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Pretoria - About 64 000 jobs in the construction industry were lost in the first quarter and this number could rise sharply in the short term unless projected government spending quickly gets into gear.
The database of the construction data service, Industry Insight, shows 161 public sector projects that have been postponed since the beginning of last year.
Industry Insight chief executive Elsie Snyman says the number of projects put out to tender moreover fell by a third in the first quarter compared with the first quarter of last year.
This resulted after the tempo at which projects were being postponed more than doubled last year.
While the rate of deferment started to slow down in the first quarter, this was simply because the number of tenders had dramatically declined. The industry's situation had therefore deteriorated.
In his budget speech in February Finance Minister Pravin Gordhan said government would spend R846bn on infrastructure over the next three years. Snyman points out that contractors have so far received little of this.
Further delays in government projects during 2010 will impact the industry heavily as the demand for residential construction remains weak, she says.
According to figures recently released by National Treasury, municipalities are, for instance, struggling to spend their capital budgets.
Snyman estimates that R10bn held by local municipalities is not getting through to the construction industry.
She says municipalities in Mpumalanga, the Free State and North West, for example, with three-quarters of the financial year behind them, have spent less than 10% of their housing budgets.
Gauteng municipalities have spent a mere 21% of their roads budgets.
The issue is therefore a lack not of finance, but of competent management and skills, she points out. This is at a time when the construction industry urgently needs government’s stabilising role to balance the lack of demand from the private sector.
- Sake24.com
For business news in Afrikaans, go to www.sake24.com.