2.2.2.2. Information technology, business services and leisure businessess: job creators

Information technology and services provided mainly to businesses are generally aggregated within a broader ensemble, which also includes real estate businesses and leasing/hire services (car hire, hire of machinery and equipment for the construction industry, hire of office and IT equipment, etc.).

During the last 15 years of the 20th century, this whole sector experienced unprecedented expansion. In absolute value terms, employment practically quintupled and represented approximately 16 % of total employment in the Luxembourg economy in 2001. The proportion of value added in the total value added rose from 11.7 % in 1985 to over 18.2 % in 2001.

At an aggregated level, this presentation does not enable major differences to be detected between real estate activities on the one hand and IT activities and business services on the other. The significance of the real estate sector in the Luxembourg economy, which accounts for nearly 10 % of the total value added, results from a national accounting rule that both actual and imputed rent is included in this economic sector.

Information technology and services provided to businesses from 1985 to 2001 (Growth, employmentand productivity) Average annual variation rates

IT activities, comprising consulting in information technology systems, software production, data processing, database activities, etc., currently constitute the most dynamic sector of the economy in terms of employment and value added, even if this expansion has been achieved with loss of productivity. From 300 people in 1985, employment rose to nearly 4 800 in 2001. The share of IT activities in the total value added of the Luxembourg economy increased from 0.2 % to 1.3 % over the same period.

The expansion in business services results from two parallel trends: outsourcing of activities and functions thatwere previously carried out in-house by industrial companies,and the emergence of new technologies, particularly in the field of information and communication technologies (ITC).

Within the sector itself, there is a juxtaposition of activities requiring the use of specialist staff, including accounting services,architecture and engineering,management consultants,legal advisors, R&D, etc., and activities requiring less skilled staff, such as cleaning, surveillance and security, etc. By way of example:in 2001, the value added per job generated in architecture and engineering was approximately 77 800 euro. On the other hand, in security and surveillance activities, the value added per job does not exceed 32 900 euro. Differences in pay levels also reflect that diversity: 28 650 euro of gross pay per job in security and surveillance in 2001, and 38 830 euro per month in architecture and engineering.

In the research and development sector, we find public research centres and a large private centre, Delphi Automotive Systems Luxembourg S.A., which carries out technical research in the motor industry and which employed 640 people at the end of 2001.There is also the Goodyear Research Centre.

Among the important sectors in employment terms,cleaning services (with over 5 300 employed in 2001), accounting services (with 4 600 employed) and architecture and engineering (with around 3 600 employed) deserve special mention. The highest rates of increase are also recorded in these sectors, as well as the management consultancy and market research fields, where employment rose from 357 in 1985 to 1 803 in 2001.

Architecture and engineering have been boosted by a fast-growing construction industry. Paul Wurth S.A., a subsidiary of the steel-manufacturing group ARCELOR, which was part of the metalworking sector (metal structures) until 1997, was reclassified in 1998 into the engineering sector. This is a sign of the changes in the manufacturing sector, where expansion is increasingly dependant on innovation and design work, forming the basis of production itself.

We observed a considerable increase in the number of companies in the whole business services sector, specifically in the fields of management consultancy, accounting and architecture and engineering. The sector as a whole consists of many small and medium-sized firms, a phenomenon which could help explain the relatively low level and low increase in productivity.

However, this characteristic did not prevent the emergence of a number of large companies.We should mention the relatively high concentration in the cleaning sector, which is dominated by a few large groups: Pedus (with 2 000 employed at the end of 2001), Nettoservice (730 employees), ISS Servisystem (650 employees), Onet Luxembourg (490 employees) and Express Services (460 employees) which employ around 75 % of the personnel in the cleaning sector. The same applies to the security services sector, which is largely dominated by the Securitas and Securicor companies (830 and 870 employees respectively at the end of 2001). Besides their security activities, the two groups also market electronic surveillance systems.

Among the management consultancies,as well as in the accounting sector,a few large groups have emerged: PricewaterhouseCoopers (with 570 employees at the end of 2001), Deloitte&Touche (approximately 700 employees), Arthur Andersen (440 employees), KPMG Group (330 employees), Compagnie fiduciaire (210 employees) and Ernst&Young (200 employees).In 2002,Arthur Andersen and Ernst&Young merged, a sign of the reorganisation of the sector worldwide.

The available statistics relating to the activities of the selection and provision of staff sector show a sharp rise in temporary employment in the Luxembourg economy.

