Now that the state of crisis has been recognised, companies will be able to resort to short-time working for site workers, subject to certain conditions. Photo: Maison Moderne/Archives

Now that the state of crisis has been recognised, companies will be able to resort to short-time working for site workers, subject to certain conditions. Photo: Maison Moderne/Archives

Luxembourg’s government decided on Wednesday to place the construction sector in a “state of crisis” for six months from 1 February 2024.

The news, which had been circulating for several days, was confirmed by the national president of the LCGB labour union  on 100.7 radio, then by the ministers for labour and the economy, (CSV) and (DP), after the government council meeting, and finally made official at 5 p.m. on 24 January. Based on the opinion of the Economic Committee of 23 January 2024, the government has declared certain branches of the construction sector to be in a state of crisis for a period of six months.

A state of crisis is political recognition of the difficulties facing the sector. More concretely, it will simplify the use of partial unemployment procedures “for cyclical reasons” for companies. And, as the two ministers emphasised, it will enable them to retain qualified staff who might be tempted to leave Luxembourg while awaiting the recovery.

Partial unemployment will be reserved for companies in the following industries: construction of residential and non-residential buildings (NACE code 41.200) and demolition and site preparation (NACE code 43.1). The scheme could be extended to other trades such as civil engineering, or even evolve into job maintenance plans as requested by the industry. This request has not been accepted at this stage.

In order to apply for partial unemployment for economic reasons, companies in the selected industries must be established in Luxembourg, have an establishment permit, not be experiencing structural difficulties and undertake not to make any employees redundant for economic reasons.

The full procedure for benefiting from partial unemployment is detailed .

Concrete support measures within three weeks

At the Fedil’s New Year’s reception on 23 January, the prime minister, (CSV), announced that . These measures should combine “tax incentives for those wishing to invest in property in order to make homes available for rent” and “support measures for people on low incomes wishing to buy or rent houses.” These measures will apply retroactively from 1 January 2024.

“This will give a boost to the construction sector. We prefer to finance economic activity rather than unemployment or partial unemployment,” Frieden added. Which goes to show that the two are not mutually exclusive.

According to the latest data from Luxembourg’s statistics bureau Statec, the number of transactions involving flats is down by 38.2% compared with the third quarter of 2022. Activity in the house sales segment also fell sharply in the third quarter of 2023, by 47.3% compared with the same quarter of 2022. Activity in the building land sales market declined by 56.4% over the same period. As a result of this fall in demand, employment in the sector fell by 2.7% between October 2022 and October 2023.

In 2023, more than 120 companies went bankrupt, mainly developers and builders. Craftsmen such as joiners, plasterers, painters and roofers were not spared either.

This article was first published in French on . It has been translated and edited for Delano.