The culturally diverse Grand Duchy of Luxembourg is a small, landlocked country in Western Europe, bordered by Belgium, France, and Germany, with a population of 459,500 people.

A founding member of the United Nations in 1946 and of NATO in 1949, Luxembourg in 1952 became one of the six countries of what would evolve into the European Union. In 1999, it joined the euro currency area.

Luxembourg had the highest GDP per capita globally and among all Organization for Economic Cooperation and Development (OECD) countries in 2004. According to the 2006 UN Development Program's 2006 Human Development Report, the country had the 12th-highest human development index (HDI) out of 177 countries. As of January 2007, the unemployment rate stood at 5.1 percent of the active labor force.

Yet Luxembourg's stable, prosperous economy would not be possible without foreign workers, most of whom come from other EU countries. In the mid-1990s, the country received thousands of asylum seekers from the former Yugoslavia, which has made Luxembourg less welcoming to all immigrants.

Although political integration — in the form of local voting rights for foreigners — has been rather successful, immigrant children generally perform poorly in school. Also, the country has yet to consider a broad integration program for new arrivals.

Historical Background

In the mid-19th century, in the years after its independence from the Netherlands in 1839, Luxembourg was a poor agricultural country. Between 1840 and 1870, one-third of the population, or about 72,000 people, emigrated to France and the United States.

The discovery of iron mineral deposits around 1870, however, brought a century of wealth to the Grand Duchy, and great numbers of foreign workers arrived to supply labor for the booming iron and mining industries (see Figure 1).

At the end of the 19th century, workers from Germany and Italy were recruited to work in the iron industry on a temporary basis.

Figure 1. Size and Nationality of the Population of Luxembourg, 1871 to 2001 Source : Statec

Luxembourg was invaded and occupied by Germany during World War I, and it was again subject to German occupation in World War II, being formally annexed to the Third Reich in 1942. As a result of the Nazi occupation, Luxembourgers developed a distinct national identity.

During the 20th century, immigrants contributed to the country's economic and social development. While the government maintained no explicit policy regarding immigration for much of the century, the implicit policy centered on accepting mainly white, Catholic, European immigrants from Italy and Portugal.

In a reaction to a booming economy and a declining native birth rate, the government endorsed a policy of family-based immigration from 1960 onward, but it did not pass any laws. Rather, the right to bring over immediate family members was stated in its guest-worker agreement with Portugal.

At the time, no real debate on permanent immigration took place: Both the government and the public perceived immigration as a "win-win" situation. The only official discourse concerned the successful and smooth integration all immigrants were supposed to achieve.

The last quarter of the 20th century was a period of almost full employment. Many new jobs were created in all economic sectors, and the the percentage and the number of foreigners in the labor market increased. Helping this trend, in part, was a low population growth rate among the native born, and low levels of women participating in the labor market.

Recent Immigration Policy

Luxembourg's present labor immigration policy is based on legislation passed in March 1972 that has changed little in the last 35 years. Notably, the law does not distinguish between workers who are highly skilled and those who are semi- or unskilled.

According to the 1972 law, only employers may sponsor foreign workers, who cannot apply for or renew a work permit on their own. To bring over a foreign worker, the employer must prove to the labor administration that it was impossible to find an EU-citizen employee who was suitable for the job. In addition, the employer must deposit a bank guarantee of approximately 1,500 euros for each non-EU worker.

The 1972 law originally was aimed at non-European Economic Community (ECC) workers, meaning nationals from countries other than the six founding Member States (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands) of what later became the EU. This meant that the law primarily affected the country's numerous workers from Portugal, which only joined the EU in 1986.

Today, now that Portugal is an EU Member State and most foreign workers (particularly the highly skilled) come from neighboring countries, the 1972 law only applies to a small number of foreign workers.

The country still has no official law that allows non-EU workers to bring over their immediate family members. Consequently, the Ministry of Immigration has significant discretion and can decide whom to let in on a case-by-case basis.

Asylum Policies and the Regularization Campaign

In the early 1990s, Luxembourg received in total over 2,000 asylum seekers, mainly from Bosnia. At the time, there was no legislation on asylum in place although in 1953 Luxembourg ratified the UN's 1951 Convention relating to the Status of Refugees and acceded to the 1967 Protocol in 1971.

The government instructed asylum seekers to find employment and accommodation, and told them they could stay in the country as permanent migrants eligible for naturalization after five years.

On April 3, 1996 — as a new crisis flared in the Balkans — Luxembourg's parliament passed the country's first law regulating asylum and outlining the procedure for application. Refugee status provides the asylum seeker with permanent residency, the right to work, and full access to welfare. If an asylum application is denied, the asylum seeker can appeal.

