Determining labour shortages and the need for labour migration from third countries in the EU

Since almost 150 years, Luxembourg depends on two kinds of migration, qualified and non-qualified, in order to deal with the workforce needs of its economy. Compared to the other EU Member States, Luxembourg is the country with the largest proportion of foreigners; however, this foreign population is mainly composed of EU citizens.
Due to its size and geographic position, Luxembourg was able to have access to a very particular form of economic migration: cross-border workers. Globalisation has also played a decisive role in the development of economic migration for the Luxembourgish labour market. The financial centre was obliged to become highly specialised in order to remain competitive in regards to other financial centres and to maintain its volume of business. In order to maintain its competitive advantage, Luxembourg needs highly skilled personnel, which the country has found, up until now, within the Greater Region.
This reality is even more pronounced with regards to the labour market: the number of actives (salaried and non-salaried) on 31 March 2014 shows that Luxembourgish nationals represented only 31%, EU citizens 65% and third-country nationals only 4%. Cross-border workers from Belgium, France and Germany represented 42% of the workforce and the resident migrant population (EU citizens and third-country nationals) 28%. Cross-border workers, which consist of skilled and highly skilled labour are substantially attracted for two reasons: 1) more competitive salaries on the Luxemburgish labour market ; and 2) a geographical location which allows the commuting of cross-border workers.
The attitude of the successive governments was to adapt immigration to the economic needs of the country. The government policy intends to focus on attracting highly added value activities focussed on new technologies (biomedicine and information as well as communication technologies – focusing on IT security), logistics and research. However, being one of the smallest countries in the European Union, Luxembourg has limited human resources to guarantee the growth not only of the financial sector but also of the new technologies sectors. The government introduced the highly qualified worker residence permit in the bill on free movement of persons and immigration approved by law of 29 August 2008 almost a year before of the enactment of the Blue Card Directive to facilitate the entry of third-country national highly qualified workers. However, this reform was isolated and incomplete and took place without making a real evaluation of the workforce demand of the different sectors of the economy.
Even though until now Luxembourg has been relying on the workforce from the Greater Region, for some socio-economic and political stakeholders, highly qualified workforces began to become scarce in the Greater region. In addition to the cross-border workers, the lifting of restrictions to access all the sectors of the labour market for citizens of the new Member States (EU-8) can be considered as a mitigating factor for the need to make an evaluation of the workforce demand, because the high salaries paid in Luxembourg became a real pull factor for the highly qualified workers. As a consequence, the political authorities did not foresee a systematic plan on how to address labour shortages in specific sectors of the economy, because there has not been a significant need for doing so.