Many construction companies have fewer orders due to the decline in housing production. Should they scale down and continue with fewer staff? Acting hastily is risky.
These are exciting times for the construction sector in the Netherlands. Employment in construction is likely to decline by 12,000 jobs in two years. Despite the significant housing shortage, construction production is declining significantly due to rising construction and interest costs and longer procedures.
The Economic Institute for Construction (EIB) provides this in recently published forecasts. The big question is how construction companies will respond to this. Will they opt for downscaling, as they did during the financial crisis in 2008, or will they continue to retain jobs?
Scaling down in times of contraction can be a solution. If less is earned, it is important to keep personnel costs within limits. This is an understandable reflex for an entrepreneur. The trick, however, is to make the best possible estimate of the shrinkage period.
The current dip could well be shorter than in 2008. The need for housing remains high. The government is strongly committed to increasing house construction. If the economic tide turns faster, construction companies will desperately need their employees. Anyone who dismisses their employees must do everything they can to get the company back to strength when the market picks up.
During the aforementioned financial crisis, many layoffs occurred. Quite a few construction workers were forced to continue as self-employed. When construction picked up, they were hired by their former employers. A limited number opted for a return. Many self-employed people continue independently. Large and small handyman companies sprang up like mushrooms. This in the knowledge that there is enough work to keep our heads above water. Construction companies that need permanent staff are facing limitations. They are struggling with a major shortage of craftsmen. Quite a few construction companies have earned well in recent years and built up a buffer. This would allow them to choose to cherish their staff and keep them on the payroll during this dip. As soon as house construction picks up again, they can deliver. By then, they will have an advantage over companies that are now deciding to scale down their construction business.