Over the course of the Kosovo war, Luxembourg received 5,340 asylum applications, the most of which came from people fleeing the Balkans. Only 4 percent of them obtained protected status.

In the spring of 2001, Luxembourg's government launched a regularization campaign to legalize asylum seekers who had remained in the country even after their applications were rejected. Those who met the government's conditions were given six months to find work.

The decision to regularize was not controversial. In the 1970s, most Portuguese immigrants came illegally but were quickly legalized because they found employers willing to sponsor their work permits. Traditionally, economic needs superceeded official procedure.

The 2001 regularization's main purpose was to move a few hundred people out of the asylum system. While ultimately 2,007 of the 2,850 immigrants legalized in the campaign were from the former Yugoslavia; the rest were a mix of asylum seekers from elsewhere and undocumented migrants. Some asylum seekers were excluded from the regularization, including many from Sandjak, a majority Muslim area in southern Serbia and northern Montenegro.

In November 2002, when the government started repatriating asylum seekers who remained in the country after their cases had been dismissed, it became clear that a large number of them had been living in Luxembourg for three, four, and even five years. Generally, their children were well integrated into Luxembourgian schools, particularly the children of Montenegrins.

On May 17, 2003, in order to pressure the government, the migrants whose asylum cases had been dismissed protested by forming a human chain of 2,000 people. The human chain symbolically linked the Ministry of Employment to the Ministry of Justice.

The protestors demanded that the status of individuals who had resided in Luxembourg for 30 months be regularized. They received support from members of several nongovernmental organizations and labor unions.

The protest did not initially change the mind of conservative Prime Minister Jean-Claude Juncker, who confirmed that the government would carry out "assisted" repatriations in the summer of 2003.

To coerce asylum seekers whose cases had been dismissed to leave Luxembourg, the government cut off their government-sponsored "food supplies." In protest, the asylum seekers met on six consecutive Fridays in front of the prime minister's office as he held his weekly press conference. After six weeks, food supplies were restored.

In the meantime, most of those dismissed left Luxembourg, with each person receiving 1,000 euros from the government.

The Immigrant Population Today

In 2006, approximately 181,962 foreigners lived in Luxembourg — 39.6 percent of the country's total population. Most of the foreigners are white, European, and Catholic, and of these, Portuguese constitute the majority (see Table 1).

About 13 percent of foreigners are not from the European Union. Their countries of origin include the former Yugoslavia, the United States, and the former Portuguese colony Cape Verde, an archipelago of nine islands off the west coast of Africa. Among the foreigners there are about 5,000 Muslims, most of them from the former Yugoslavia.

Table 1: Population of Luxembourg, 1981 to 2006 (in millions) Year 1981 1991 2001 2003 2004 2005 2006 Total Population 364,600 384,400 439,500 448,300 451,600 455,000 459,500 Total number of women 186,700 196,100 223,000 227,300 228,600 230,300 232,700 Luxembourgers 268,800 271,400 277,200 277,600 277,400 277,600 277,700 Foreigners by country of origin Portugal 29,300 39,100 58,700 61,400 63,800 65,700 67,800 Italy 22,300 19,500 19,000 19,000 18,900 18,800 18,800 France 11,900 13,000 20,000 21,600 21,900 22,400 22,900 Belgium 7,900 10,100 14,800 15,900 16,000 16,100 16,100 Germany 8,900 8,800 10,100 10,200 10,300 10,400 10,400 United Kingdom 2,000 3,200 4,300 4,700 4,600 4,500 4,500 The Netherlands 2,900 3,500 3,700 3,600 3,600 3,600 3,500 Other EU countries 10,600 6,600 9,200 9,700 9,600 9,600 9,800 Other countries* … 9,200 22,500 24,600 25,500 26,300 28,000 Total number of foreigners 95,800 113,000 162,300 170,700 174,200 177,400 181,800 Foreigners as a percentage of total population 26.3 29.4 36.9 38.1 38.6 38.9 39.6 Source: Statec

Immigrants in the Workforce

Luxembourgers, who make up one-third of the country's labor force, work mainly in the civil service, leaving most of the the production and innovation sector work to immigrants and commuters from border areas. Indeed, over the past 15 years, commuters from neighboring France, Belgium, and Germany have come to represent approximately 38 percent of the workforce (see Figure 2).

Figure 2: Composition of the Workforce by Nationality and Residence, 1970 to 2003 Source : Statec

As stipulated in EU law, citizens of other EU countries are able to work freely in Luxembourg. For third-country (non-EU) nationals, there are three types of work permits. The first is for one year and one employer; the second for four years in a single economic sector; and the third has neither time nor sector limitations.

