The Czech job market is generally outperforming the rest of Europe, but it now seems to be catching up with the doom and gloom in the rest of Europe.
The Czech Credit Bureau announced today that the number of bankruptcies of construction companies in the Czech Republic is at a record level.
The expectation is that the level of companies going bankrupt will rise by 17 percent this year. The construction is also the sector where Czech companies go bust the most often, according to an analysis from the Czech Credit Bureau. This will lead to a loss of a large number of construction jobs.
Vera Kamenickova, who heads the CCB analytic department, said “In the first six months of 2012, the number of the declared bankruptcies reached 130. This is 67 percent of the number of bankruptcies for 2011. It can thus be expected that the number of bankruptcies in construction in 2012 will be higher than in 2011”.
The worst year for the construction industry was in 2000 when 193 companies went bankrupt. Since 2008, however, the numbers of bankrupt construction companies have been going up annually and have reached record levels. In 2008 117 companies went into liquidation, whereas in 2012 the CCB expects around 229 companies to go under.
The analysis blames cuts in public investments for the long-term decline of Czech construction as builders depend to a large extent on these investments.
“The state saves and revenues of regions fell in 2011, which had to be reflected in the development,” Kamenickova remarked.
Moreover, households started to save as well and housing construction is also decreasing.
Source: CCB – Czech Credit Bureau