Werner-Schaus Ministry I

The early elections of 1 February 1959 put an end to the coalition between the CSV and the LSAP which had dominated the preceding decade.[1] While the LSAP retained the 17 seats it had received in 1954, the CSV lost five seats.[1] The conflict between the Farmers' Central and the government had cost the CSV many votes among its rural base.[1] The Democratic Party, since 1955 the successor of the Patriotic and Democratic Group, was the winner of the election.[1] The liberals won 11 seats, and presented themselves as the alternative to the LSAP in a coalition government.[1] Despite its losses, with 21 seats the CSV remained the largest political force in the country.[1] The Grand Duchess asked Pierre Werner to form a government, after Pierre Frieden had declined to do so for health reasons; Frieden died on 23 February 1959.[1] Until the new government took office on 2 March, the departments under Frieden were distributed on an interim basis to the other government members: Central Administration to Joseph Bech, the Interior to Pierre Werner, Education, Arts and Sciences, Religion, Population and Family to Émile Colling.[1]

In 1959, the closure of the last leather factory, the company "Idéal" in Wiltz, provoked a reorientation of government policy on industrial investments.[3] The authorities were conscious of the danger in the monolithic nature of the Luxembourgish economy.[3] During the 1950s, the economy had almost entirely relied on the steel industry.[3] Traditional activities which had once flourished, such as slate production, tanneries and furniture manufacturing, were not able to keep pace with international competition and gradually disappeared.[3] This deindustrialisation especially affected the rural regions of the North and the East.[3] It reinforced the imbalance between the country's rural, farming areas, and the mining basin, where the iron and steel industry was concentrated.[3] From 1959, the government led an active policy of economic diversification and development in order to modernise the nation's industries, slow the exodus from rural areas, and maintain a regional balance.[3] Thus, it created a Board of Industrial Development (BID), whose goal was to persuade American industrialists who wanted to get round the custom tariffs of the Common Market, to create production facilities in Luxembourg.[3] The Grand Ducal court, which enjoyed a certain amount of prestige across the Atlantic, was closely associated with this campaign, and the presidency of the BID was given to Prince Charles of Luxembourg, the son of the Grand Duchess.[3] A law on economic expansion, voted on 2 June 1962, gave the government the means to attract foreign investments by granting low-interest loans and tax incentives.[3][4] Thanks to these measures, the reconversion of the Wiltz region was seen through.[4] By 1965, seven businesses working mostly for the foreign market and employing 560 people were established in the city.[4] However, the biggest successes of the diversification effort came towards the mid-1960s, when DuPont established itself in Contern and Monsanto in Echternach.[4]

When it had only just assumed office, the government was confronted with a social conflict which risked paralysing the mining and steel industries.[5] Employers refused to negotiate a new collective contract for the factories and mines.[5] In August 1959, the unions threatened to call a strike.[5] The government eventually managed to persuade both sides to turn to a neutral arbiter, namely Henri Rieben, a professor at the University of Lausanne; this allowed both unions and employers to save face.[5] The pay rise which was finally decided took into account the productivity and profitability of the businesses.[5] Rieben's arbitration showed the will of the actors to enter into a dynamic of social partnership, and to resort to negotiation rather than confrontation.[5]

The Werner-Schaus government enacted several laws extending the social security system. In 1960, a pension fund for commercial and industrial businesses, and a National Solidarity Fund, were created.[5] In 1962, social protection was extended to rural workers with the introduction of a health insurance fund for farmers.[5] In 1963, civil servants received a salary review which increased their allowance considerably.[5] Finally, they enacted a large-scale pensions reform. The law of 13 May 1964 unified the principles of funding the contribution systems for old-age pensions, and regulated the adaptation of pensions to pay rises.[5]

• Thewes, Guy (2011). Les gouvernements du Grand-Duché de Luxembourg depuis 1848 (PDF) (in French). Service Information et Presse. pp. 152–159. ISBN 978-2-87999-212-9.