Like many EU Member States, Luxembourg decided to initially restrict labor migation from eight of the acceding EU Member States (the A-8), which include Poland, Hungary, and the Czech Republic, when those countries joined in May 2004. However, in May 2006, the government opened select economic sectors to A-8 nationals. It has temporarily restricted labor-market access to nationals from Bulgaria and Romania, which joined the EU in January 2007.

Low Levels of Naturalization

Despite the large presence of foreigners in Luxembourg — among the highest percentage for all OECD countries — few foreigners decide to naturalize.

The current law requires five years of residence and knowledge of the three national languages (Luxembourgian, German, and French). However, the procedure for testing proficiency in all three languages has not been codified, and the experience of one candidate for naturalization may differ from the experience of another, depending on the public official who conducts the process.

Also, since Luxembourg does not permit dual citizenship, those naturalizing must give up the citizenship they already hold.

In general, the number of naturalizations has increased steadily since 2001 (see Figure 3). Those naturalizing are, in many cases, other EU citizens, including those from Italy and Portugal (see Table 2). Non-EU citizens from many different nationalities have also taken up citizenship.

The price for naturalizing can be high. People from the former Yugoslavia, for example, have to pay $3,000 to their government to give up their nationality before becoming citizens of Luxembourg.

Figure 3. Number of Naturalizations by Country of Origin, 1950 to 2005 *This chart provides exact numbers of naturalizations for these countries only. The numbers appear above the corresponding bar in the chart.

Source : Statec

Table 2. Number of Naturalizations by Nationality, 1994 to 2003 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Portuguese 143 127 128 162 154 139 136 131 132 244 Italian 211 163 179 152 143 148 109 120 92 117 French 82 79 76 80 50 46 61 65 41 53 Belgian 78 63 60 77 65 65 87 77 77 114 German 69 51 65 44 54 51 48 53 47 85 Cape Verdian 33 49 31 27 30 38 29 76 20 65 Yugoslav 17 12 8 15 25 21 21 53 23 55 Other nationalities 178 143 178 202 195 184 205 328 188 330 Total 811 687 725 759 716 692 696 903 620 1063 Source: Ministry of Justice

Voting Rights for Foreigners

European Community Directive 94/80 (December 19, 1994) on the municipal right to vote opened local elections to EU citizens residing in other EU Member States. Prior to this, all rights to vote in Luxembourg, communal and national, were reserved for citizens only.

Article 12 of the directive stipulates that a Member State with more than 20 percent of its citizens coming from other EU countries may obtain exceptions to the directive. Currently, Luxembourg is the only EU country permitted an exception, and therefore it can require a longer minimum period of residence as a condition for participation in local elections. Indeed, Luxembourg requires EU citizens to prove a stay of six years to vote and 12 to be a candidate.

The exceptions were widely celebrated as important concessions. At the time, Luxembourg felt that its particularly high percentage of foreigners necessitated a different policy. Critics pointed out that in no other country was a similarly high percentage of the population deprived of the right to vote.

The number of foreigners registering to vote has grown in recent years. According to SeSoPi, a Catholic research center, during the 1999 national elections, six out of every 100 voters were foreign while 94 were Luxembourg citizens. In the October 2005 municipal elections, SeSoPi reports that the ratio was one foreigner for every nine Luxembourgers. In certain communes, however, the electoral weight of foreigners was above average.

For the 2005 elections, 23,937 foreigners registered to vote. Of these, 22,706 were EU citizens and 1,251 were from oustide the EU. Overall, foreigners' participation levels increased, but older immigrants and those from Western Europe saw greater rates of registration and participation.

In 1999, foreigners for the first time could run for local office. Of the 3,226 candidates seeking to be elected, 138 (4.3 percent) were foreigners. In the 2005 elections, the number of foreign candidates rose to 188, 5.9 percent of the total. While just nine foreigners were elected in 1999, 14 won in 2005.

Evolution of the Public Discourse on Immigration and Integration

Unlike other EU Member States, Luxembourg is characterized by low unemployment, and the economic integration of new immigrants has generally not been a political issue.

However, the arrival of a significant number of asylum seekers in the late 1990s helped change this view. Luxembourgers were accustomed to foreigners who usually found employment quickly thanks to the healthy job market, but since the government did not allow asylum seekers to work, references to foreigners' "laziness" became widespread.

Luxembourg's traditional political parties have generally held a welcoming attitude toward immigrants, a position the openly right-wing party National Bewegong (National Movement), which never polled better than the 3 percent of the vote it won in the 1999 general elections, has not been able to challenge.

The populist Alternative Democratic Reform (ADR) party is not openly xenophobic but believes in restricting all type of immigration. ADR has been able to capture votes from the right-leaning electorate of the Christian Socialist (CSV) party and has influenced the country's other parties with regard to their position on immigration. ADR won five seats (out of 60) in the 2004 general election.

