Construction sector could shed 80,000 jobs in the next three years: report

Over 80,000 jobs in the construction and building industries could be wiped out over the next three years, according to new research from forecaster Access Economics.

The study also shows the number of apprenticeships will drop by 10% with the most damaging effects felt during 2009-10, 2010-11, with output to fall by a massive 12.1% over three years.

It also noted that 35,000 jobs were lost in the past 12 months, and that the “outlook for the global economy and the pace of any recovery remains uncertain at best”.

The report blames the industry’s downturn on a lack of business investment, low levels of new housing activity, reductions in commodity prices and high rental prices.

“Access Economics sees the downturn in business investment as carrying too much momentum to be fully offset in the short-term by additional government investment and a housing sector recovery,” the report says.

“In large part, that is because both business investment and the construction sector grew so strongly over recent years that a period of consolidation was always going to be likely.”

The number of apprenticeships is also expected to drop from 54,400 from December 2009 to 48,500 by early 2012.

The report predicts:

• The value of non-residential building will fall by 27% in 2009-10 and by 12.3% in 2010-11.
  
• The value of engineering construction will decline by 26.4% in 2009-10, and by a further 13.5% in 2010-11.
  
• The value of housing investment will rise by 4.1% in 2009-10, then by 10.4% in 2010-11. 
  
• Construction output will drop by 7.9% in 2009-10, and then by a further 4.3% in 2010-11.

The Construction, Forestry, Mining and Energy Union (CFMEU), which commissioned the study, has responded to the report by requesting the government to develop a crisis plan to prepare for the massive job losses.

“The Federal Government has guaranteed banks, but this seems only to be translating into huge profits for the banks and not practical support for the economy,” union national construction division secretary Dave Noonan said in a statement.

“While the Prime Minister’s announcement at the national conference yesterday on the creation of long-term green jobs is welcomed, this report shows urgent and immediate action is needed in the construction industry,” he said.

Noonan said the union will also be watching the new Fair Work legislation to gauge how it affects the industry during the next three years.

“While employers continue to bray on about the powers of the ABCC and to talk the industry down, the real issues facing the construction industry are more profound – and these are issues the CFMEU is prepared to take a lead on,” he said.

But the report did have some good news, with a prediction for housing construction to pick up over the next two years. The forecast comes after Reserve Bank of Australia governor Glenn Stevens warned earlier this week that another housing bubble could emerge if construction does not keep up with demand.

“Through recent years we have been building homes at a far lower rate than demographics would suggest is necessary. Low interest rates, low rental vacancy rates and the First Home Owners Grant (although winding back) will support additional housing activity,” the report said.