (2013-2060). 0 2 4 6 8 10 12 14 16 18 20 0 2 4 6 8 10 12 14 16 18 20 NLD IRL EST LVA GBR SVK SWE CZE LUX NOR DEU DNK POL EU HUN BEL SVN ESP FIN PRT AUT FRA ITA GRC 2013 2060
  7. 7. 7 House prices are growing strongly… Real house prices, index 2007=100 Source: OECD, Analytical house prices indicators database. 90 100 110 120 130 140 150 90 100 110 120 130 140 150 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Seasonally adjustedSeasonally adjusted Luxembourg Australia Belgium Canada France Germany Sweden
  8. 8. 8 …and household indebtedness is rising also Household debt, per cent of GDP or GNI 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % of GNI (Gross National Income) % of GDP (Gross Domestic Product) Note: The instruments that are taken into account to compile household debt are debt securities and loans. Data are presented in consolidated terms. Source: OECD National Accounts Statistics.
  9. 9. 9 Economic growth is strong, but relies heavily on the financial sector Real GDP growth, year-on-year percentage changes Source: OECD Economic Outlook 101 database. -10 -8 -6 -4 -2 0 2 4 6 8 10 12 2007 2009 2011 2013 2015 2017 Luxembourg Euro area
  10. 10. 10 Green growth requires further investment Congestion times are among the highest in Europe Hours spent in road congestion by the average driver every year, 2015 0 5 10 15 20 25 30 35 40 45 0 5 10 15 20 25 30 35 40 45 FIN EST SWE LVA SVK DNK CZE POL ESP SVN AUT HUN PRT FRA EU DEU NLD IRL LUX ITA BEL GRCGBR Note: This indicator assumes two 30km trips per day (morning peak and evening peak) and 220 working days. It takes into account all major roads in the 27 Member States for which data is available (about 2 500 000 kilometers). Source: European Commission, EU transport scoreboard 2016.
  11. 11. 11 The demand for skills is changing Average annual change in total employment requiring different tasks (thousands) - 6 - 3 0 3 6 9 12 15 18 - 6 - 3 0 3 6 9 12 15 18 1996-2008 2009-10 2012-15 Non-routine manual Routine manual Abstract Note: Refers to population aged between 15 and 64. Abstract tasks refer to problem-solving, intuition, persuasion and creativity. Source: Eurostat (2017), Employment and unemployment (Labour Force Survey) (database), March.
  12. 12. 12 Luxembourg has long attracted immigrants to fill vacancies Net migration flows, % of total population 0.0 0.5 1.0 1.5 2.0 2.5 0.0 0.5 1.0 1.5 2.0 2.5 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source: STATEC.
  13. 13. 13 Recommendations for more resilient and greener growth 1. The linkages between banks and investment funds need to be closely monitored. 2. Additional macro-prudential measures should be introduced to rein in high household indebtedness and increasing housing prices. 3. Housing supply should be supported by streamlined land planning, introduction of time-limited building permits and increased taxation of non-used constructible land. 4. Age-related costs should be reduced further by linking the legal age of pension with life expectancy and the level of pensions to the level of contributions. 5. Green growth requires higher taxes on transport fuel, a system of congestion charges and further investment in transport infrastructure.
  14. 14. BETTER SKILLS FOR MORE INCLUSIVE GROWTH 14
  15. 15. 15 Computer skills are high 0 5 10 15 20 25 30 35 40 45 50 0 5 10 15 20 25 30 35 40 45 50 FIN LUX NOR DNK SWE ISL EST LTU AUT PRT ESP FRA GBR SVN DEU GRC LVA EU28 CZE NLD IRL ITA MLT SVK BEL HUN HRV POL BGR TUR ROU %% Note: Share of individuals aged 16 to 74 reporting to have carried out five or six specific tasks related to computer use. Source: Eurostat (2015), Individuals’ level of computer skills; European Commission (2012. Share of people with computer skills, 2014
  16. 16. 16 Skill mismatches are high Note: Workers are classified as underskilled (overskilled) if they report that they need further training to cope well with their duties (if they report that they have the skills to cope with more demanding duties). Source: Sixth European Working Conditions Survey, 2015. Self-reported skills mismatch As percentage of all employment, 2015 0 10 20 30 40 50 60 0 10 20 30 40 50 60 PRT FIN ITA NOR BEL LVA SVK CZE NLD POL GBR EU-28 FRA GRC ESP DNK IRL SWE CHE LUX DEU HUN SVN EST AUT Overskilled Underskilled
  17. 17. 17 Education scores show a persistent gap Average PISA scores, 2009-2015 Source: OECD (2016), PISA 2015 Results (Volume I): Excellence and Equity in Education. 460 465 470 475 480 485 490 495 500 505 460 465 470 475 480 485 490 495 500 505 Science Reading Mathematics Mean scoreMean score Luxembourg OECD average
  18. 18. 18 Grade repetition is high Share of 15-years old who repeated a year at least once, per cent 0 5 10 15 20 25 30 35 0 5 10 15 20 25 30 35 ISL SVN GBR FIN DNK EST SWE KOR CZE NZL GRC LVA POL CAN SVK AUS IRL ISR HUN TUR USA OECD ITA AUT MEX DEU CHE NLD FRA CHL LUX PRT ESP BEL Source: OECD (2016), PISA 2015 Results (Volume I): Excellence and Equity in Education.
