The workers of Manuel Cardoso Construction are in all their states. This Wednesday morning, a notice of forced sale was placed on the door of the premises, then removed by company officials, without the workers having had time to read what was written there. One of the largest construction companies in Luxembourg has salary arrears and debts to several suppliers. Contact asked Manuel Cardoso’s management about the situation, but 24 hours after sending the questions, no response had been received.
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Founded in 1981, the company currently has approximately 220 employees. Many companies in the construction sector have unpaid wages, due to the crisis in the sector.
Representatives of the construction sector fear that many companies will not reopen after the August holidays. Concerned about the situation in the sector, two organizations have sent a letter to the unions presenting a grim scenario and proposing measures to deal with this crisis.
Call for joint action
The letter, seen by Contactis signed by the Federation of Luxembourg Construction and Civil Engineering Companies and the Association of Building and Public Works Contractors.
The letter, sent to the central trade unions, calls for joint action “to overcome the crisis which is likely to worsen in the coming months”. “We underline that in the current very difficult and exceptional situation that the construction sector is going through, the access of the construction sector to partial unemployment must be considered”, can we read in this four-page letter.
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It also proposes the signing of a “sector plan for maintaining employment, which is in the main interest of workers in the sector, in the event that the situation worsens after the collective holidays”. She also specifies that “in the current situation, it is important to remain reactive both on the employer and union side”.
A grim diagnosis
The letter begins with a grim diagnosis of the state of the sector, with many worrying indicators. For example, home sales fell 30%, reaching a 48% reduction for new apartments in the fourth quarter of 2022. “This drop in new apartment sales is the largest since sales for the sector have been recorded, being since 2007,” the report states. These figures make Luxembourg the third European country where the fall in housing sales is the most significant.
There is also a marked decrease in demand caused by “rising interest rates and conditions that make access to credit more difficult,” say the signatories of the letter.
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In question, a sharp drop in new mortgages which reached 40% during the last two quarters of 2022, which represents the largest drop since 2008. So many indicators which lead one in four companies in the sector to say that they are affected by “insufficient demand as the main factor limiting their activity”.
On the supply side, there is a sharp increase in costs with the rise in the price of building materials and energy prices, but also the increase in interest rates. The 16% rise in construction costs is “the largest since 1975”.
Slowdown in construction employment
“Construction is one of the most important employment sectors in Luxembourg, accounting for around 10% of total employment,” the document states. The latest indicators show that there is “a slight decline in construction employment in the first months of 2023”. So far, 326 people have lost their jobs in the first quarter of 2023.
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This is the highest number of bankruptcies recorded in the last 40 years. A total of 58 businesses closed in the first three months of the year. This reality entails a “real risk that the workforce that companies will not need in times of crisis will go to other sectors, or return to their country of origin, a phenomenon that we are currently observing for workers of Portuguese origin”.
This article was originally published on the Contacto website.
Adaptation: Simon Martin
