Housing crisis
Construction industry expects 10,000 job losses
January 21, 2024, 5:11 a.m
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In Germany, fewer and fewer apartments are being built. This puts a strain on the construction industry. She expects the first job cuts in more than 15 years.
Because of the crisis in housing construction, the German construction industry is expecting the first loss of employment in the sector since the financial crisis in 2024. “We are currently expecting that around 10,000 jobs will have to be cut in the coming months,” said Tim-Oliver Müller, general manager of the construction industry association HDB, to the German Press Agency.
The reason for the feared job losses is the weak economy in construction. While commercial construction and public construction got away with a black eye in 2023 and only recorded slightly falling sales, sales in residential construction fell by 12 percent, said Müller. “We assume that sales in residential construction will also fall by a further 12 percent in 2024.”
That affects the industry. According to an HDB member survey, 55 percent of the 450 companies surveyed expect their earnings situation to deteriorate in 2024. 60 percent wanted to keep the workforce stable, 12 percent wanted to expand it and almost a third (29 percent) wanted to cut jobs.
Prospects “worrying”
According to the HDB, the construction industry was an employer for around 927,000 people in 2023. The reduction of around 10,000 jobs only involves around one percent of the jobs in the industry. At the same time, it would be the first loss of employment in construction since 2008 during the global financial crisis, when a good 700,000 people were working in the industry. After that, employment rose steadily in the real estate boom by a total of more than 200,000 people by 2022. According to HDB, it stagnated last year. For years, the construction industry was a pillar of the German economy, but now it has become a problem child.
The prospects are worrying, as construction is expected to lack around 120,000 specialists in 2030 due to demographic change alone, said HDB Managing Director Müller. “No matter what happens, we have to hire in order to maintain the level of skilled workers – despite the crisis.” The construction is needed more urgently than ever. “Especially when the housing construction engine starts up again, we will be lacking every single skilled worker that we are now in danger of losing.”
The Central Association of the German Construction Industry (ZDB) was already pessimistic in December. The association, which represents medium-sized construction companies, expected a significant loss of around 30,000 employees this year. While skilled workers are still being sought in the expansion areas and civil engineering, capacities in residential construction are not being utilized to capacity.
In view of increased interest rates and expensive materials, housing construction in Germany is stalling. The Ifo Institute expects that only 225,000 apartments will be completed in 2024, compared to an estimated 270,000 last year. DZ Bank also sees a downward trend: by 2025, the number of annual apartment completions could fall to 200,000 apartments. That would only be half as much as the traffic light coalition had planned. At the same time, there is a severe housing shortage, especially in cities, which has recently driven up rents sharply.