  19. 19. 19 The share of training in active labour market policy spending is low Per cent of GDP, average 2010-15 (or last available year) Source: European Commission, Labour market policy (LMP) database. 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 GBR EST SVK CZE GRC LVA SVN ITA DEU NOR POL PRT LUX EU28 BEL ESP HUN AUT NLD IRL FRA FIN SWE DNK Training Total LMP measures
  20. 20. 20 High marginal tax rates create disincentives to work Marginal Effective Tax Rates on increasing working hours, 2014 0 10 20 30 40 50 60 70 80 90 100 110 0 10 20 30 40 50 60 70 80 90 100 110 KOR CHL GRC ESP PRT EST ITA TUR LVA USA SVN HUN SVK JPN ISR BEL OECD FRA SWE AUT ISL GBR CAN NOR POL DEU CZE NZL NLD CHE AUS FIN DNK IRL LUX % of gross earnings% of gross earnings Note: From 33% to 67% of average wage, supplements included, for married couple. Source: OECD, Tax-Benefit Models.
  21. 21. 21 Work disincentives for second earners are high Net personal average tax rates on second earners, 2015 0 5 10 15 20 25 30 35 40 45 50 0 5 10 15 20 25 30 35 40 45 50 MEX CHL ISR KOR NZL AUS GBR IRL GRC EST CHE SWE ESP JPN FIN CAN POL TUR ITA NOR NLD AUT USA SVK PRT CZE LUX SVN HUN FRA ISL DNK DEU BEL %% Note: Second earner at 67% of the average wage (primary earner at the average wage level), no children. The net personal average tax rate is calculated as the increase in income tax and employee SSCs (net of in-work benefits) paid by the family as a result of the second earner entering workforce divided by the increase in family gross income as a result of the second earner entering in the workforce. Source: Thomas and O’Reilly (2016).
  22. 22. 22 Recommendations for better skills for more inclusive growth 1. Reduce grade repetition by providing earlier individualised support to students falling behind. 2. Improve the mobility between secondary education tracks through curriculum alignment and differentiated teaching. 3. Ease the upward mobility of vocational education students to tertiary education programmes. Strengthen career guidance and counselling to improve responsiveness of tertiary education to labour market needs. 4. Enhance access to lifelong learning by creating individual learning accounts and expanding the individual study leave. Tailor lifelong learning programmes to the needs of the low-skilled and older workers. 5. Adjust the tax and benefit system to increase incentives to work for low- skilled youth, older workers and second earners.
  23. 23. IMPROVING FURTHER THE INTEGRATION OF IMMIGRANTS 23
  24. 24. 24 The large immigrant population has a high employment rate 0 5 10 15 20 25 30 35 40 45 50 POL SVK CZE HUN FIN PRT ITA DNK GRC SVN FRA NLD ISL ESP LVA DEU GBR EST NOR BEL IRL SWE AUT CHE LUX % of total population A. Foreign-born population 1 January 2016 Non-EU28 EU28 -16 -12 -8 -4 0 4 8 NLD SWE DNK BEL FIN FRA AUT DEU NOR TUR CHE LVA SVN SVK ISL ESP GBR POL EST IRL CZE GRC ITA PRT LUX HUN % pointsB. Employment rate Gap relative to native born, age 15-64, 2015 Source: Eurostat (2016), Population Statistics and Employment and Unemployment (Labour Force Survey) Statistics.
