[Type text] National plan for smart, sustainable and inclusive growth Luxembourg 2020 Luxembourg, 30 April 2015 Courtesy translation of the official French version National Reform Programme of the Grand Duchy of Luxembourg under the European Semester 2015 Photos: © Luxinnovation, Patrick Galbats/LfB, Patrick Galbats/LfB Jean-Paul Kieffer/SIP, The Energy Agency, Christophe Van Biesen/LfB 2 ACRONYMS ABBL Association of Banks and Bankers in Luxembourg ADEM Employment Development Agency AIP Professional Insertion Activities ALJ Local Youth Action BNG New generation budget CAE Work-Support Contract CASNA Welcome center for newly arrived students CCPUE Coordination Unit for Urban and Environmental Projects CCSS Joint Social Security Centre CEPS Centre for Population, Poverty and Socio-Economic Policy Studies CES Economic and Social Council CFE Financial Contributions by the State CIE Initial Employment Contract CIE-EP Initial Employment Contract—Practice CIPU Urban Policy Information Cell CNS National Health Fund CPTE Permanent Committee for Labour and Employment CRP Public Research Center CSL Employees' Chamber CTIE Centre for Information Technologies of the State DIRD Gross domestic expenditure on R & D DSGE Dynamic Stochastic General Equilibrium E2C Second chance school EFT Labor Force Survey EPC Economic Policy Committee ETS Emission Trading Scheme FNR National Research Fund ESF European Social Fund GES Greenhouse Gas Emissions IFBL Luxembourg Institute of Banking Education IGSS Inspectorate General for Social Security Administration ILR Luxembourg Regulatory Institution IVL Integratives Verkehrs-und Landesentwicklungskonzept NEET Not in Education, Employment or Training NREAP National Renewable Energies Action Plan NGO Non Governmental Organization PAEE Action Plan for Energy Efficiency GDP Gross National Product NPR National Reform Programme PRO-SUD Syndicate of Communities for the Promotion and Development of the South Region SGP Stability and Growth Programme R&D Research and Development RDI Research-Development-Innovation RMG Guaranteed Minimum Income SNAS National Social Action Service SNJ National Youth Service SRAS Regional Social Action Service SSM Minimum wage STATEC Luxembourg Central Statistics and Economic Analysis Office SVO Voluntary Guidance Service SYVICOL Syndicate of Cities and Towns in Luxembourg EU European Union UEL Union des entreprises luxembourgeoises (Employer’s Orgnanization) 3 TABLE OF CONTENTS 1. Introduction .......................................................................................................................... 5 2. The macro-economic scenario for 2015-2019 .................................................................... 7 2.1 Macro-economic perspectives for the period covered by the programme ................................. 7 2.2 The macro-economic impact of structural reforms .................................................................... 7 3. Implementation of country specific recommendations ..................................................... 8 3.1 Budgetary situation .................................................................................................................... 8 3.2 Budgetary sustainability ............................................................................................................. 8 3.3 Wage-setting, economic diversification and RDI .................................................................... 11 3.4 Youth unemployment ............................................................................................................... 14 3.5 Greenhouse Gas Emissions ...................................................................................................... 17 4. Progress achieved in national objectives for the Europe 2020 strategy ........................ 18 4.1 The Employment objective and the key measures for achieving it .......................................... 19 4.1.1 National objective ............................................................................................................. 19 4.1.2 Key measures for achieving the national objective ........................................................... 20 4.2 The R&D objective and the key measures for achieving it ...................................................... 25 4.2.1 National objective ............................................................................................................. 25 4.2.2 Key measures for achieving the national objective ........................................................... 27 4.3 The climate change and energy objective and the key measures for achieving it ................... 34 4.3.1 Greenhouse gas emissions objective ................................................................................. 35 4.3.1.1 National objective .......................................................................................................... 35 4.3.1.2 Key measures for achieving the national objective ....................................................... 38 4.3.2 Renewable energies objective ........................................................................................... 42 4.3.2.1 National objective .......................................................................................................... 42 4.3.2.2 Key measures for achieving the national objective ........................................................ 42 4.3.3 National energy efficiency objective ................................................................................. 45 4.3.3.1 National objective .......................................................................................................... 45 4.3.3.2 Key measures for achieving the national objective ........................................................ 47 4.4 The Education objective and key measures for achieving it .................................................... 48 4.4.1 Early school leavers objective ........................................................................................... 49 4.4.1.1 National objective .......................................................................................................... 49 4.4.1.2 Key measures for achieving the national objective ........................................................ 49 4.4.2 Tertiary education objective .............................................................................................. 53 4.4.2.1 National objective .......................................................................................................... 53 4.4.2.2 Key measures for achieving the national objective ........................................................ 53 4.4.3 Strengthening the human capital base through adult education and training .................... 55 4.5 The social inclusion objective and key measures for achieving it ........................................... 55 4.5.1 National objective ............................................................................................................. 55 4.5.2 Key measures for achieving the national objective ........................................................... 56 5. Use of Structural Funds ..................................................................................................... 61 5.1 Coordination with structural funds ........................................................................................... 61 5.2 Financing priorities for the period 2014-2020 ......................................................................... 61 6. Institutional issues and the role of stakeholders .............................................................. 62 6.1 Coordination of the distribution of spatial resources ............................................................... 62 6.2 Ownership on the national level ............................................................................................... 62 6.3 Communication ........................................................................................................................ 63 4 1. Introduction The European Union (EU) has just been through the worst financial and economic crisis it has experienced in recent generations. Despite multiple successes achieved on both national and European levels, economic activity is returning only moderately, though it should accelerate in 2016. The improvement is underpinned by the drop in oil prices and the depreciation of the euro. Still, the recovery is fragile. Changes in the international situation, especially the persistence of geopolitical tensions and the slowdown of economic activity in emerging economies, is bolstering uncertainty regarding economic perspectives. While the international environment may provide a partial explanation for the current situation, specific national factors are also preventing more rapid growth in the EU. The risk of perennially weak growth and high levels of unemployment has thus become a center stage preoccupation. The crisis not only had a cyclical impact; it also appeared to have a significant structural component that has weakened the growth potential. Structural and budgetary policies at both the Community and Member States levels must therefore be combined more into a more integrated approach that is auspicious to growth. While both necessary and comprehensive, too little time and energy have been expended up till now on implementing the structural changes needed to enable economies to recover higher growth rates. The crisis has certainly slowed progress