Monday, 1 November 2010

Another 50,000 Building Jobs To Go...

Another 50,000 building jobs set to go next year...

Another 52,000 construction and related jobs are expected to be lost next year, according to an unpublished report.

The cost of the job losses will add an additional €1 billion to exchequer spending in unemployment payments, benefits and training, according to a report prepared for the environment department.

The report, by DMK Economic Consultants, predicts that the numbers employed both directly and indirectly in construction would reach a floor of 126,000 by the end of next year. At one time, there were 380,000 people employed in construction and related jobs.

Up to the end of June this year, there were 127,000 people working in construction and a further 58,000 employed in construction-related work such as civil engineering, architecture, legal conveyancing and specific manufacturing for the sector.

This does not include an estimated 8,000 apprentices doing training.

The report estimates that as may as 7,700 apprentices and trainees were in a form of limbo having failed to complete their training as construction employers said they were not in a position to pay them.

The report’s projections are based on the assumption that the government’s capital allocation over the period 2010 - 2012 would be fully spent.

A lower spend would have even more serious repercussions, according to the report.

The report said that construction activity levels had ‘‘virtually come to a standstill’’
and said that output would decline by a further 10 per cent next year - with new house building likely to fall to 7,500 per year, a figure last seen in the mid-1990s.

Having peaked at 25 per cent of GNP, the industry is expected to fall to 9.2 per cent of GNP this year and just 7.9 per cent by 2012.

The report said these were ‘‘levels that are completely unsustainable for an economy focused on catering for the needs of the new indigenous and multinational enterprise base, that is expected to dominate the new smart economy in the next phase of Ireland’s economic development’’.

The value of construction output in current prices is projected to fall to around €10.5 billion by 2011. The last time the industry was valued at this level was in 1990.

The report said that, if the next series of budgets reduced capital provisions or increased taxation, both would damage the medium-term prospects for any viable construction recovery.

It noted that many of the 2010 public capital provisions were allocated to projects that had started in boom times and were now near completion.

‘‘Given the long lead-in time to the construction phase for most large public sector projects, unless new orders emerge of significant value, it may not be possible to spend the full public capital allocation next year," it read.

The report said that, despite the pressure on the government to reduce exchequer spending and capital budgets, there was a significant ‘‘infrastructure deficit’’ and a ‘‘need for investment in sensible public social and productive infrastructure projects.

‘‘Thus, unless innovative funding mechanisms emerge to fund projects in these areas, it is difficult to see where recovery in construction will come from in the short-to mediumterm," it stated.

Report by John Burke - Sunday Business Post.

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