Opening private sector construction critical to saving over 100 000 jobs
An urgent review of the restrictions on the private sector construction is required if we are to avoid a collapse of the construction sector in South Africa.
And so, today (19 May 2020), I have written a letter to Minister of Cooperative Governance and Traditional affairs, Nkosazana Dlamini-Zuma, with an attached submission, requesting that under Alert Level 4 restrictions, construction be allowed to expand operations beyond public sector engineering and construction, to include commercial, industrial and private residential construction, together with construction by public entities, and to permit the upscaling of manufacturing of construction supplies beyond 50 per cent sector employment. These proposals incorporate aspects of the draft Alert Level 3 and 2 provisions – all of which we believe can safely be implemented immediately.
It is estimated the impact on the construction sector of the Covid-19 pandemic could cost the Western Cape 111 416 direct and indirect jobs in 2020, and a loss of R14.9 billion in income to people employed in this sector. Opening up private construction as soon as possible, which we believe can safely be done under Alert Level 4, will help prevent these job losses.
The construction sector is a vital component of the South African economy. In 2019, the sector was valued at R172 billion in South Africa and contributed approximately R32 billion to the Western Cape’s total gross value added.
The construction sector was already under pressure pre-Covid 19, having contracted by 3.3% in real terms on 2019. It is estimated that in the Western Cape the sector could experience a further contraction of approximately 41% in 2020, followed by a 10% contraction in 2021 as a result of current restrictions. This translates to a loss of R12.9 billion in 2020 and R3 billion in 2021.
Importantly, the construction sector plays a critical role in attracting fixed capital investment to South Africa that not only supports current economic growth but is also a catalyst for future economic growth and economic potential. By revising the current Alert Level 4 restrictions, we can help to ensure that the construction sector survives and is able to play a role in our economic recovery post COVID-19.
Now more than ever, businesses need to be able to continue to trade safely and responsibly to ensure that we save jobs, livelihoods and the economy during the Covid-19 crisis. The private sector construction presents an opportunity for just that.
Under normal circumstances the sector already complies with very high health and safety standards, and as such, the implementation and regulation of additional measures to ensure safe operations to stop the spread of Covid-19 would not be very difficult for companies.
If the construction sector is able to operate safely for the purposes of public sector engineering and construction, we see no reason why this can’t be extended to the entire construction sector. In doing so, we can significantly impact on the ability for the economy to open in the Western Cape and South Africa, to save jobs and get more people working safely during the Covid-19 crisis.
Spokesperson for the Provincial Minister of Finance and Economic Opportunities
(Responsible for the Provincial Treasury and the Department of Economic Development and Tourism)
Tel: 021 483 4327
Cell: 071 087 5150