ABSTRACT
This chapter shows that, during the last 20 years, Luxembourg’s welfare state proved to be very stable. Thanks to coalition governments and to the Tripartite procedure, it has been adapted to major economic and social changes. Social security funds merged, mid-term sustainability for healthcare and pensions was guaranteed, and a long-term care insurance was created. Europeanisation also played a major role. The European Employment Strategy promoted an increase of the employment rate, especially for women. The public employment service was transformed and active measures for jobseekers were introduced. Parental leave was created and childcare services were developed. Due to an atypical labour market, characterised by the important share of immigrants and cross-border workers, Luxembourg is subject to European law prohibiting discrimination between national workers and European citizens. The ECJ invalidated several rules and practices and forced Luxembourg to reform its welfare state in accordance with EU regulation. A paradigm shift in unemployment benefits for cross-border workers and the coherence of a system, which is still based on the Bismarckian model while drifting more and more towards a universalistic regime, will be the two major challenges for the future.