  25. 25. 25 Non-EU immigrants face higher unemployment Unemployment rate by country of origin, age group 15-74, per cent 0 5 10 15 20 25 0 5 10 15 20 25 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Extra-EU-28 EU-28 countries Luxembourg Source: Eurostat, Employment and unemployment (Labour Force Survey) database.
  26. 26. 26 The risk of poverty is high among non-EU immigrants Age 18-64, 2015 0 10 20 30 40 50 60 0 10 20 30 40 50 60 POL ISL CZE LVA EST PRT NLD NOR DEU GBR FIN HUN DNK FRA SVN EU28 AUT ITA SWE LUX BEL ESP GRC Source: Eurostat (2015), "Living conditions and welfare: Income distribution and monetary poverty", Eurostat Database, October.
  27. 27. 27 Immigrants are under-represented in public sector jobs Share of employment in the public services sector, aged 15- 64, 2012-2013 Source: OECD/European Union (2015). 0 10 20 30 40 50 60 0 10 20 30 40 50 60 GRC ITA ESP BGR LUX SVN CZE AUT DEU TUR LVA EST EU OECD CHE IRL ROU SVK HRV ISL HUN LTU FRA BEL FIN MLT PRT POL NLD GBR DNK SWE %% Among foreign born Among native born
  28. 28. 28 Processing times for immigration of highly- skilled non-EU workers is high Time in weeks 0 2 4 6 8 10 12 14 16 18 0 2 4 6 8 10 12 14 16 18 GBR BEL DNKGRCNOR PRT AUS NLD ESP SWE FRA DEU IRL LVA CHE HUN POL SVK USA CAN EST FIN AUT CZE LUX ITA Source: Deloitte (2016), Global Immigration Study.
  29. 29. 29 Socio-economic status has a large impact on student performance Impact of socio-economic background, Performance in science, PISA 2015 0 5 10 15 20 25 0 5 10 15 20 25 ISL EST NOR LVA CAN TUR ITA FIN JPN KOR DNK GBR MEX ISR USA AUS SWE NLD GRC IRL OECD POL ESP SVN NZL PRT CHE DEU AUT SVK CHL CZE BEL FRA LUX HUN Note: Percentage of variance in student performance in science explained by ESCS, which refers to the PISA index of economic, social and cultural status. Source: OECD (2016), PISA 2015 Results (Volume I): Excellence and Equity in Education.
  30. 30. 30 Performance of students with immigrant background is lagging behind Note: At the end of primary school, children are assigned to different programmes of secondary education: academic (enseignement secondaire, ES), technical (enseignement secondaire technique, EST) and preparatory (régime préparatoire, PREP). Source: OECD, PISA 2015 Database. Performance in science, score points, PISA 2015 0 100 200 300 400 500 600 Preparatory Technical Secondary Immigrants students Non-immigrant students
  31. 31. 31 Disadvantaged schools face greater shortages of educational resources Index of shortage of education staff Difference between schools in top and bottom quarters of socio-economic profile, PISA 2015 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 AUS ESP USA TUR MEX SWE NZL ISR CZE DNK CHL NOR LUX HUN SVK NLD CAN GBR PRT OECD CHE DEU ITA IRL BEL GRC JPN SVN FIN POL ISL LVA FRA EST AUT KOR Note: Higher values in the indices indicate a greater shortage of educational resources. The socio-economic profile is measured by the PISA index of economic, social and cultural status. Source: OECD (2016), PISA 2015 Results (Volume II): Resources Invested In Education.
  32. 32. 32 Recommendations for improving the integration of immigrants 1. Improve the availability of high-quality child care and provide incentives for fathers to share parental leave. 2. Continue to increase public supply of language courses. Diversify language training according to workplace needs. 3. To limit long periods of inactivity, speed up decisions on asylum applications and ease provisional labour market access for applicants with high prospects of being allowed to stay. 4. Ease immigrants’ access to public sector jobs. 5. Make resource allocation across schools more equitable and introduce incentives to attract more experienced teachers to disadvantaged schools.
  33. 33. 33 For more information http://www.oecd.org/eco/surveys/economic-survey-luxembourg.htm OECD OECD Economics Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

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