According to a new report published by Statec, Luxembourg’s national statistics office, the future growth in population of the Grand Duchy will be goverened by migratory flows, which depend mainly on the economic growth of the country; the 2017 population (on 1 January 2017) is 591,000 – this is expected to rise to one million by 2060.

In a study on the macroeconomic and demographic projections in Luxembourg from 2017 to 2060, STATEC illustrates this link between economic growth and demographic change based on four scenarios.

In most countries, demographic change is determined by the natural balance, resulting from the difference between births and deaths. In Luxembourg, as in other small countries, the population varies mainly as a result of migration. The surplus of arrivals on departures, also called net migration, is here at the origin of the increase of the population.

The projection exercise therefore becomes more complicated for Luxembourg because of the predominant weight of net migration in population growth and its volatility. The latter is largely explained by economic fluctuations.

Another specificity of Luxembourg having an impact on net migration: foreign workers reside either in Luxembourg or in the border region. This arbitration at the place of residence is not modeled so that an assumption on the relative share of foreign residents and cross-border commuters must be emitted.

Net migration as a determinant of population growth

Net migration accounts for more than 80% of population growth. By 2060, four migration scenarios were developed by STATEC taking into account different future economic developments for the Grand Duchy, causing GDP growth to fluctuate between 0.0% and 4.5%. The net migration would be between 3,500 and 16,000 people in 2060. The growth scenario 0.0% being the one where net migration would be the lowest. The 4.5% growth scenario, on the other hand, would result in a net migration five times higher, which, compared to current and past levels, nevertheless remains relatively low. In all four scenarios, productivity turns out to be the main driver of GDP and, more surprisingly, of the population.

The population of Luxembourg, which is 591,000 in 2017, is expected to reach one million inhabitants in 2060 in the scenarios of GDP growth of 0% and 1.5% in the very long term. In the other two scenarios the million would be exceeded: 1.1 million inhabitants in the 3.0% GDP growth scenario and 1.2 million inhabitants in the 4.5% GDP growth scenario.

Inescapable aging

The population of Luxembourg is aging, regardless of the migration scenario envisaged. The average age of the population is expected to increase by at least five years compared to today: from 39.3 years in 2017 to 44.2 years in 2060 in the “GDP growth 4.5%” scenario and to 46.0 years in the “0% GDP growth” scenario.

Demographic change also means impact on the labour market. The causality between demographic and economic change is two-way: GDP growth attracts foreign workers who contribute to it at the same time.

What is the utility of a macroeconomic and demographic projection?

It is a tool for decision-making in many areas and helps to frame the future of societies in different dimensions, such as economy, mobility, housing, energy, urbanisation, health, aging or the environment.

STATEC’s projections are different from the methodology used by Eurostat, which does not take into account, in particular, any economic factor in the development of migration assumptions.