Oecd Economic Surveys: Luxembourg 2003-Issue 15 (Oecd Economic Surveys)

Table of contents......Page 5
Basic statistics of Luxembourg, 2002......Page 8
Assessment and recommendations......Page 10
GDP growth......Page 22
Table 1. Demand and output: recent trends and projections......Page 23
Figure 1. Real value added by activity......Page 24
Table 2. FISIM in banks’ balance sheets and national accounts......Page 25
Figure 2. Share of FISIM in banks’ gross production......Page 26
Table 3. Effects on GDP of changing levels and accounting treatments of FISIM......Page 27
Table 4. Current balance of payments......Page 28
Figure 3. Contributions to real GDP growth......Page 29
Labour market developments and inflation......Page 30
Figure 5. Employment and unemployment......Page 31
Figure 6. Employment by sector......Page 32
Figure 7. Labour productivity in the business sector......Page 33
Table 5. The contribution of indexation to average wage increases......Page 34
Elastic supply implies GDP growth in the medium term will be determined by world demand for Luxembourg products......Page 35
Figure 8. Confidence indicators point to weak activity......Page 36
Figure 9. Monetary conditions......Page 37
Medium-term perspectives for financial services in Luxembourg......Page 38
Policy challenges......Page 41
Overview......Page 42
Table 6. General government budget and debt......Page 43
Revenue growth has held up well thanks to a surge in collections of back taxes......Page 44
The budget surplus is set to almost disappear in 2003 on account of continued high expenditure growth......Page 45
Figure 12. Changes in total expenditure as a share of GDP......Page 46
Measures are planned to rein in expenditure growth in 2004-05, but further measures are needed......Page 47
Performance......Page 48
Table 7. Performance indicators: sustainable retirement income......Page 49
Policy......Page 50
Conclusion......Page 52
Increasing the employment rate, especially for older workers......Page 54
Access to the disability pension has been tightened…......Page 55
Figure 15. Employment rates of older workers......Page 56
Box 2. The 2002 law on occupational disability and redeployment......Page 58
Persisting obstacles to higher employment rates of workers aged 60 or more......Page 59
Increasing incentives to work for the unemployed......Page 60
Table 8. Net replacement rates 60 months after claiming benefit, 1999......Page 61
Low average and high variance in schooling performance......Page 62
Reducing the school dropout rate is key to preserve long-run employability of the workforce......Page 63
Box 3. Main features of the non-tertiary education system......Page 64
The institutional design of education policy should be reengineered to foster performance......Page 65
Table 9. School-level indices in selected OECD countries......Page 66
Figure 17. Public expenditure on education and student reading literacy......Page 67
Increasing the efficiency with which government achieves its objectives......Page 68
Public sector management reforms, contracting out and privatisation......Page 69
E-government......Page 70
Figure 18. Degree of sophistication of on-line public services......Page 71
Figure 19. SMEs reporting administrative burdens as a major constraint on business performance......Page 72
Improved broadband-internet access would help Luxembourg to reap the benefits of the knowledge economy......Page 74
Figure 20. Percentage of EU households with Internet access......Page 75
Figure 22. DSL Internet access prices in selected OECD countries......Page 76
Climate change......Page 77
Box 4. The integration of policies across sustainable development areas......Page 78
Table 10. Main indicators: climate change......Page 79
Figure 24. GHG emissions, targets and projections......Page 80
Improving living standards in developing countries......Page 82
Table 11. Main indicators: trade and development cooperation......Page 83
Table 12. Producer support equivalents and their components......Page 86
Follow up on OECD recommendations for structural reform......Page 88
Box 5. Follow up on OECD recommendations for structural reform since 2001......Page 89
Introduction......Page 98
Origins and recent trends......Page 99
Table 13. Sectoral employment shares: Luxembourgers, resident foreigners and frontaliers, 2002......Page 100
Figure 25. Employment: Luxembourgers, resident foreigners and frontaliers......Page 101
Immigration policy......Page 102
Figure 27. Luxembourg residents: education attainment by nationality......Page 104
Table 14. Employment in foreign-owned enterprises, 1998......Page 105
A three-sector labour market?......Page 106
Figure 28. Relative salaries and employment shares of Luxembourg nationals, by sector......Page 108
Fiscal impacts......Page 109
Integration......Page 111
Figure 30. Participation rates......Page 112
Figure 31. Relative performance of immigrants and national secondary school students......Page 114
Improving the efficiency of transport services......Page 115
Figure 32. Cross-border flows in the Grande région, 2001......Page 116
Table 15. Real house prices, construction costs and land prices......Page 118
Figure 33. Ratio of house prices to disposable income......Page 120
Table 16. An error correction model of real house prices......Page 121
Table 17. Shares of rental dwellings in the total stock of housing......Page 122
Conclusions......Page 123
Notes......Page 125
List of acronyms......Page 138
Bibliography......Page 140
Annex I. Output gaps, unemployment gaps, and the Phillips curve......Page 147
Box A1. The unemployment rate Grande région......Page 148
Figure A1. Output and unemployment gaps......Page 149
Figure A2. Standard deviation of output gaps......Page 150
Annex II. Sources and methods underlying the calculation of public expenditure per student in Luxembourg......Page 154