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Closing the financial sector skills gap: why young talent should come to Luxembourg


Luxembourg's financial industry punches above its weight: a global powerhouse in fund services, home to Europe's largest hub for sustainable finance, and an important vector for European private banking. Rapid change, digitalisation and vigorous business growth require fresh insights and ways of thinking, as well as in-demand skills – how can the Luxembourg financial sector find the new blood it needs?


The skills shortage experienced by many sectors of Luxembourg's economy is not a new phenomenon. Within financial institutions, there is growing demand for skills and experience in key areas from compliance and risk management to IT and digital services.


But much less talked about is the need to attract a new generation of talent to the sector. Graduates, trainees and apprentices can provide a different perspective; they have lived their entire lives in the digital world, and bring fresh ideas and approaches to everyday work issues. The industry, too, may need to be more flexible about the way in which it seeks out talented individuals, who may not always have a master’s degree to their name.


“Young graduates are an obvious target for the industry, but it might also be fruitful to consider the value of apprenticeships as a means of bringing needed capabilities into the workforce,” says Laurence Mohy, Co-Chair of the L3A HR & Talent Management Committee.


Where Luxembourg can compete with New York


But why Luxembourg? The financial industry continues to grow and evolve. Competing with centres such as London, Dublin, Frankfurt and Paris, or even New York, Luxembourg can offer an attractive mix of benefits: enhanced opportunities for career development, high salaries and benefits, and excellent quality of life.


The country's financial community is relatively small and close-knit, which makes it easier for the brightest talents to stand out and get ahead. Networking is different from the big-city experience when you can chat with the CEO of an international bank or asset manager as you queue for your morning coffee. And the ongoing development of new products, services and innovations means plenty of opportunities for advancement, as human resources experts attest.


Employment also comes with a comprehensive social safety net. At just over €2,000 per month, the minimum wage is the highest in the EU. In reality, graduates who enter operational, back-office and technology roles will swiftly find their salaries comfortably exceeding this level.

Social security protection and other benefits are attractive, too, and employees have the right to 80 days of training leave throughout their careers. Financial institutions often exceed the minimum regulatory standards to ensure that their staff have the qualifications and capabilities they need.


Quality of life


London, Paris and Frankfurt have their own advantages, but none can offer Luxembourg's quality of life. Big cities can be tough on newcomers, but Luxembourg is a welcoming environment, even before people arrive. The government recently simplified visa and other permit requirements for non-EU graduates, including making it easier to bring in spouses and young family; work permits are typically granted within eight weeks. The government's guichet.lu website has all the details for incomers, including the lowdown on administrative procedures such as switching driving licences.


Some new arrivals may decide they might not need one. Luxembourg was the first country to offer free public transport in 2020, making commuting and exploration cheap and easy. Getting further afield is simple, too – the airport is just 15 minutes from the city centre, serving more than 105 destinations, and many big European cities are just an hour's flight away, most within two.


Reliable and quick air and train travel, and the global nature of finance, all make for a cosmopolitan mix. Luxembourg is home to more than 180 nationalities and has three official languages (Luxembourgish, French and German), although English is increasingly prevalent as a lingua franca, a contributor to cohesion in a tolerant, safe and open society. Children brought up in Luxembourg naturally become multilingual. The living environment is attractive, too, with green spaces running through the capital and the hills, valleys and rivers of the north and east of the country within easy reach.


Managing staff retention


The wealth of opportunities also means that employers have to work hard to retain the best and brightest employees. Among fund service providers, the average time spent in one position is between two and five years; talented individuals are regularly recruited by client firms they deal with.


Individuals may choose to move for more money, although often it's personal relationships and culture issues that prompt them to look elsewhere. It's not always easy to prevent, but training and upskilling can be an important incentive to stay with an existing employer, as evidence of the company's commitment to its staff and of long-term opportunities within the organisation.


Says Darren Robinson, Co-Chair of the L3A HR & Talent Management Committee: “As a head-hunter, it may sound counterintuitive, but I want companies to make my life more difficult. It’s currently too easy to move people from one service provider to another. I believe we all have a moral obligation to inspire and engage our employees, which leads to longer tenure, benefiting the company as well as the employee’s future employment prospects.”


Sometimes departing employees are ready to branch out on their own. Luxembourg has a thriving start-up culture, especially among financial technology firms that have a ready market and a wealth of opportunities for collaboration as they grow. The government and other bodies offer a range of assistance packages for budding entrepreneurs, and the country is home to many incubators geared to helping new businesses add scale and experience and gain access to markets. Some of the industry's biggest service provider businesses were start-ups once.


Finding valuable employees abroad and at home


Can increased recruitment from abroad help to satisfy the demand for skills? Consultancies, financial institutions and other firms are ready to offer benefits to help incomers adjust to cost-of-living pressures; Luxembourg's high salaries are matched by relatively high costs compared with its neighbours, especially for housing. Companies may provide starter packages to help new arrivals with moving, financial help with renting or buying a home, and childcare. Career development and upskilling initiatives funded by employers can boost the market worth of graduates seeking to add professional or higher academic qualifications.


Are financial sector employers getting it right? It appears so, according to PwC's most recent annual workforce satisfaction survey. Nearly 30% of employees in Luxembourg work directly or indirectly for the industry; the majority are satisfied with their jobs and feel aligned with their employer's views on individuality and independent thought, as well as big-picture issues such as efforts to curb climate change.


The country's political leaders are well aware of the difficulties posed by a mismatch between skills supply and demand. The government's coalition programme includes plans to boost tax incentives for high-priority recruits coming to Luxembourg.


There are also other areas in which the public authorities could help, such as financial measures to boost provision and take-up of training schemes. And like many European countries, Luxembourg probably has something to learn from Germany about the role of apprenticeship in ensuring the economy has the human resources it needs to flourish.

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