CoUE

Luxembourgs Position Paper

Delegate: Juan Pablo Salgado
Topic: Euro Crisis
Topic A: The uture o! the Euro"one: A #e$ Direction
%pening statement
The largest ban&s in 'reece(#ational) Alpha) Euroban&) and Piraeus(reported *+,-+ billion in
losses !or the .ear +/00- Almost 012 o! 'reece3s 'DP4 5t included the bond s$ap that had
saddled pri6ate7sector bondholders $ith a 892 loss- :ut no $orries- ;escue !unds $ere alread.
lined up at the <ellenic inancial Stabilit. und) $hich had recei6ed *+= billion in bonds !rom
the European inancial Stabilit. acilit. the da. be!ore(part o! the second bailout pac&age o!
*01/ billion that the Troi&a o! the EC:) 5>) and EU had orchestrated- The ban&s) not the
'ree&s themsel6es) are getting bailed out- The big mone. is rolling in(and the e6er $il. 'ree&
political elite ha6e !igured it out- ;ead---- The.3re #ot E6en Tr.ing An.more-
:ut ?solidarit. o! the union has its limits)@ said e6en so!t7spo&en Jens Aeidmann) President o!
the :undesban& on Saturda.- ?ThatBs $h. $e lin&ed the aid to conditions----@ one o! the
conditions is to retire a portion o! 'reece3s pri6ate sector debt b. bu.ing bac& its bonds $ith
discounts to !ace 6alue- This $ill be to obtain about 19 billion euros in loans !or 'reece-
Against the bac&ground o! the current debt crisis important measures to impro6e the economic
go6ernance in the EU and the euro area in particular ha6e been ta&en- EU >ember States ha6e
strengthened the Stabilit. and 'ro$th Pact) introduced a ne$ mechanism to pre6ent or correct
macroeconomic imbalances and are increasingl. coordinating structural policies- These are
crucial steps to strengthen the CEC 7 the economic leg 7 o! the E>U and to ensure the success o!
the euro in the long run-
Apart !rom ma&ing tra6elling easier $ithin the EU) a single currenc. ma&es economic and
political sense- The !rame$or& under $hich the euro is managed underpins its stabilit.)
contributes to lo$ in!lation and encourages sound public !inances- A single currenc. is also a
logical complement to the single mar&et and contributes to ma&ing it more e!!icient- Using a
common currenc. increases price transparenc.) eliminates currenc. exchange costs) !acilitates
international trade and gi6es the EU a more po$er!ul 6oice in the $orld- The si"e and strength o!
the euro area also better protect it !rom external economic shoc&s) such as unexpected oil price
rises or turbulence in the currenc. mar&ets- Last but not least) the euro gi6es the EU3s citi"ens a
tangible s.mbol o! their European identit.-
'i6en the current economic crisis) the European Union should mo6e to a deeper union- The Euro
Crisis has put the entire union in an undesirable position in $hich all countries need to $or& as
ConeC in order to secure a stable outcome to this chaos- The economic crisis has had a negati6e
impact on se6eral sectors o! the European econom.- irst) it se6erel. a!!ected the Cpotential
gro$thC o! Europe in $holeD a notable decrease in the unionBs gro$th rate has occurred ma&ing it
di!!icult to accomplish the CEurope +/+/C proEect- Second) the European labor mar&et has been
deepl. disturbed and the unemplo.ment rate has mounted- inall.) the crisis has negati6el.
impacted the budgetar. positions o! copious countries) b. increasing public debt de6elopments
and increasing negati6e !iscal de!icit- 5n the end) this economic crisis could spread and lead to an
economic collapse in the entire continent- 5t is the responsibilit. o! the union to bond together in
order to a6oid such possible chaos-
Luxembourg is one o! the smallest but $ealthiest countries) the economic crisis a!!ects the
potential gro$th o! the European Union) unemplo.ment) budgetar. position o! countries related
$ith the increased o! public debt and negati6e !iscal debt- The EU must sta. strongl. united to
o6ercome the euro crisis that a!!ects European econom.-
The $el!are o! the people in the Euro"one is in Eeopard. due to the economic crisis as such the
Council o! the European Union must address this topic-
Luxembourg is $ealth. and bene!its !rom the ser6ices) ma&ing shi!ts in the international
econom.) the !inancial sector $ere se6erel. damaged $ith approximatel. F02 !rom the total
labor !orce !rom !oreign countries G+/F)/// represents the total population o! the labor !orce in
Luxembourg) o! $hom 0+=)9// are !oreign cross7border $or&ers commuting primaril. !rom
rance) :elgium) and 'erman.H- Strengthening the EU is one concerned o! Luxembourg
supporting the de6elopment o! the Euro"one econom. and the implementations to pre6ent !uture
economic crisis-
The !iscal position has a!!ected the countr. and it has deteriorated) but this has been mar&edl.
