The economic committee in a meeting on Tuesday didn’t adopt a job retention plan that the chamber had developed together with labour unions. The committee includes government and union representatives who meet once a month to analyse the labour market and assess requests for partial unemployment.

“I don’t know why it was refused,” said Scheuren in an interview with Delano on Wednesday. “We must inform our members that the job retention plan isn’t an option anymore.”

For Scheuren, this means that “there is no alternative” other than agencies beginning to fire people.

Already at the end of February, unemployment office Adem reported 122 real estate agents as jobseekers, the highest number ever and an increase of 31.2% year-on-year. Even during the pandemic, which left many agents out of work during lockdown, there were fewer jobseekers in the sector.

Scheuren expects that there could be between 400 and 500 job losses in the sector. The chamber had proposed offering partial unemployment--under which the government pays for 80% of wages to reduce payroll for struggling companies--while making it mandatory in return for estate agents to do enrol in training with an accredited organisation in Luxembourg.

Competition in the market

“I see this as a political message that we accept this unemployment,” he said.

Labour minister Georges Engel (LSAP) on Wednesday on Radio 100,7 spoke out against the government paying for partial unemployment in the sector, saying that not everything can be state-subsidised and that the market has to take care of this problem.

While he acknowledged that there would be job losses, he said many vacancies are available for qualified people.

The economy ministry did not reply to a request for comment by the time of publication on why the job retention plan was refused.

Under job retention plans, the government assists companies in providing training to employees to more easily find another job but also helps in temporarily reducing working hours or managing voluntary departures. The plan would only have applied to real estate agents who are employed by an agency and not those who are self-employed.

There were nearly 1,600 real estate agencies in Luxembourg at the end of 2020, according to Statec data, with more than half of them having no employees under contract.

Scheuren reiterated remarks made during an interview in March 2021 that there are too many agents in the sector. “But that’s not the fault of the employees,” he said. “It affects the people who are the weakest in the sector.”

The chamber had previously appealed to slow down the issuing of real estate licences and changing admission criteria but said policymakers didn’t listen. This has created hyper-competition in the sector that is now set to result in layoffs. “The government helped create the conditions we’re in at the moment,” Scheuren said.

Market downturn

That also includes policies that have deterred investors, such as a controversial reform of rent laws, which remains pending in parliament. The reform should reduce the amount of rent owners can charge but at the same time could lead to rent increases for existing properties.

“Every advantage we had to attract investors has been chipped away at,” said Scheuren. “It’s a totally a-cyclical policy in the wrong direction.”

The Observatoire de l’habitat--a housing market monitoring body--at the end of last year had warned of the rental market becoming less attractive for investors while at the same time the purchasing power for buyers is decreasing.

Fewer plots of land changed hands, too, and construction is declining. The Chamber of Skilled Trades and Crafts last year said it anticipates around 1,500 housing units less to be built in 2023.

“We predicted these consequences,” said Scheuren. Around 40 people a day are currently responding to rental adverts, he said, showing how tight the market has become.  

Activity in the real estate sector last year, with the number of transactions down 30.4% for the sale of flats between the fourth quarter of 2022 and the same time in 2021. The number of houses sold during the same time decreased 25.4%

For the whole year, the number of transactions dropped 14.4% compared to 2021, with the volume of those transaction down by 10.8% to reach €3.9bn.