A missed opportunity

On Tuesday evening, at the tripartite coordination committee meeting, an agreement was reached on measures to address the increase in energy prices. These have had a significant impact on the cost of living in recent months. More and more people are afraid of falling into poverty. For Caritas Luxembourg, the announced measures are likely to calm the situation at first. On the other hand, they will certainly not substantially improve the situation of the most deprived people of our society.

Indeed, we must not forget that already prior to the pandemic and the war in Ukraine, when the energy prices in Luxembourg were very low in comparison to the European average, nearly 23,000 people (3.6% of the population) were not able to adequately warm their homes. A study by the European Trade Union Confederation recently showed that in July 2022, a Luxembourg citizen on an average salary would have to work 14 days to pay his or her annual energy costs. On the minimum wage, it would require up to 25 days of work.

Unfortunately, the aid package announced on Tuesday evening is not socially selective. Once again, the ‘watering can’ principle was applied - as is too often the case - which is a real shame. This would have been the right time to move purposefully from large-scale measures to targeted and social support measures. If we are to avoid a social crisis, we need short-term aid that reaches those who need it most, fast and without administrative obstacles; needs-based support and without having to apply for it.

Caritas Luxembourg also believes that the limits for receiving social benefits should have been reviewed. Indeed, the limit is rapidly attained when working full time and earning a salary slightly above the minimum wage. Many single parents and young adults find themselves in the situation where they earn a few euros too many to qualify for support such as the cost-of-living allowance or the energy grant. The eligibility criteria for the different allowances must therefore be revised and scaled upwards. Earning a few extra euros should not mean that you are not entitled to receive any benefits. The amount should be descending. Furthermore, the procedures for obtaining the various social allowances remain too complicated. A large proportion of people do not know what they are entitled to. For example, few people know that they are entitled to the energy grant, despite not being entitled to the cost-of-living allowance.

Finally, Caritas Luxembourg would also like to point out that energy poverty must be tackled in the long-term, for example by providing energy renovation incentives. In this context, it is important to keep in mind that the poorest people of our society are more likely to be tenants rather than owners. And yet, it is rented accommodations that are the least energy efficient. Incentives for owners to renovate their rental properties to make them more energy efficient are not effective. Binding regulations are needed that prohibit the renting of energy wasteful properties and that are accompanied by substantial subsidisations for energy renovations so as not to penalise owners. Such a measure would boost the national energy renovation strategy. In addition, rental price increases following energy efficiency improvements should be regulated and controlled to avoid any enrichment from state subsidies.

The fight against energy poverty is crucial for ensuring social justice.

Another important component of social justice is being able to afford to eat well. Caritas Luxembourg expects that the soaring food prices will have a disastrous effect - as early as this autumn - on families who were already struggling to make ends meet and to have enough to eat. Additional measures will be needed to help families in need.

During the banking crisis, the banks were saved. During the Covid crisis, companies were saved. Now we need to save the people who can no longer make ends meet and those who are at risk of falling into poverty. It is too late to try to patch things up.