Economic policy Werner-Schaus Ministry II

1 economic policy

1.1 growth
1.2 inflation
1.3 employment
1.4 balance
1.5 energy
1.6 media

economic policy
growth

during late 1960s, grand duchy s economy had been sluggish: growth rate less of eec partners. weak growth due monolithic structure of luxembourgish economy. in 1968, economic , social council had warned government “everything leads believe times of great prosperity on , return temporarily , in exceptional circumstances. subsequently, 1 should not expect steel industry continue be, has many years, […] essential pillar of technical, economic , social progress of country”.

from 1969, economic situation improved. investments in steel industry increased 150% compared 1968. steel production increased considerably reach record number of 6,448,351 tonnes in 1974. pay in steel industry increased 27% 1969 1973. wave of prosperity dimmed structural fears had provoked fall of preceding government.

inflation

however, full use of production capacities , increased global demand created runaway situation risked accelerating spiral of inflation. on, government action aimed counter effects of economic overheating strengthening price controls, ordering credit institutions , pension funds slow credit policy, temporarily authorising work on saturdays in construction sector, particularly affected lack of manpower, , reducing rate of vat on number of consumed items strong influence on price index. strong increase in budget surplus made possible make public savings , lead countercyclical policy. state s budget surplus fed various investment funds, such roads fund or crisis fund created law of 27 july 1938. introduction of vat on 1 january 1970 sparked fears of inflation. replacement of old tax on revenue, had been principal fiscal resource in domain of indirect taxes, system of value-added tax risked becoming new cause of price rises. government introduced reduced rate of 4%, alongside normal rate of 8%.

the government had great difficulties in slowing rush in increase in incomes, source of inflation. found impossible change sliding-scale of pay , salaries, veritable social taboo. however, measure have permitted deceleration of spiral of prices , salaries. salary demands in 1 sector triggered demands in others. in 1969, government had cede demands of civil service “correcting” of gap had grown between pay in public , private sectors. in effect, state, in competition banking industry took large part of university , secondary school graduates, had more , more difficulties in recruiting qualified candidates.

employment

the economy s growth brought strong growth in employment. however, on of declining birth rate, national jobs market not capable of satisfying demand. in order remedy lack of manpower, government resorted immigration. on 20 may 1970, luxembourg , portugal signed treaty regulated recruitment of portuguese workers. on 28 may 1970, agreement yugoslavian government. 1969 1974, 24,560 portuguese workers arrived in luxembourg.

balance

the growth of luxembourgish economy accentuated geographic imbalance accelerating depopulation of predominantly agricultural northern regions. law of 20 march 1974, concerning general development of territory, first time addressed question of structural , geographic balance on national level. objective provide political decision-makers means ensure harmonious development of country s infrastructure. law testament growing interest given notion of quality of life , emergence of environmental considerations.

energy

the price increase in oil products in 1972 plunged western economies runaway inflation. government took measures reduce consumption of petrol, example outlawing use of cars on sundays. in parallel, sought alternative energy sources. in 1972, government started study of construction of nuclear power plant on luxembourgish territory. negotiations took place company rheinisch-westfälische energie ag, involved hydro-electric plant in vianden. project provided construction of nuclear plant of 1200 mw on moselle, near remerschen. however, in 1974, opposition manifested itself.

media

in sphere of media, government pursued collaboration of state clt, @ same time reinforcing control of public powers on company. on 4 april 1973, pierre werner signed agreement prolong concessions clt until 31 december 1995. luxembourgish government obtained veto right on sales of shares affect political neutrality or luxembourgish nature of business. clt s remit obliged maintain symphonic orchestra.