eased due to automatic stabili"ers and lo$er re6enues !rom !inancial acti6ities- urther support
has been pro6ided !rom the EU) ;egarding consumer prices) the Luxembourg in!lation rate rose
!rom +-/2 in earl. +/0/ to a little o6er 1-=2 in the +nd Iuarter o! +/00- Polic. and the actions o!
the countr. are considered !or national le6el and the impact in international aspects-
Position
As such) Luxembourg supports strengthening the EU) !ostering the Euro"one econom. and the
implementation o! measures to pre6ent economic crises in the !uture- Ahile Luxembourg is
considered one o! the smallest) .et) $ealthiest countries in the $orld) its $ealth has not protected
it !rom the e!!ect o! the current crisis- The Luxembourg econom. is based principall. on
ser6ices) ma&ing shi!ts in the international econom. particularl. acute- Ahile international trade
has notabl. decreased) LuxembourgBs !inancial sector $as se6erel. damaged- Aith
approximatel. F02 !rom the total labor !orce !rom !oreign countries G+/F)/// represents the
total population o! the labor !orce in Luxembourg) o! $hom 0+=)9// are !oreign cross7border
$or&ers commuting primaril. !rom rance) :elgium) and 'erman.H) the residentsB
unemplo.ment has been in constant increase Je6en be!ore the economic crunch the countr. is
currentl. !acing- The crisis made the situation $orst- The !iscal position o! the countr. has
deteriorated) but this has been mar&edl. eased due to automatic stabili"ers and lo$er re6enues
!rom !inancial acti6ities- urther support has been pro6ided !rom the EU-
;egarding consumer prices) the Luxembourg in!lation rate rose !rom +-/2 in earl. +/0/ to a
little o6er 1-=2 in the +nd Iuarter o! +/00- Luxembourg is !ollo$ing the global trend !or rising
in!lation due to the increase in commodit. prices since mid7+//K- %n the other hand) the
European So6ereign Debt Crisis has hindered se6eral other macroeconomic de6elopments !rom
expanding- or example) the pri6ate consumption) gross !ixed capital !ormation) consumer prices
and so !orth ha6e notabl. decreased-
Plan o! action
The go6ernment ta&es measures in the issue and establishes a plan o! action:
0- Amending the Lisbon treat.
The Presidenc. belie6es that onl. a strong common mar&et $ould help Europe o6ercome the
crisis and e6en ma&e a stronger mar&et in the !uture- <e also proposes to amend the treat. $ith
the concluded !iscal pactD promising the compatibilit. o! the EU la$) the !iscal pact $ould !oster
the Lisbon treat.- Luxembourg $ould encourage such amendments to ta&e place as it $ill help
initiating a strongerLsingle mar&et that could o6ercome the crisis and secure a better !uture !or
the continent-
+- 5ntroducing Stabilit. bonds
A!ter numerous !ailed trials to !orm a tighter union in the past t$o .ears) rumors sa. that an
agreement bet$een all Euro"one leaders to ha6e a tighter union is more li&el. to happen- The
European Commission) the administrati6e arm o! the union) has published its C'reen PaperC in
$hich it laid out three possible options- Three di!!erent $a.s $ere introduced to sho$ di!!erent
proposals !or the bonding s.stem:
i7 Joint EU bonds: #eeded to help countries in se6ere troubles- <o$e6er) this solution is ris&.D it
could shi!t the burden o! the debt to #orthernLAestern European countries- 5t could be
considered b. Luxembourg i! hea6. regulations and en!orcements are to be implemented-
ii7 Partial EU bonds: Thus !ar) this has been the response ta&en b. the EC:- 5t $or&ed $ell and
pro6ed to be e!!icient- Aor&s $ell $ith $ealth. countries in Europe such as Luxembourg- >ost
li&el. it is not enough !or countries !acing huge !inancial problems such as 'reece) Spain)
Portugal) 5reland and so !orth-
iii7 #o Eoint EU bonds: $hat the EU has done in the past) continuing on this path could ma&e the
crisis longer- 5t is considered the less desired option !or all countries Jincluding Luxembourg-
1- The 12 rule o! de!icits
This la$ mainl. bans all countries !rom running a de!icit o! more than 1 2 e6er. .ear- This
percentage is incredibl. lo$ and se6eral countries) $ith strong econom.) did not manage to ma&e
it J'erman. is a good example- Luxembourg $ould support such ruleD ho$e6er) a slight increase
in the percentage o!!ered $ould ma&e it more !easible !or multiple countries to stic& to it and not
surpass the percentage agreed upon- Aith other countries su!!ering !rom an economic crisis such
as Spain running a .earl. de!icit $aging !rom 0/70=2) a F2 .earl. de!icit $ould most li&el. be
a rational percentage that $ill not put the continent at ris&-
9- European inancial Stabilit. acilit.
