Construction companies to ask for government help

Luxembourg construction companies say with demand falling, jobs could be at risk

The construction sector in Luxembourg wants the government's help
The construction sector in Luxembourg wants the government's help © Photo credit: Shutterstock

By Madalena Queiros and Andréa Oldereide

Construction companies want Luxembourg's government to step in and save jobs as they cope with falling demand and rising borrowing costs.

The Luxembourg Federation of Construction and Civil Engineering Companies will propose that the government pay for a partial unemployment package as less work means fewer workers are needed.

The state's partial unemployment assistance would allow construction companies to keep from losing staff in hopes economic conditions improve within months, said Miguel Carvalho, founder of a company with the same name.

"Of course, these measures are temporary, and if the economic situation doesn’t change, companies will be forced to fire their workers, which is what we want to avoid at all cost,” Carvalho told Contacto.

Market slowing

Rising interest rates have altered Luxembourg’s real estate market, Marc Giorgetti, head of the Felix Giorgetti construction company, told broadcaster RTL. A year ago, buyers jostled as soon as a residential property was put up for sale, while now the housing market is in limbo, Giorgetti said.

At least three other construction company heads have raised similar warnings about their prospects and what it could mean for workers and the broader economy.

Roland Kuhn, the managing director of one of the country's oldest construction companies, last month asked the government to step in and encourage home buyers with new inducements for a year.

In order to avoid a series of bankruptcies and higher unemployment, the state should stimulate home purchases by allowing an exemption from registration fees, reducing valued-added-tax (VAT), increasing a tax credit, and approving a series of other tax advantages for "those who could still buy", he told RTL.

The proposals for the government to use taxpayer money to help construction companies was broadly panned by online commentators.

"When demand is high, price is high. When demand is low, we ask for government intervention to keep the prices high," one wrote on Monday in response to an RTL report.

Last month, the national statistics agency Statec said in its medium-term projections that Luxembourg economic activity will slow this year after estimated potential growth of 2.5% in 2022, but should rebound to more than 3% in 2024.

Job creation could slow in coming years, particularly in construction, Statec said.

Source: LT Staff