During Luxembourg’s steel boom, industrialists in the south of the country constructed housing in order to attract and retain workers. A century later, employers are doing the same. And not just for workers at the coalface.
Around 1880, steel manufacturing and mining companies began mushrooming in Luxembourg’s southern Minett region. Esch-sur-Alzette was still a village compared to today. Because of a lack of housing, workers from abroad lived in dorms, with up to four people sharing a bed in shifts, in some cases. Those who brought their families often lived in squalid conditions. The solution to employers like ARBED and Société Métallurgique des Terres Rouges was clear: build homes and the workers will come and stay.
As Luxembourg’s talent shortage grows, a small number of employers are drawing inspiration from the past by building housing for employees.
“The cost of living, particularly housing, is a major obstacle to the long-term settlement of foreign workers,” the Luxembourg Chamber of Commerce noted in its Talent4Luxembourg report launched at the end of 2025.
Housing As A Recruitment Challenge
The shortage and cost of housing in Luxembourg not only impacts junior roles, “even high-level employees who have the financial means to pay for high-end apartments struggle to find housing,” says Gabriela Nguyen-Groza, managing partner at executive search and leadership and corporate governance firm Amrop Luxembourg.
She recalls a company partner who had been recruited through her firm but who, two weeks before the start of their role, still hadn’t found suitable accommodation for his family. When she contacted a nearby real estate agent asking for help, she was told they faced a long backlog of executives seeking accommodation. The cause: high prices and housing scarcity in the neighbourhoods with schools and workplaces.
Nguyen-Groza has observed similar difficulties with two or three large employers. And with housing costs similar to capitals like London and Paris, it makes it challenging to persuade international candidates to quit larger cities for Luxembourg.
While her experiences are focused on executives, junior talent recruitment is also a problem as housing scarcity pushes up rents. In 2023, private tenants spent close to 40% of their income on housing costs on average, the housing ministry reported.
“Because of this housing problem, we will have more and more problems in attracting talent at all levels,” Nguyen-Groza predicts.
Some companies are taking radical steps, buying 2-3 room apartments and renting them out to junior employees, often deducting rent from salaries, a strategic recruitment tool that Nguyen-Groza notes is slowly gaining traction among a small number of employers.
€25M For Employee Housing
PM-International, a nutritional supplements and cosmetics manufacturer based in Schengen, is going to extreme lengths to attract and retain talent. After providing a fixed housing allowance of €500 per household, it is now constructing dedicated staff accommodation in Schengen. “While money alone doesn’t solve the problem […] by investing in affordable housing near our international headquarters, we provide shorter commutes, less stress, and an easier start for newcomers,” says Wolfgang Klaer, Chief Administrative Officer PM-International.
The company, which employs 150 people in the grand duchy, is building 27 apartments, ranging in size from 75 to 90 square metres. Each will have a kitchen, bathroom and rents are aligned with the market rate. The first three are expected to be completed by October 2026.
The initiative is structured as a long-term, scalable solution, aimed at increasing acceptance rates and talent retention within the company. Initial reactions from candidates have been positive, Klaer reports. He adds that the project naturally avoids the creation of a two-tier workforce, or employee resentment, simply because not all staff want to live close to their work.
“Housing works well for some, especially relocating employees, and isn’t the right fit for others.” Ultimately, he says that fairness and clear communication are central to avoiding resentment.
Broader Employee Value Initiatives
Employer-provided housing is part of a holistic approach from the company to make Luxembourg a more attractive and livable base for global talent. As part of its employee package, PM-International also offers non-financial benefits including international career opportunities in 45 countries, lifestyle perks like a personal trainer and gym access, corporate car programmes and training and development budgets.
Its staff housing project remains exceptional though, and rare in Luxembourg. “As with most construction projects, there are many aspects to consider, especially administrative and approval processes,” explains Alex Dellwo, PM-International Director Infrastructure IT & Facility. “Navigating permits, regulations, and timelines takes time, which is very common in projects of this scale.”
Then there is the cost. PM-International is investing €25 million in what is a fully self-funded project. Dellwo states that it is not easy to qualify for public funding on employee housing. He adds that the company is, however, closely monitoring potential support options.
State-Aid For Construction
In 2023, Luxembourg’s government launched “Aide à la pierre”, granting state-subsidies to social housing developers and public promoters to build housing that stays affordable. It opens the door for subsidies on housing for employees, stating that rent must be affordable based on income and the lease may be terminated three months after the end of employment under certain conditions.
“Developing housing for employees is not only a powerful social initiative, it is also an opportunity for companies to increase their attractiveness while helping to solve the housing shortage,” Luxembourg housing minister Claude Meisch said at an employee housing conference in 2024.
Under the scheme the housing and planning ministry contributes up to 75% of investment costs for affordable rentals.
In theory, the state supports employee housing. In practice, very few companies use the system. Since its launch, 23 companies have submitted an application under the “Aides à la pierre” scheme, according to figures provided by the housing ministry. Of that number, five companies have set up a non-profit association (ASBL) or a foundation and another five still need to have their statutes validated or have yet to submit them, according to the ministry. Informal exchanges have taken place with four additional companies. The ministry says that only one project has been the subject of a convention relating to financial contributions, for a total of €1,163,121.
Low Adoption
The low adoption is likely related to the lack of financial incentive and high level of complexity around the mechanism. Funding is granted to societal impact companies (SIS) or cooperatives on the condition that homes remain affordable long term, typically 40 years for societal impact companies and the lifetime of the building for social housing developers. To benefit, companies would have to create a separate SIS or cooperative. As a SIS profit distribution is capped and regulated, while the long-term affordability obligation would severely limit returns.
“Enabling employers to create affordable housing is a step forward but, legislation does not encourage private housing actors to become directly involved in the construction of affordable housing, which limits the potential for increasing supply,” the Luxembourg Chamber of Commerce wrote in its recommendation roadmap Talent4Luxembourg. It wants greater simplification around administration for the scheme.
A housing ministry spokesperson told Silicon that work is ongoing to optimise the law by taking into account feedback.
It is clear that housing is not a niche HR issue, it’s an economic constraint. Faced with a limited housing supply and high prices, Luxembourg’s state and employers are experimenting with innovative solutions. To be truly attractive to talent and ensure economic growth, they must now scale them.