Located in Luxembourg) the ES pro6ides initial !inancial help to all countries in the Euro"one
that are !acing economic problems- 5t helped baling out Portugal) 5reland and other European
countries be!ore positi6e outcomes $ere achie6ed- Luxembourg has been pre6iousl. helped b.
this entit. and this $as a reason $h. the conseIuences o! the crisis in Luxembourg compared-
%rgani"ations related on the euro crisis in Luxembourg
DEM Labor Administration
AIP Pro!essional 5nsertion Acti6ities
ALJ Local Mouth Action
CAE Aor&7Support Contract
CASNA Aelcome center !or ne$l. arri6ed
students
CCSS Joint Social Securit. Centre
CEPS Centre !or Population) Po6ert. and Socio7
Economic Polic. Studies
CES Economic and Social Council
CFE inancial Contributions b. the State
CIE 5nitial Emplo.ment Contract
CIE-EP 5nitial Emplo.ment Contract 7 Practice
CIPU Urban Polic. 5n!ormation Cell
CNS #ational <ealth und
CPTE Permanent Committee !or Labor and
Emplo.ment
CRP Public ;esearch Center
CSL Emplo.eesB Chamber
CTIE Centre !or 5n!ormation Technologies o!
the State
DIRD 'ross domestic expenditure on ; N D
DSGE D.namic Stochastic 'eneral EIuilibrium
EFT Labor orce Sur6e.
EPC Economic Polic. Committee
ETS Emission Trading Scheme
FNR #ational ;esearch und
FNS #ational Solidarit. und
ESF European Social und
GHG 'reenhouse 'as Emissions
IFBL Luxembourg 5nstitute o! :an&ing
Education
IGSS 5nspectorate 'eneral !or Social Securit.
Administration
IVL Integratives Verkehrs-und
Landesentwicklungskonzept
OCM %pen Coordination >ethod
NEET #ot in Education) Emplo.ment or
Training
NREAP #ational ;ene$able Energies Action Plan
NGO #on 'o6ernmental %rgani"ation
PAEE #ational C%+ Emissions Ouota
Allocations Plan
GDP 'ross Domestic Product
NRP #ational ;e!orm Program
PRO-SUD S.ndicate o! Communities !or the
Promotion and De6elopment o! the South
;egion
SGP Stabilit. and 'ro$th Program
R&D ;esearch and De6elopment
RDI ;esearch7De6elopment75nno6ation
RMG 'uaranteed >inimum 5ncome
SNAS #ational Social Action Ser6ice
SNJ #ational Mouth Ser6ice
SPOCS Simple Procedures %nline !or Cross7
border Ser6ices
SRAS ;egional Social Action Ser6ice
SSM >inimum $age
STATEC Luxembourg national statistical institute
SVO Poluntar. 'uidance Ser6ice
SYVICOL S.ndicate o! Cities and To$ns in
Luxembourg
EU European Union
UEL Union des entreprises luxembourgeoises
GEmplo.er3s %rgani"ationH



Topic B: Europ !"!" Spci#$ L%i&$#'i( S&&io) o) Soci#$ Po$ic*
%pening statement
5n the national re!orm o! Luxembourg there are goals related and in cooperation $ith the EU) the
support and assistance in the issue must be conEoined to e6er. state o! the EU to accomplish the
goals stated in the European commission and their la$s-
Luxembourg has achie6ed rapid and sustained gro$th o6er the past += .ears and li6ing standards
are the highest in the %ECD- <o$e6er) !ollo$ing the crisis) it no$ !aces the possibilit. o!
