As signs of recovery emerge in Luxembourg's construction sector, trade unions and industry leaders caution that the industry faces a looming workforce crisis and ongoing demand that it may struggle to meet.

Under pressure for over a year, Luxembourg's construction sector may soon show signs of recovery, but significant challenges remain. While some indicators suggest an upturn, others caution that the road to full recovery will not be straightforward.

The construction crisis persists, but is the worst now behind the industry? The National Institute of Statistics and Economic Studies (STATEC) expressed optimism this week, noting that the decline in employment within the sector has slowed. This trend could signal a potential rebound in activity and recruitment.

However, on Thursday, the Chamber of Skilled Trades and Crafts adopted a more cautious stance, a position echoed by trade unions. "It's true that the figures indicate positive developments, but the reality on the ground is less clear-cut," said Robert Fornieri, deputy general secretary of the Luxembourg Confederation of Christian Trade Unions (LCGB). "I still believe 2025 is a year of transition. There's nothing to celebrate," he added.

Fornieri highlighted several barriers to a robust recovery. A primary concern is the lack of new construction projects and sites, which has led to shrinking order books for companies. As a result, firms are scaling back operations: retirees are not being replaced, and temporary workforces are not being renewed. Despite these challenges, Fornieri emphasised that the LCGB remains cautiously optimistic.

Both the Chamber of Skilled Trades and Crafts and the LCGB agree that government support for the construction sector should continue. They advocate for extending aid measures, which are currently set to expire this summer.

Additionally, they urge banks to demonstrate greater flexibility in loan approvals. "There is still rigidity in granting loans, and rate cuts have been insufficient. In some cases, residents pay more in rent than they would for the mortgage they were unable to secure," Fornieri criticised.

Jean Luc De Matteis, central secretary for the sector at the Independent Luxembourg Trade Union Confederation (OGBL), identified exorbitant property prices as a core issue. He proposed a solution: increased investment in social housing. "We would reduce prices, stimulate activity, and meet the needs of residents," he argued, describing it as a "magic" resolution to the ongoing challenges facing the sector.

Read also: 'It's a disaster': Luxembourg City residents voice frustration as housing affordability hits breaking point

"The sector will recover but we won't be able to meet demand"

For the OGBL, the STATEC figures indicating a recovery in employment are clear, yet they come with significant caveats. "The age pyramid is inverted in the construction sector," explained De Matteis. "As people retire, they are not being replaced, and in a few years, a large portion of the workforce will have disappeared," he cautioned.

Compounding this issue, the sector is already grappling with labour shortages despite having scaled back operations to weather the current crisis. "It's a real paradox," acknowledged both the OGBL and the LCGB. Even amid the downturn, the industry continues to need more workers.

De Matteis recalled that even during the major bankruptcies of 2024, there was still demand for labour. "The majority of employees who lost their jobs were quickly rehired," Fornieri added, highlighting that while the sector is proceeding cautiously, it has not ground to a halt.

Looking ahead, however, concerns remain. "At some point, the sector will rebound, but we won’t be able to meet the demand," warned the LCGB. The reliance on cross-border workers, who already play a crucial role in the industry, may no longer suffice to fill the gaps. This leaves Luxembourg facing an enduring challenge: the need to build more to keep pace with demand.