The construction industry doesn’t just erect structures that encourage increased productivity and improve the standard of living, it contributes greatly to the country’s economy through the following ways:
- Provision of employment opportunities and training
- Creating opportunity for investing and profit making
- Support of businesses that cater to health and safety
- Affecting large-scale economic change due to its size
- Private finance initiative
- Promoting improved transportation systems
- Providing income for small businesses that provide related goods or services
It is known to also factor significantly in the growth and recovery of economies. Due to the labor-intensive nature of the industry, at full-mast, it employs a healthy percentage of the country’s workforce.
While the industry continues to cater to people financially and help bring stability to an already treacherously poised economy, a broader consideration of the economic situation shows that as a sector, the industry is still taking a significant beating. Unemployment rates in the industry tripled in the months following the advent of the pandemic, causing unemployment among an estimated 1 million construction workers, according to the U.S. Bureau of Labor Statistics. In April, a month after the first global lockdowns were put in place, Canada lost 314,000 construction jobs, or about 21.1 percent of the industry’s workforce.
What Role Can the Government Play in the Economic Recovery?
Construction guarantees a snappy return on any investments made. In the same vein, construction provides skilled and unskilled employment. If the government makes job creation and infrastructure a priority, the industry is well placed to regain its sure footing.
The United States’ construction industry is one of the most extensive in the world. According to statistics, the industry spent up to 977 billion U.S. dollars in 2019 and employed about 11.2 million people.
While businesses in the private sector may display a reluctance to invest during uncertain economic times, the government can affect an increase in infrastructure projects. For example, building projects or maintenance. When the government embarks on such investments, it stimulates demand for materials and services related to construction. It will also cause a marked rise in job availability due to the number of people the industry employs, which is about 7.6% of workers around the globe.
The government should explore options available for hastening the approval process for certain infrastructural and construction projects. For the economic recovery phase to begin, work has to first begin, so this action would aid the availability of work post-pandemic and encourage investors or developers to pitch their tents with the industry. To unlock the potential of the construction industry towards economic recovery, this and other sustainable policies are required.
4 Ways the Construction Industry Can Lead the Economic Recovery
1. Securing Maintenance Projects and Investments
It is highly beneficial for the government to focus investments on maintenance-based projects and backlogs. This is because construction firms can take advantage of the movement restrictions to carry out repairs with speed and ease.
Maintenance projects are best embarked on because when there is need for approval, they are approved faster than constructing projects. This allows for faster procurement of funds and hastens the reward to communities and businesses in the area.
For small or medium-sized construction companies, these sort of projects are an advantage because the government frequently turns to international contractors for larger-scale projects.
2. Adoption of Labor-Based Construction Methods
One of the major problems in a failing economy is a rise in unemployment and the resultant poverty. In the industrial age of today, many companies are embracing technology such as project cost management software and the ease of production that comes with it. However, construction is one of the few industries where everything can still be put together with labor.
In the construction industry, over 50% of available labor requirements for large projects are relegated to technology. In areas where there is low wage or a high rate of unemployment, it is advised that construction companies adopt methods of building or repair that are more labor-based. This would provide employment opportunities for more people throughout the duration of the project and reduce the rate of unemployment.
3. Balancing the Scales During Large Projects
Construction projects bring with them a healthy amount of economic ‘ripple effects.’ When working on large construction projects, it is healthy to keep local businesses and workforces engaged. This can be facilitated by balancing the large projects with smaller investments. Two ways a construction project can directly impact local businesses are hiring local workers to join the labor team and obtaining raw materials from local sources. This provides more income for the employed businesses to pass on to others around the area.
Long-term workers at a construction site often have need for various amenities like food, temporary housing and laundry services. The local businesses in an area can cater to these needs, from local restaurants to coffee shops, lodges and gas stations. This way, construction projects would contribute indirectly to economic recovery in that community.
4. Promoting Green Infrastructure
Investments in green infrastructure will play a very important role in achieving economic recovery post-COVID-19.
The importance of eco-friendly communities and lifestyles cannot be undermined. Construction firms can aid recovery of a threatened economy by embracing green infrastructure. One way to do this is the use of renewable energy sources like solar panels in households and commercial buildings. For this to succeed, there must be an adoption of eco-friendly projects on the national level, influencing the transport sector towards adopting electrified systems of transportation and promoting the restoration of the ecosystem.
Before COVID-19, many professionals in construction worked on short-term contracts based on available projects. Hence, some of them lost their sources of income when the pandemic began without any form of compensation. Small businesses that depend on the construction industry run a risk of insolvency if everything does not return to normal soon.
According to history, construction is a sector that contributes greatly to economic growth. After the Second World War, construction aided the recovery of the U.S. economy by providing affordable housing for families and individuals who left the cities to settle in new suburbs. Soon, the new communities attracted businesses who had to have commercial structures erected — shopping centers, garages, car parks and cinemas, amongst others. The opening up of new areas also brought a necessity for road construction and repairs, causing a boom in the industry and economy as a whole.
After the pandemic, the industry is guaranteed to pioneer an economic recovery if the government, construction contractors and companies play their respective various parts, a recovery that can be faster and optimized with the use of contruction budgeting and procurement cost management software; Request a Demo today!