$ea&er per!ormance in the .ears to come e6en i! li6ing standards $ill remain high- This
underlines the importance o! structural policies to help boost gro$th and sustain high incomes- A
part !rom measures to impro6e the !unctioning o! the labor mar&et and raise public sector
e!!icienc.) there are a number o! polic. priorities- Education per!ormance is relati6el. $ea&: it
does not match the demand !or highJs&illed $or&ers and ma&es it harder !or residents to !ind
Eobs- >aEor re!orms no$ under$a. to impro6e the education s.stem are $elcome- Product
mar&et regulations are highl. restricti6e o! competition) particularl. !or pro!essional ser6ices and
in the retail sector- This leads to high prices and ine!!icienc.- The $ea& en!orcement o!
competition polic. is due to inadeIuate resources and the !ragmented structure o! the
competition authorities- <ousing costs are high b. comparison $ith the surrounding region and
other !inancial centers- This contributes to large !lo$s o! commuters- Ahile increasing housing
suppl. is recogni"ed goal) this has been !rustrated b. polic. barriers that restrict house building-
At the same time) housing demand is boosted b. tax subsidies- The transport in!rastructure is
being upgraded and extended- <o$e6er) the existing net$or& could be used more e!!icientl.
through user charges- Luxembourg has the highest per capita C%+ emissions in the %ECD- 5t is
committed to ma&ing large reductions) and measures to increase energ. e!!icienc. are being put
in place- The &e. problem) ho$e6er) is large sales o! motor !uels to people $ho li6e in the
surrounding countries- Car taxes and !uel duties ha6e increased but there is scope to go !urther-
Position
The European societ. is changing) in!luenced b. di!!erent !actors such as technological
progress) the globali"ation o! trade and an ageing population- European emplo.ment) social
a!!airs and eIual opportunities policies contribute to impro6ing people3s li6ing conditions $ith a
6ie$ to sustainable gro$th and greater social cohesion- The European Union GEUH pla.s the role
o! a trigger in social change- 5t has introduced a protecti6e legal !rame$or& !or European
citi"ens- 5t !osters the cooperation o! >ember States) the coordination and harmoni"ation o!
national policies) and the participation o! local authorities) unions) emplo.ers3 organi"ations and
other sta&eholders in6ol6ed-
The priorit. aims o! this polic. are to increase emplo.ment and $or&er mobilit.) to impro6e the
Iualit. o! Eobs and) $or&ing conditions) to in!orm and consult $or&ers) to combat po6ert. and
social exclusion) to promote eIualit. bet$een men and $omen) and to moderni"e social
protection s.stems-
The Europe +/+/ Strateg. is based on initiati6es aimed at intelligent) sustainable and inclusi6e
gro$th in the European Union GEUH- 5n the coming decade) the priorities set shall enable the
le6el o! emplo.ment) producti6it. and social cohesion o! the EU countries to be increased-
This strateg. is implemented through European and national obEecti6es) $hich in6ol6e actions
coordinated b. the national) regional and local authorities o! the EU >ember States) and also
concerted actions $ith social partners and ci6il societ.- #ational ;e!orm Program !or the 'rand
Duch. o! Luxembourg under the Europe +/+/ Strateg.
5n the recent economic crisis the e!!ects o! reducing greatl. the emplo.ment and potential
production gro$th) $ea&ness the state public !inances in the European econom. reco6er. plan
enabled EU member states to !ace the crisis-
Council o! the European Union in the +/+/ proEect is see&ing the stabilit. !uture o! the EU on
social polic.-
;ND ta&es on a !undamental character in a small) 6er. open econom.- LuxembourgBs structural
speci!icities 7 its si"e) its industrial histor.) the pre6alence o! ser6ices and 6er. small companies
in its producti6e s.stem and the presence o! a large number o! multinational subsidiaries in the
countr. 7 combine to impact ;ND acti6ities) their de6elopment and their measure through
indicators) including the indicator C'ross domestic expenditure on ;ND Gas a percentage o!
'DPHC-
#ational re!orm
Luxembourg ta&es actions to cooperate $ith the EU and states measures in the national re!orm
program-
Luxembourg applied C&no$ledge triangleC $ith the Cit des Sciences) multi7sector
speciali"ation policies) the Luxembourg national librar. proEects in the area o! digital
in!ormation and its role as guardian o! intellectual production and national pro6ider o!
documentation ser6ices) the master plan !or implementing in!ormation technologies $ithin the
State) the third S>E action plan-
The En6ironment and Climate Partnership that implements a national plan to reduced C%+
emissions) the national climate change action plan) the rene$able energies action plan) the
energ. e!!icienc. action plan) the master plan !or territorial reorgani"ation) the rural de6elopment
program-
Promotion o! social inclusion and the !ight against po6ert.) the eIual rights action plan
addressing socio7economic relations bet$een men and $omen) pilot proEects and re!orms in
relation $ith earl. school lea6ers-
inancial a!!airs
>acro7inancial Stabilit.
