The Luxembourg Chamber of Commerce has published the first edition of its Economy Barometer, which is set to be published every six months in order to assess the economic climate and highlight the principal concerns of businesses in Luxembourg.
The first edition of this report shows that business activity is growing in 2019 and that companies are optimistic about their future. However, they will have to overcome recruitment difficulties, a problem that is growing, according to the barometer.
From 17 June to 1 July 2019, the Luxembourg Chamber of Commerce conducted a survey of 371 companies with ten or more employees, representative of the Luxembourg economy. According to their feedback, the economic situation will be favourable over the next six months - the top indicator of the Economy Barometer, which corresponds to an average calculated from seven business indicators. These cover the following activities from the previous six and coming six months: employment, profitability, investment and confidence in the future of the company and the economy. In the first half of 2019, this number reached 63 out of 100.
Future editions will make it possible to compare this indicator and the detailed results of the barometer with those of previous semesters and thus to observe whether the economic situation is stable or declining. As this survey will be recurring, it will also be possible to detect at an early stage any new problems Luxembourg companies are facing.
Particularly confident companies
The July barometer showed that activity has increased for 37% of the companies surveyed in the last six months and has decreased for only 10% of them. This positive differential between companies experiencing growth and those in a downswing can be observed across all sectors of the economy. Entrepreneurs are therefore optimistic for the second half of the year. Only 6% of them foresee a decrease in their activity. In addition, a quarter of the companies surveyed expect their profitability to improve in the next six months, compared with 9% who expect a decline.
Furthermore, 71% of entrepreneurs are confident in the future of their company and 16% very confident, compared to only 12% who are not very confident or not at all confident. Similarly, almost nine out of ten companies said they are confident, even very confident, in the future of the Luxembourg economy.
Aside from the issue of recruitment, the only other particularly critical point highlighted by this barometer was regarding administrative procedures and formalities. Indeed, 2% of business leaders find that they have simplified in 2019, while 41% consider them to be more complex.
On the other hand, the question of credit brought more positive feedback. Only 4% of companies have experienced "significant" difficulties in accessing credit in the last twelve months, while 8% have experienced difficulties.
Another question in the barometer was about innovation. Industrial companies were found to innovate the most; 40% of them recently carried out innovative projects compared to 28% of companies overall.
However, in terms of commitment to Corporate Social Responsibility (CSR), sectoral disparities are emerging. While 40% of financial services companies have carried out CSR projects in the last twelve months, less than one in five companies have done so in the trade, transport and construction sectors.
The focus of this barometer: Recruitment
Over the past two years, recruitment needs have affected the majority of companies. Thus, nearly 80% of the managers interviewed had recruitment needs of up to 20% of their total workforce, whether for replacements or new positions. Looking to the future, recruitment needs between 0 and 20% of the total workforce are foreseen, but more companies (16%) believe that recruitment will not be a need, but rather mainly job creation (almost 60%) will be a concern as opposed to replacements.
A large majority of companies that have previously had recruitment needs (nearly 90%) have already encountered difficulties in recruiting staff. Among these companies, nearly 70% believe that these difficulties have worsened over the past two years, confirming a tight labour market. Of all the difficulties cited, 67% of respondents cite a lack of the sought-after profiles in the Grand Duchy and the Greater Region, 54% state that the available profiles are insufficiently qualified and 34% mention a mismatch between the job offer and candidates' salary expectations. Among other things, companies cite "internal" solutions such as restructuring, training, or promotion, then recruitment abroad, temporary workers, advertising, students, interns or apprentices, the use of a recruitment agency or the use of fixed-term contracts to solve these issues. The use of recruitment from abroad raises other issues, such as language proficiency and the cost of living in Luxembourg.
The profiles that are most sought after by companies are workers, technicians, administrative employees, engineers, and IT developers. Workers, technicians, engineers and IT developers also appear to be the most difficult profiles to find. The reality on the ground is therefore a bit different from what is most frequently highlighted in terms of lacking workforce profiles.
This information has been provided by the Chamber of Commerce.