RTL Today - Alarm bells ring again: Luxembourg faces looming labour shortage in struggling construction sector

Despite signs of renewed interest in new builds, Luxembourg's construction industry remains mired in crisis, as job losses mount, companies fold, and looming retirements raise questions about who will build the homes of tomorrow.

Two years after first raising the alarm, the Chamber of Skilled Trades and Crafts is once again highlighting the "worrying" state of Luxembourg's construction sector. While some industry players are encouraged by renewed interest in new builds, this enthusiasm has yet to translate into tangible transactions.

The crisis in the construction sector persists, with companies still grappling with the aftermath of two years marked by scarcity. Many firms have been forced to rely on their reserves simply to survive, and for some, the breaking point is drawing near. This reality is underscored by a "sharp increase" in bankruptcies and business closures in 2024, with 700 deregistrations recorded over the course of the year. "The desert crossing did not start six months ago," emphasised Tom Wirion, director general of the Chamber of Skilled Trades and Crafts, during an interview with our colleagues from RTL Infos.

Last week, the organisation, which represents Luxembourg's craft industry, reiterated its concerns about the precarious state of the construction sector. In an appeal for support, it turned to two key stakeholders: banks and the government. "More needs to be done, and quickly," Wirion stressed, noting that the market remains in a "rather critical situation." The "renewed interest" in off-plan (VEFA) sales noted by representatives of the Chamber of Real Estate last month has not yet reached builders – "if it exists at all."

Tom Wirion, Director General of the Chamber of Skilled Trades and Crafts / © Chamber of Skilled Trades and Crafts

"The level of activity is still significantly below the ten-year average," Wirion highlighted, expressing concern over the sharp decline in employment within the sector. Since 2022, the number of workers in construction has dropped from 52,000 to 48,000, according to figures cited by the director general. He also critiqued recent data published by the National Institute of Statistics and Economic Studies (STATEC), which reported a resurgence in hiring in February. Describing this as a "purely artificial" increase, Wirion pointed out that the more telling indicator – the number of active employees – is clearly declining. "The sector is losing jobs, that's clear," he reiterated.

Another crisis is looming

The current challenges facing Luxembourg's construction sector are not just a short-term concern but also threaten to exacerbate long-term issues, particularly in the housing market. With fewer workers available today, the sector risks falling further behind in meeting future demand for houses, flats, and buildings. "These two years of crisis will accentuate the housing shortage," observed Wirion. "And if there is a recovery, where will we find the personnel to build faster and catch up?"

Adding to these concerns is an impending demographic challenge. "32% of construction workers are aged 50 or over," noted Wirion, highlighting the urgent need for Luxembourg to attract younger labour to sustain the industry. As older workers retire, the country will face increasing pressure to fill critical roles. However, attracting new talent presents its own set of obstacles. High living costs and rental prices make Luxembourg less appealing to potential recruits. "They would need to be housed, and eventually, their families would need to be housed as well," Wirion explained. "We seem to be going around in circles."

One possible solution has been proposed by Minister of Housing Claude Meisch: promoting the construction of affordable housing specifically designed for employees. Wirion acknowledged this as "a path for the future," though he emphasised that addressing immediate problems – such as the lack of construction projects and available housing – must take precedence.

To tackle these pressing issues, Wirion believes that both banks and public authorities must step up their efforts. While acknowledging the government's existing contributions, he argued that more action is needed, including additional calls for tenders. "Appointments have been made" with government officials to discuss potential solutions, he confirmed. Meanwhile, his criticism of the banking sector remains firm. "It's like talking to a wall," he lamented. "Everyone says they're doing their part and doing their utmost, but frankly, I don't think we'll see much progress."

Despite these challenges, Wirion assured that companies within the construction sector have not remained passive. Those with the means have diversified their service offerings to adapt to changing market conditions. For others, however, patience continues to be the only option.

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