Employment in VSE/SMEs in construction and real estate is resisting the crisis despite a sharp increase in business failures

According to the Banque de France[1], the number of business failures increased by 36,9% in one year in construction and by 41,4% in real estate activities. However, in terms of employment, the situation is more mixed than it seems. By focusing on the evolution of job losses and creations during the year 2023, the study carried out by the Cercle Perspectives in collaboration with Init among 11.090 VSEs/SMEs in these sectors reveals numerous disparities in situations, whether between types of companies, between sectors or regions. Cercles Perspectives is a think tank bringing together the 19 largest accounting firms in France.

For Antoine de Riedmatten, President of Cercle Perspectives and Chairman of the Executive Board of In Extenso: “While the year 2023 was marked by an unprecedented crisis for the real estate sector as a whole, our study demonstrates an overall resilience of employment among VSE-SMEs, which have given priority to reallocation of their human resources even as the largest players in the sector carry out restructuring plans. »

A reallocation of resources to deal with an unprecedented real estate crisis

Across the entire panel of 11.090 responding companies, one observation stands out: it is companies with 5 or more employees that have experienced the greatest turnover, whether in terms of job cuts (33% of respondents) or in terms of hiring (40% of respondents). These companies in fact have the means of a form of agility to reallocate their internal resources towards more dynamic activities.

In construction, for example, many VSEs and SMEs have refocused their efforts on renovation rather than new construction.

If the intermediate VSEs in this breakdown (2 to 4 employees) seem to be in balance, since 24% of respondents have eliminated jobs and 25% have created them, the same is not true for the smallest structures, relating to self-entrepreneurship or with a single employee, which have for the moment frozen new hires, while waiting for the market to pick up again (+3%). Located at the end of the subcontracting chain, they are often the first to be impacted by market variations.

In total, VSE-SMEs in the real estate sector have eliminated almost as many jobs (26%) as they have created (25%). Faced with market transformations, half of them have had to make adjustments to the structure of their human resources.

Job cuts in the notarial profession: a warning sign?

Rising interest rates, insolvency of buyers...the sharp slowdown in real estate transactions has severely penalized the activity of notarial firms with a large real estate department, particularly in the most urban areas, and has driven 42% of between them to reduce their numbers.

The construction sector was strongly impacted by the drop in new construction, which led 27% of VSE-SMEs to have to either make layoffs, face resignations or propose conventional terminations...which were however compensated overall, for 25% of them, by a reallocation of human resources towards more promising activities such as energy renovation.

In the midst of a crisis, Hauts-de-France and the Grand Est continue to recruit

The regions where employment in the housing sector is doing best are Hauts-de-France and Grand Est, in which 31% and 33% of responding companies declared having created jobs. In these regions, the sector's dynamism has been driven in particular by the establishment of new industrial sites (giga factory in Dunkirk, for example). However, the decline in the construction of new housing is causing great concern in most regions.

Methodology :

The barometer was carried out on the basis of data collected by the 19 accounting firms members of the Perspectives Circle, based on a sample of 11.090 VSE-SMEs. Data consolidation was carried out by the INIT research firm.

These VSE-SMEs cover the notary, real estate, construction and architecture sectors, in the following proportions.

[1] https://www.banque-france.fr/fr/statistiques/defaillances-dentreprises-fev-2024

Illustrative image of the article via Depositphotos.com.