The tightening of border controls since the attacks of September 11, 2001, had effects in Luxembourg as well. On the eve of the attacks, Luxembourg's small Muslim community was close to obtaining both formal recognition and public financing — already granted to the Catholic, Protestant, Orthodox Christian, and Jewish communities — when the weekly magazine Le Jeudi accused the country's Muslims of being connected to radical Islamists.

There were no openly anti-Islamic reactions, but suspicions developed concerning the putative links between the Luxembourgian Muslim community and radical Islamist organizations. The fact that a large portion of asylum seekers from the Sandjak region were Muslims only further confused the situation.

The issue of granting dual nationality to foreigners arose formally in November 2004 in a report by Lionel Fontagné, a French professor of business, on Luxembourg's economic competitiveness in globalized markets.

"Nothing decisive can probably be done without changing the balance of the political economy. ... [the fact that] the dynamic of employment is based essentially on employees who migrate or commute, while voting is concentrated among the working and non-working populations of the public sphere, is a source of blockage, which could be solved by reexamining the questions of dual nationality/citizenship and political participation of foreigners in elections."

In fall 2006, the Economic and Social Council (CES) recommended an active immigration and integration policy as well as better and quicker procedures for working permits.

However, no legislation has resulted from either the Fontagné or CES reports.

At the end of May 2005, Luxembourg hosted a seminar that brought together government representatives and experts from France, Belgium, Germany, and the Netherlands to discuss current practices with regard to integration courses.

While the government requires language and civic education courses for naturalization, it remains silent on integration courses for new arrivals. For the moment, the government has only instituted a modest pilot project on integration that focuses on language and culture.

The Major Challenge to Integration: Schools and Qualifications

Immigrant children dominate Luxembourg's schools. In 2004, they made up 41.4 percent of all students in elementary schools, 13 percent of high school students, and 60.4 percent of those in post-secondary technical education according to the Ministry of Education. While the drop-out rate is 4.9 percent for all children, it is 3.6 percent for Luxembourgers and 11.9 percent for Cape Verdeans.

There have been some parliamentary documents and debates on the educational situation of immigrant children over the past 25 years, but they have not led to any far-reaching legislative actions.

Luxembourg ranked last in public education among all OECD countries according to the last two reports from OECD's Program for International Student Assessment (PISA). Both reports emphasized the selective character of Luxembourgian education and its socially unjust character, which exacerbates social inequalities instead of reducing them. The result is an excessive number of failures. Indeed, at the age of 15, half of children will have repeated a class at least once.

Part of the problem is also due to Luxembourg's trilingual instruction. Proficiency in Luxembourgian, German, and French — all three languages are used in the education system — is required for graduation from secondary school, but half the students leave school without a certified qualification.

Often, Luxembourgian children, whose mother tongue is Luxembourgian, a German dialect, encounter difficulties in French, whereas the children of immigrants often fail German-language courses. Since German courses are based on an extensive knowledge of Luxembourgian, which foreign children often do not have, they face a structural disadvantage.

Efforts have been made in the area of language teaching, and some pilot projects have been organized by teachers and by the Ministry of Education.

Challenges for the Future

In the near future, Luxembourg will face multiple challenges in the field of immigration and integration.

According to the Luxembourgian national statistics office Statec, the population will grow in the coming years but only thanks to the arrival of foreign workers.

Indeed, foreigners are critical to Luxembourg's economy. Without labor inflows, the country's welfare system would become unsustainable according to a 2003 OECD report. Population growth could test social cohesion, however, given that Luxembourgers fears becoming a minority in their own country.

In terms of policy, the 1972 law is scheduled for revisions in the 2006-2007 parliamentary session, but reform will be difficult. Luxembourg is struggling with the need for labor migrants and growing reticence among voters to allow more immigration.

Thus far, attempts by right-wing, openly xenophobic political groups or parties to limit immigration have failed. Complicating matters further is that fact that two ministries that oversee immigration policy are run by two different political parties.

A new law on nationality that allows for dual citizenship — but increases the residency requirement for naturalization from five years to seven — was introduced in parliament on October 7, 2006. This law would also formalize the testing of Luxembourgian language proficiency. It has not yet passed.

Luxembourg has seen a modest increase in the number of foreigners (across all socioeconomic levels and geographic regions) who register to vote in local elections, thanks to a well-targeted information campaign. However, there is room for improvement. As Grand Duke Henri said to parliament in May 2002, "The participation of the greatest possible number of people in the process of decision making is for us of national interest."

In a country where laissez faire policies regarding immigration prevailed for much of recent history, the on-the-ground reality and demographic projections make continuing past policies unviable.

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