Building sector may shed jobs

Johannesburg - As the plethora of 2010 Fifa World Cup-related construction projects comes to a close, the industry will be looking at ways to save costs - which may include retrenchments.

According to Ebrahim Dhorat, director of assurance at Ernst & Young, SA's unemployment figures would have been higher if it weren't for the 2010-related construction work over the past three years. Now that these are nearing completion, spare capacity in the construction sector is on the rise.

"Some [construction firms] have retrenched a large amount of labour because the cost of keeping staff did not make economic sense, given their excess capacity," said Cadiz Asset Management equity analyst Mpandekazi Maneli.

Group Five CEO Mike Upton said on Wednesday he reckons the industry will be shedding jobs for the next six months.

"This year will be one of consolidation," he said. "Uncertainty is still around because of the rate of government's ability to spend, and the private sector is still in a very slow recovery mode.

"I don't think companies will lose permanent employees, but temporary workers and contractors won't find as much employment."

ETM economist George Glynos concurred, saying despite government's spending on infrastructure, many other sectors remain weak.

"Gautrain will be drawing to a close, [there are] no more stadiums to build, residential property is still in the doldrums and commercial [property] fairly weak, so it is just [government] projects in the pipeline that they can count on," Glynos said. "Without strong economic growth, their ability to employ will be severely constrained."

However, a few industry players are looking forward to a busy year, forecasting growth in their employment numbers.

Esorfranki CEO Bernie Krone said his firm has about 3 700 workers. He doesn't expect this number to decrease during the year, and aims to swell employee ranks for water infrastructure-related projects. The group was recently awarded a R240m contract by Rand Water for a project near the Vaal Dam.

The same goes for road builder Raubex. Its financial and commercial director Francois Diedrechsen said: "The increased focus on road infrastructure across the country has resulted in Raubex accelerating its training programmes, and actively growing the number of employees from 5 700 to almost 6 100 from August 2008 to August 2009.

"If the pace of work driven by government expenditure continues as expected throughout 2010, Raubex is set to grow its employee base at a similar rate to meet local workload requirements."

- Fin24.com