In domestic construction, layoffs are happening and will likely continue

Prague - The revival of domestic construction is unrealistic in the upcoming year, according to today's findings from ČTK among analysts and builders. The ongoing decline in the sector will likely correspond to continued layoffs of employees from construction companies. The average recorded number of employees in construction enterprises with 50 or more workers fell by 4.3 percent year-on-year in April, announced the Czech Statistical Office today.
According to the data published today, construction did ease the year-on-year decline to 2.7 percent in April after a 6.1 percent drop in March, but it does not stand much chance of a significant improvement in performance in the upcoming year.
"Many small firms have already had to cease operations, medium-sized firms are facing major difficulties, and layoffs have already affected large companies as well. Companies are forced to lay off skilled workers for whom they have no work," said Václav Matyáš, president of the Association of Entrepreneurs in Construction (SPS), to ČTK. According to him, layoffs have also impacted related sectors, such as the production of building materials, glass, or ceramics.
Analyst Petr Dufek from ČSOB expects employment in Czech construction to fall by about five percent this year. "However, this figure may be skewed due to the more frequent use of the so-called "švarcsystém," which allows companies to reduce employee costs while also achieving greater flexibility," he told ČTK.
In the first quarter of this year, the average recorded number of employees in the Czech construction sector was 225,141 people, which represents a decrease of 17 percent compared to the pre-crisis year 2008, according to statisticians.
"Construction is suffering from a lack of orders, both from the private sector and the public sector. This is a long-term trend, and we will not see any changes in it this year," stated Dufek.
A further decline is expected, for example, in the construction of new apartments, believes Petr Novotný from the real estate team at the law firm Vilímková, Dudák & Partners. "The market is saturated. There are many vacant apartments waiting for buyers. Therefore, there is no need to build more new apartments. Developers are forced to postpone their projects," said Markéta Šichtařová, director of Next Finance.
The head of the builders' association does not expect an improvement, probably even in 2013. "If the government continues its policy of cuts, the impacts on employment are evident. The trend of reducing the number of workers in the entire construction sector will continue," concluded SPS president Matyáš.