Unprecedented. Construction companies consider resorting to partial unemployment

The situation in the construction sector is so serious that companies are considering asking the Government to apply the partial unemployment regime (chômage partiel). A measure never requested for the construction sector.

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The aim is to avoid dismissing workers from construction companies at all costs, explains Miguel Carvalho from the Luxembourg Federation of Construction and Civil Engineering Entrepreneurs.

The proposal to ask the Government for a partial unemployment regime was debated at the last meeting of this structure and received the support of almost all members. A measure never requested for the construction sector.

According to projections, within six months, construction companies will have to stop having work to ensure the payment of wages to all their workers. In order to avoid redundancies, the solution is to place part on partial unemployment.

Miguel Carvalho, CEO of Carvalho Construction

Photo: Antonio Pires

“A company with 100 workers, if it has six months of occupation at 100% of wage bill, after six months it is very likely that it will receive limited orders and only have occupation for 60%, with 40% of wage bill without occupation”, exemplifies Miguel Carvalho.With the partial unemployment regime, you can ask the State for help to “temporarily secure these people”, he explains.

The Commercial Court of Luxembourg declared the bankruptcy of six companies recently.

“Of course, these are temporary measures and if the economic situation does not change, companies will be forced to lay off, which we want to prevent at all costs”, he concludes.

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One less concern for those who work in the sectors affected by the partial confinement decreed in the context of the pandemic.

At stake are partial unemployment benefits unduly paid by the State to companies, clarifies Tom Hoswald, general coordinator of the Ministry of Labor, Employment and Social Economy.

Many workers are on partial unemployment. In a few months we will know how the economy will react.

The partial unemployment regime can last up to six months, consecutive or not, within a year. The law on the matter, which predates the current crisis, stipulates a maximum duration of 1,022 hours per year and per employee working full time.

These requests were made in just one week. The government expects to spend 500 million euros on subsidies for these workers in March due to the coronavirus crisis.

In view of the situation in the country and the repercussions that the health crisis is having on the economy, the government will simplify requests for partial unemployment.