The order books are getting thinner and thinner at the country’s master masons, carpenters and painters as well as other construction companies. Since last year, a quarter of the work has disappeared when it comes to the ongoing construction. It is not an abnormal situation, because the activity in construction goes up and down, but what is abnormal, on the other hand, is that the layoffs do not follow. It is otherwise the typical picture that a decline in construction is followed by redundancies among the craftsmen. But despite the decline in construction activity, employment is unchanged. This is shown by an analysis from SMVdanmark, which organizes 18,000 small and medium-sized companies.
Companies are gambling
The companies’ reluctance to hand out redundancy notices worries Lasse Lundqvist, economist at SMEDanmark.
– The companies are currently gambling by retaining their employees despite a huge drop in construction activity. There are large costs involved in retaining employees, especially when there are long prospects for progress in the construction sector. But they do it because it has been so difficult to get the skilled tradesmen they have on the payroll today, and the master craftsmen fear that if they let go of the employees and we get an upswing in construction sooner than expected, then they will start all over again with recruiting new ones, he says.
Rigid steering
He understands the great dilemma that companies find themselves in, but he warns against holding on to employees.
– In light of the fact that public construction projects are being postponed, the municipal construction budgets have shrunk, and consumers have pulled the handbrake on new bathrooms and other things, you should be extremely careful in companies and be firm on managing costs. If it involves layoffs, it is after all better than the company going bankrupt and everyone losing their jobs, he says.
Layoffs on the way
Lasse Lundqvist finds it paradoxical that we see this situation in the Danish labor market, which otherwise prides itself on being among the most flexible in the world with many job changes every year.
– Just in the area of construction, the enormous lack of skilled labor and the expectation that the lack will be even greater in the future has destroyed that flexibility. But the construction industry is already badly affected by bankruptcies and many indicators suggest that it will only get worse in the future, so layoffs must be on the way, he says.
Lasse Lundqvist recommends that the municipalities take steps to reduce the long waiting time for approval of building applications. In this way, the municipalities can help to keep construction activity up.