Price and cost competiti6eness
>acro7structural bottlenec&s to sustainable gro$th
;e!orming the pension s.stem
A $ell7!unctioning and stable !inancial sector
Ensuring !ull utili"ation o! the econom.Bs labor potential
5mpro6e the contribution o! the education s.stem to human capital !ormation
Thematic !or the goals to achie6e
Emplo.ment obEecti6e and the &e. measures !or achie6ing it
;ND obEecti6e and the &e. measures !or achie6ing it
Climate change and energ. obEecti6e and the &e. measures !or achie6ing it
'reenhouse gas emissions obEecti6e
;ene$able energies obEecti6e
Energ. e!!icienc. obEecti6e
Education obEecti6e and the &e. measures !or achie6ing it
Earl. school lea6er3s obEecti6e
Social inclusion obEecti6e and the &e. measures !or achie6ing it
>ethodolog. and coordination3s to achie6ed the goals
Coordination o! the distribution o! spatial resources
#ational o$nership
Communication
E6aluation) monitoring and !ollo$7up
Coordination $ith structural !unds
A ne$ &ind o! gro$th Gsmart) sustainable and inclusi6eH J mainl. b.:
impro6ing s&ills le6els and Gli!e7longH education
boosting research and inno6ation
more use o! smart net$or&s and the digital econom.
moderni"ing industr.
greater energ. and resource e!!icienc.-
Stronger go6ernance through:
regular and transparent monitoring
Leadership at the highest political le6el J the European Council-
:ecause the crusade to &eep Europe competiti6e can bene!it !rom coordination at EU le6el- The
EU is not inter6ening in these polic. areas) merel. o!!ering the bene!it o! its o6er6ie$ position to
ma&e recommendations that should help indi6idual countries-
The EU is see&ing to help because the sta&es are &o high J Europe needs strong economic gro$th
and high le6els o! emplo.ment to sustain its le6els o! social protection) especiall. $ith its ageing
population-
%rgani"ations related on in Luxembourg:
DEM Labor Administration
AIP Pro!essional 5nsertion Acti6ities
ALJ Local Mouth Action
CAE Aor&7Support Contract
CASNA Aelcome center !or ne$l. arri6ed
students
CCSS Joint Social Securit. Centre
CEPS Centre !or Population) Po6ert. and Socio7
Economic Polic. Studies
CES Economic and Social Council
CFE inancial Contributions b. the State
CIE 5nitial Emplo.ment Contract
CIE-EP 5nitial Emplo.ment Contract 7 Practice
CIPU Urban Polic. 5n!ormation Cell
CNS #ational <ealth und
CPTE Permanent Committee !or Labor and
Emplo.ment
CRP Public ;esearch Center
CSL Emplo.eesB Chamber
CTIE Centre !or 5n!ormation Technologies o!
the State
DIRD 'ross domestic expenditure on ; N D
DSGE D.namic Stochastic 'eneral EIuilibrium
EFT Labor orce Sur6e.
EPC Economic Polic. Committee
ETS Emission Trading Scheme
FNR #ational ;esearch und
FNS #ational Solidarit. und
ESF European Social und
GHG 'reenhouse 'as Emissions
IFBL Luxembourg 5nstitute o! :an&ing
Education
IGSS 5nspectorate 'eneral !or Social Securit.
Administration
IVL Integratives Verkehrs-und
Landesentwicklungskonzept
OCM %pen Coordination >ethod
NEET #ot in Education) Emplo.ment or
Training
NREAP #ational ;ene$able Energies Action Plan
NGO #on 'o6ernmental %rgani"ation
PAEE #ational C%+ Emissions Ouota
Allocations Plan
GDP 'ross Domestic Product
NRP #ational ;e!orm Program
PRO-SUD S.ndicate o! Communities !or the
Promotion and De6elopment o! the South
;egion
SGP Stabilit. and 'ro$th Program
R&D ;esearch and De6elopment
RDI ;esearch7De6elopment75nno6ation
RMG 'uaranteed >inimum 5ncome
SNAS #ational Social Action Ser6ice
SNJ #ational Mouth Ser6ice
SPOCS Simple Procedures %nline !or Cross7
border Ser6ices
SRAS ;egional Social Action Ser6ice
SSM >inimum $age
STATEC Luxembourg national statistical institute
SVO Poluntar. 'uidance Ser6ice
SYVICOL S.ndicate o! Cities and To$ns in
Luxembourg
EU European Union
UEL Union des entreprises luxembourgeoises
GEmplo.er3s %rgani"ationH