Two plus one threats to the construction industry

By Eleni Botas

Two plus one threats are causing shocks in the construction sector of the country, at a time when the locomotive of the Greek economy is taking over and projects totaling 43.3 billion euros from the Recovery Fund, the new NSRF and the Public Investment Program are just around the corner. .

The sharp rise in material prices that continues to plague the industry, the serious shortage of manpower and the increase in interest rates that companies will face in the near future, are the serious problems of the construction market.

The major problem that continues to cause intense concern to companies is the surge in energy costs and consequently the jump in prices of raw materials.

The recent revision of the prices of public works carried out by the Ministry of Infrastructure and Transport is characterized by executives of the construction sector as “aspirin”.

This is because, as they claim, the revisions set by the ministerial decision to address the large differences in the prices of construction materials, are minimal in front of what is really happening in the market.

The rise in prices has been recorded since the summer of 2020 and is constantly increasing, with the result that, as they point out, insurmountable obstacles are created for the implementation of new works in the contracting companies.

Also, a large number of significant suppliers of materials of the contracting companies state to the companies that there is destabilization of the prices of raw materials and large fluctuations in the availability of the materials they trade and therefore can not be bound in time and delivery prices of the orders they accept.

At the same time, companies are invited to sign contracts for projects that cost and gave bids even two years ago. In this case, you either do not undertake and lose the project, or you “enter”, as they emphasize.

It should be noted that last December, the General Price Index of Construction Materials, recorded a “jump” of 7.1% against a decrease of 0.2% that occurred when comparing the respective indicators of the year 2020 with 2019.

At the twelve-month level (January 2021 – December 2021) the index increased by 3.8% compared to the corresponding index of the twelve months January 2020 – December 2020, compared to a decrease of 0.2% recorded during the comparison of the previous twelve months.

Regarding the rise in prices, in many material price indices a double-digit increase was recorded. According to ELSTAT data, the main changes were: Electricity 44.9%, Diesel 27.7%, Reinforcing iron 19.3%, Copper pipes 16.9%, Copper pipes 14.6%, Radiators 8.6%, Plastic pipes 8.6%, Bricks 7.0%, Plastic pipes, synthetic, fiberglass 6.9%, Safety glass 5.2%, Built-in cabinets 5.0%, Aluminum frames 4.7 %, Interior doors 4%, Ready-mixed concrete 3,6%, Parquet 3,3%, Building timber 3,2%, Wooden windows 3,1%, Plastic, acrylic, water 3,1%, Cement 2,9%, Marble slabs 2.8%.

Labor shortage

A serious labor deficit is recorded in the construction sector. According to ELSTAT data, in the fourth quarter of 2009 before the outbreak of the financial crisis in the country, the construction sector employed 364,100 people, while in 2020 the manpower of the construction sector decreased to 144,000, down 60.4%.

That is, six out of ten workers have changed careers or may have left the country in search of work in the same field.

In the first quarter of 2021, the total number of those who stated that their last job was in the construction sector was further reduced by 6%.

The problem of labor shortage was recently mentioned, speaking at a conference, by the member of the board of GEK TERNA, George Perdikaris, emphasizing that one of the serious disadvantages of the construction industry is the shrinking of technical and labor staff as a side effect of limited construction activity. in the previous period. “We are in Europe the country with the smallest participation of young people in the construction workforce,” he said.

Also, as stated by Capital.gr, the president of the Federation of Builders Dimitris Kapsimalis, there are no people to work in the construction industry. Neither Greeks, nor foreigners. In fact, for the Greek workers, as he emphasizes, most of those who could deal with the industry have chosen to work in delivery companies with satisfactory salaries and several tips, as a result of which they have turned their backs on construction.

But even those who work in Greece go abroad as there is much greater demand and much better wages.

As for the foreign workers, during the 10 years of the crisis when there was no construction activity in our country, they were forced to return to their homelands or to choose other countries for work.

The problem of labor shortage is, according to construction industry executives, serious, as within the next 18 months a barrage of projects is expected to be auctioned and the gap in “hands” is large.

“For us, the problem of labor shortage is the number one priority,” said a construction market executive. “The economy will not be able to recover and productivity will not increase unless a solution is found to this problem,” he said, noting that the problem is not only in Greece, but is observed in most developed economies of the world.

Finally, the rise in interest rates has alarmed the market for borrowing costs, although it still does not pose a problem for the companies themselves.
Rising government bond yields are causing headaches for central governments, but it still seems too early for business.

For the manufacturers who are estimated to have a lot of need for capital in the near future due to the large projects that will be done, top executives in the industry addressed by Capital.gr commented that “such is the problem of raw materials and energy costs that do not allow us, at least at this stage, to deal with interest rates “.