© Tom Zeimet / RTL
The construction sector in Luxembourg faces an uphill battle, as bankruptcies surge and employment declines by 8%, leaving small businesses and workers grappling with the fallout.
Luxembourg's construction sector is still far from recovery, according to the Chamber of Skilled Trades and Crafts and trade unions.
Despite government measures aimed at revitalising the industry, the desired results have yet to materialise. Over the past 12 months, the sector has seen a wave of bankruptcies, significantly impacting employment. Tom Wirion, Director General of the Chamber of Skilled Trades and Crafts, explained that employment in the construction sector fell by 8% in 2024, dropping from 54,500 jobs to 50,000.
Jean-Luc De Matteis of the Independent Luxembourg Trade Union Confederation (OGBL) noted that while bankruptcies are not uncommon in the sector, the current wave primarily affects small businesses. These smaller companies often lack the resources and organisational capacity to sustain operations, leading to closures. However, Matteis added that affected employees are quickly reabsorbed into the sector due to ongoing demand for labour.
In 2024, certain segments of the construction industry were classified as being in crisis for six months, qualifying for short-time working measures. However, this support will not be extended, as it has seen limited use.
Robert Fornieri of the Luxembourg Confederation of Christian Trade Unions (LCGB) told RTL that no significant recovery has been observed so far, with only certain activities showing gradual improvement. Fornieri criticised the level of government investment in the sector as insufficient and highlighted the challenges posed by banks, which remain stringent in granting loans. Although interest rates have decreased, Fornieri argued that the reduction has not been substantial enough to stimulate a meaningful rebound.
The outlook for the housing market remains uncertain, according to Joël Schons, CEO of Stugalux Construction SA. In 2024, the company was forced to implement a redundancy plan, initially targeting 65 of its 180 employees. However, through internal reorganisation and strategic reorientation, only 34 employees were ultimately laid off. Schons emphasised that predicting a genuine upturn in the housing market remains difficult.
Schons explained that the company's owners contributed to its recovery by injecting significant funds and restructuring the business model. Previously, Stugalux Construction sold properties off-plan, issuing invoices as soon as construction was completed. Under the new approach, the company completes construction first and only then sells the properties, allowing revenue to flow in afterward. However, this shift meant the company operated for nearly a year without issuing any invoices. "It's been a tough year, but we're back on track", Schons said.
In January 2024, unions had called for a job retention plan to protect employees. However, Schons noted that the severity of the crisis – described as the worst in 30 years – made the redundancy plan unavoidable. While the situation has since improved, Schons emphasised that the housing crisis is "certainly not over yet".
