The South Africa Forum of Civil Engineering Contractors (Safcec) has pleaded with the government to avert job losses in the sector by allowing it to return to work during the extended lockdown period in the country.
Safcec CEO Webster Mfebe said the plea was made on behalf of the entire construction sector because the lockdown will, among other things, lead to an estimated 68 000 to 108 000 job losses in the formal construction industry over the next 18 months.
He said he was reliably informed that the sector’s plea to reopen construction sites was receiving serious consideration by the authorities.
Mfebe said the matter was likely to be debated at the meeting of the government’s economic cluster “given its urgency and the fact the president himself was recently on record to reconfirm his previous statements on the importance of infrastructure development as an important catalyst to reignite the economy in line with the NDP [National Development Plan] objective of working towards infrastructure investment accounting for 30% of GDP by 2030.”
“We, therefore, remain hopeful that the government will give this matter its proper urgent consideration, given the fact that the industry is not only a catalyst to economic activity but is the biggest employer after agriculture of the masses of people at entry levels.
“Moreover, it is an industry that readily meets the stringent Covid-19 requirements, given that it is currently strictly regulated in terms of the Occupational Health and Safety Act,” he said.
The sector currently employs almost 900 000 people, he said.
The plea was made to the Public-Private Growth Initiative (PPGI), a sector-based collaboration between government and business, the day before President Cyril Ramaphosa announced the extension to the initial lockdown in South Africa.
The PPGI aims to enhance the alignment of plans and objectives of the public and private sectors. Mfebe is the leader of the construction sector within the initiative.
Mfebe added that Minister of Trade and Industry and Competition Ebrahim Patel had indicated at the last meeting of the PPGI, which took place before the lockdown was implemented, that there was a need for the development of a masterplan to address the issues affecting the construction industry.
DTI departmental spokesperson Sidwell Medupe said meetings of the cluster of ministers are confidential and make recommendations for consideration by the cabinet.
“If the recommendation is endorsed by the cabinet, it will be included in the media statement issued afterwards on the decisions taken,” he said.
Apart from highlighting the construction sector’s estimated job losses because of the lockdown in the letter to the PPGI, Mfebe said the size of the construction industry in terms of the rand value of fixed investment is expected to decline by 8.7% this year, from an initial forecast decline of only 1.5%.
Mfebe said the Covid-19 pandemic, and all the short- and medium-term implications on the economy, is expected to cut about R19.6 billion out of the construction industry in 2020, and move the industry onto a lower growth path.
He added the short- and medium-term outlook for the construction sector will be hampered by fiscal constraints in the public sector, as well as a persistent demand shock emanating from the private sector, which is expected to last several years, with the virus accelerating many of South Africa’s challenges from the medium- to more short term.
Mfebe said the five largest construction companies account for about 30% of the industry’s revenue, with the balance accounted for by small and medium enterprises (SMEs).
“As can be seen from the… forecast, an extended lockdown period will completely cannibalise and decimate the already-fragile industry….”
“Based on international experience during the Covid-19 lockdown, especially in European countries such as the United Kingdom, Australia, and some parts of Africa, where South African companies have construction projects, the construction sector, inter alia, has been permitted to work under certain conditions in compliance with Covid-19 requirements,” he said.
David Metelerkamp, the senior economist at construction market intelligence firm Industry Insight, said late last month that the lockdown would result in huge job losses in the construction industry as it’s very labour intensive.
“Hopefully these people are going to be bailed out by these UIF [Unemployment Insurance Fund] rebates or whatever government is trying to put together, but I’m a bit sceptical about the efficacy of these sort of things and how quickly they can get to workers,” he said.
Metelerkamp expects construction business casualties, particularly small and medium businesses, because of the lockdown. However, he said the impact on the industry will depend on the scope of government plans to try and bail out SMEs to some degree.