Renovation and retrofitting: the priorities of construction SMEs and crafts

By Patrick LIÉBUS, President, European Builders Confederation EBC

The construction sector is one of the main pillars of the European economy and offers a lot of innovative solutions to engage with the social, climate and energy challenges we are facing today.

In 2016 it recorded an annual turnover of 1,278 billion, accounting for 8.6% of the total GDP of the European Union and thus making it the single largest industrial contributor.

There are about 3,3 million enterprises active in the sector, of which 93% have less than 10 workers.

In total about 43 million workers in the European Union directly or indirectly depend on the construction sector and the micro and small enterprises engaging in it, adding to the sector’s vital importance for our society.

However, the construction sector with its SMEs and craftsmen were severely hit by the financial crisis, suffering from the double-dip recession close in on the meltdown in 2008.

It took the construction sector until 2014 before growth was slowly starting to kick back in again.

The sector seems nowadays to be back on track to reach the pre-crisis output levels, benefiting not just the sector as such, but the European Union as a whole.

This is because every job created in construction results in two additional jobs elsewhere, as a Commission analysis claims, and thus construction offers a great opportunity to tackle the high unemployment rates, still existing in some of the Member States.

Renovation and retrofitting still play an essential role in the recovery of the construction sector and its good performance in recent years.

In fact, renovation and retrofitting measures in the residential market of the European Union grew by more than 10% since 20052. One of the main reasons behind this was the governments’ responses after the economic and financial crisis.

The recovery measures implemented were primarily related to energy efficiency improvements in the building stock and boosted the reliability of the renovation market, especially in residential housing, which is the most important market for the majority of construction SMEs and crafts.

One of these measures was the application of reduced VAT rates to labour intensive services in the construction sector, such as renovation.

EBC is a strong supporter of this policy measure and encourages Member States to make further use of it in order to renovate the building stock in the European Union and at the same time support their local SMEs.

Given that about 75% of the EU building stock is considered energy inefficient and the energy use in buildings (residential and commercial) is responsible for about 40% of final energy consumption in the European Union, energy efficiency renovation represents a promising long-term growth possibility for the EU construction sector.

In addition to this, energy efficiency in buildings forms an integral part in reaching the goals set within the 2030 framework for climate and energy and in achieving the COP 21 commitments.

It is vital that buildings move towards being “nearly-zero carbon”.

In 2015 energy efficiency improvement works were worth about EUR 100 billion, roughly equalling 15% of the total turnover of construction activities in the EU. The vast majority of this turnover was created in residential housing.

Thus a continuous increase in the coming years can potentially boost the EU’s energy performance and at the same time increase employment, especially among young people in local areas jobs that cannot be moved to other countries.

It is estimated that in 2015 alone, energy renovation works directly employed around 882,900 people.

Numbers by EUROCONSTRUCT suggest that by 2020, the renovation sector will see a stronger growth than new construction for the first time since 20143.

There are huge opportunities for our SMEs within this frame not only to drive the sector, but the whole European economy.

However, as much as a thriving energy efficiency renovation market can boost the business of the more than 3,27 million construction SMEs in the sector, it also inherits specific challenges.

The sector suffers from a lack of skilled workers in general, while energy efficiency renovations even necessitate additional competences and qualifications.

The evolution of technologies and materials requires continuously reconsidering and updating our knowledge and skills. Lifelong training is thus a crucial issue for our enterprises.

In order to keep training and VET as a priority area, the European Union and its Member States should keep supporting training initiatives with appropriate financial means.

Energy efficiency is a top priority for our construction craftsmen and micro to medium sized companies.

For this reason, and in the context of the 2018 European year of cultural heritage, EBC has decided to devote its annual conference to the issue “Energy efficiency in historical buildings”.

I invite all interested parties to meet in Paris on 29 June to discuss this topic matching tradition and innovation!