The construction industry has shed 140 000 jobs between Quarter 1 and Quarter 3 of 2017 according to the latest Quarter Labour Force Survey.

According to Ntando Skosana, Project Manager for Monitoring and Evaluation at the Construction Industry Development Board (cidb) these job losses are a reflection of the pressure that the construction industry is under.

The job losses are also reflected by the Stats SA GDP statistics that recorded that the construction industry contracted by 0.8% and 0.5% quarter-on-quarter in 2017Q1 and 2017Q2 respectively.

While the construction industry has contributed to employment by creating 184 000 jobs over the long term, from the period 2008Q1 to 2017Q3 the increasing unemployment rate in the country reflects that the contribution to employment in construction and other industries has not been enough to accommodate the new entrants in the labour force and the long term unemployed.

The cidb/BER employment index for both General Building and Civil Engineering has remained negative since 2008, reflecting that more employers are letting go of staff than employing additional staff.

Difficult business conditions

This unfavourable employment index is largely attributable to the ongoing difficult business conditions; a slowdown in construction activity and increasing pressure of profitability. Skosana notes that “Construction workers are being laid off due to a decline in construction activity. The lack of demand for their services has created job losses”.

The cidb says under spending by government departments is a significant contributor to the lack of demand, which in turn results in lost employment opportunities. At the end of the 2016/17 municipal financial year, it was reported by National Treasury that Municipalities under spend on their capital budget by around R15 billion.

Skilled labour in short supply

Paradoxically, although most contractors are still shedding labour, the cidb SME Business Conditions Survey shows that some contractors are increasingly rating the shortage of skilled labour as a constraint to business growth and to profitability – although the levels are still below the 50% level.

Skosana notes that job losses largely reflect unskilled, low and semi-skilled labour. “Skilled labour is in short supply, and this can also be seen from the career junction vacancy index for building and construction which shows a higher rate of vacancies in skilled occupations compared to the semi-, low and unskilled occupations.”

“The challenge in the short to medium term is to increase efficiency in spend, to enhance capacity of government to procure and deliver infrastructure, enhance payment procedures, enhance access to credit for contractors, and more. The cidb is confident that business conditions will improve, and is actively involved in all these areas with stakeholders in order to address these issues,” the cidb concludes.