4,600 construction workers made redundant due to stagnant economic growth

The situation remains very tense. The sector's and economy's growth stagnated, which is palpable in the construction sector. In the last four years, there was a decrease of 4% within the sector due to businesses closing down. There was another decrease of 9% on the employees' side as 4,600 job positions disappeared, Paul Nathan explained. The manager of a construction business and vice president of the Chamber of Trades added that the international context, ranging from the pandemic to the Ukraine war, is also a contributing factor.

The construction costs increased due to the rising energy and primary material prices. However, the costs of funding were also provoked by the higher construction fees, inflation, and the increased bank rates. All of these factors led to the collapse of the real estate sector, which left construction firms struggling to provide sufficient work for their employees. Before the pandemic hit, each year showed a growth of 3-4% so there was plenty of work for each construction worker.
 
Nathan mentioned that the construction sector is completely independent of any foreign craft. In order to move foreign construction sites to Luxembourg, they need a location. The current rise in living expenses is a definite disadvantage in Luxembourg. The Ministry for Housing developed a programme which reserves certain housing for the construction workers of newly established businesses in Luxembourg. The above-mentioned project enables construction firms to provide affordable housing for their employees. The businesses generate money through investing and at the same time they assist their workers. It is a win-win situation, explained Nathan.

Difficult time for construction sector: right time to invest 

“The current situation is also a good opportunity for private individuals to invest or renovate. No project or renovation could ever be done as cheaply as now. Shouldn’t it be up to developers to lower prices even further to revive the market?”, the RTL interviewer asked.

“No,” replied Nathan. “If prices are reduced again now, it won’t be profitable to carry out any project at all.”

However, public calls for bids are looking somewhat better. In 2024, things moved more slowly, which was to be expected after an election year. In 2025 though, the state, municipalities, and semi-public institutions have issued more calls again, and this has to continue pleads the construction sector.

Demands from the sector

Modern infrastructure is needed in the country to attract new companies, create new jobs, and thereby revive economic growth. In addition, in terms of housing, it is essential not to discourage investors from investing their money in the country. Every home that is not built will be lacking for future economic development.

In general, investment in real estate should be encouraged, for example through a reduced VAT rate of 8% for the construction of rental housing.

Equally important is the administrative simplification promised by the government. It is considered a big step that the government had made this a priority. Over the past decades, more and more procedures have been introduced – each reasonable when viewed in isolation – but they have collectively led to the complexity of the construction sector. As a result, building has become unnecessarily expensive and slower, criticises the Chamber of Trades vice president.

Working groups, including representatives from the construction sector, are currently preparing a national building regulation to be presented to the policymakers soon. Naturally, things never move quickly enough, but that is due to the complexity of the subject and the large number of stakeholders involved, says Nathan.

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