Activities of companies in the business services sector are not limited to the domestic market. In 2001, total exports of business services accounted for a little over 6 % of the total exports of goods and services. From 1995 to 2001, these exports rose from 1.02 billion euro to 1.86 billion euro.

The dynamic leisure activities sector, which includes recreational, cultural and sporting activities, is also worthy of note. Employment in this sector virtually doubled between 1985 and 2001, rising from 1 700 in 1985 to 3 200 in 2001. Gross value added at current prices witnessed comparable growth, rising from 126 million euro in 1985 to 291.5 million in 2000. The reduction to 267.3 million euro in 2001 appears to be due to the general economic downturn affecting the country’s economy. In absolute value, the importance of this sector to the Luxembourg economy is relatively low (1.2 % of GVA and 1.2 % of total employees in 2001), but it has great development potential.

Audiovisual services are one of the most dynamic fields in this sector. Its rapid expansion is connected with the presence in Luxembourg of the CLT (Compagnie Luxembourgeoise de Télédiffusion, which became the RTL Group in 2000), SES (Société Européenne des Satellites, now SES-Global), as well as initiatives undertaken by the relevant authorities (see also chapter 2.2.2.3 on telecommunications).

In the field of audiovisual production, introduction of the law of 13 December 1988 sought to attract investors into audiovisual production by setting up temporary tax breaks based on audiovisual investment certificates. This law was revised on 21 December 1998. In 2001 alone, audiovisual investment certificates worth 50 million euro were issued. Over the whole period from 1989 to 2001, the total amount of certificates issued was 284 million euro.

Audiovisual investment certificates issued from 1989 to 2001

Furthermore, a “National fund to support audiovisual production” to promote the creation of audiovisual works in Luxembourg and encourage production, co-production and distribution of audiovisual works was set up by the law of 11 April 1990.Within the same context, the National Audiovisual Centre (CNA) was opened in 1989. Its main aim is to promote the Luxembourg film industry, and archive and restore the national audiovisual heritage.

Cinemas overcame the crisis of the 1970s and early 1980s. In 1995/1996, the Utopia company, which was founded in 1988 from the cine-club movement, built the first multiplex cinema in Luxembourg (Utopolis). Supply and demand have now been matched, enabling the society to expand vigorously by extending its presence in Luxembourg, as well as in neighbouring countries, including Longwy in France and the Cinecity network at Aarschot, Lommel and Mechelen in Belgium.The number of cinema-goers in Luxembourg rose from approximately 672 000 in 1995 to 1 413 900 in 2001.

In the radio and television sector,we must obviously mention the RTL Group in Luxembourg.The company’s origins date back to 1929. Based on a broadcasting concession granted by the Luxembourg government, the CLR (Compagnie Luxembourgeoise de la Radio) operated the Radio Luxembourg station from 1932 onwards, and its European role soon came to the fore by broadcasting radio programmes in English, French and German.

Television broadcasting started in the 1950s and,in 1954,CLR changed its name to CLT (Compagnie Luxembourgeoise de Télédiffusion). Liberalisation and deregulation of audiovisual media from the mid-eighties onwards enabled CLT to expand its activities in Germany, France, Belgium, the Netherlands, the United Kingdom, Sweden, Hungary and Austria. The end of the 1990s was characterised by a major restructuring of the whole audiovisual services sector in Europe. In 1997, CLT merged with the large German audiovisual group UFA. In 2000, the merger of CLT-UFA with the British company Pearson TV gave rise to the RTL Group. The company, in which the German group Bertelsmann holds a majority stake, is the leading European audiovisual services group. It controls 18 radio stations, 24 TV stations and 85 Internet sites in 11 countries, and produces over 10 000 hours of programmes per year. Each day, over 140 million viewers watch TV stations controlled by RTL Group, including RTL, RTL II,Vox in Germany, M6 in France, RTL-TVI and Club RTL in Belgium. At the end of 2001, RTL Group, whose headquarters is in Luxembourg, employed some 620 staff.

Following the liberalisation of the airwaves under the law of 27 July 1991 on electronic media,new radio stations were established for the audience living in Luxembourg. Before that law, the Luxembourg-language radio station RTL (belonging to CLT) held a monopoly. In 2002, two national radio stations, four regional stations and around 20 local radio stations were broadcasting radio programmes. In addition, there are six television programmes intended mainly for a domestic audience.