Spain's construction industry demands government aid amid activity slowdown due to Middle East war

Construction

The employers' association has sent a letter to the government demanding that it include economic support measures for the sector in the new anti-crisis plan

Wendy Dávila

The construction sector has urgently asked the Spanish government to approve aid in the new anti-crisis plan amid activity slowdown due to the conflict in the Middle East.

According to the employers' association, more than half of companies (56 per cent) have seen their acitivity slow down due to the energy crisis.

Last week, the Bank of Spain raised its inflation forecast and its assessment of the housing crisis. It raised the housing shortage to 750,000 properties, 150,000 more than two years ago, due to the mismatch between supply and demand.

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  • No one denies that Spain needs to increase supply to address the deficit. Despite this, the government did not include specific measures for the construction sector in the latest package cabinet approved to address the escalating war in Iran.

    This has led the construction employers' association (CNC) to send a letter to the government demanding that the new anti-crisis package, to be approved next Monday, include measures to protect the activity of one of the sectors most exposed to increased costs due to the war.

    The CNC warns that the energy crisis has impacted almost all construction companies, since energy costs represent around 30 per cent of their total bill.

    Among the actions the construction sector demands is one of the employers' association's long-standing requests: the modification of the law to allow for price revisions in tenders. This would allow companies to update both energy and labour costs to reflect market prices in the event of an inflationary crisis.

    According to the sector, this would prevent tenders from being unsuccessful or leading to project abandonment and slowdowns.

    This particularly impacts many of the works necessary for road maintenance, where average cost overruns are 15 per cent and can reach 30 per cent for the rehabilitation of structures and surfaces, right in the middle of the road improvement campaign at the start of summer, when travel increases due to vacations. Precisely because of their short duration, these projects are not subject to price revisions.

    Impact on employment

    Another concern the CNC added to the letter is the potential impact of the war on employment. The construction sector represents only seven per cent of total Social Security affiliations, with 1.5 million workers, according to the latest active population survey (EPA). According to the employers' association, Spain needs at least 700,000 more workers in the sector.

    The escalating costs of the war in Iran could further hinder the sector's efforts to find workers to build the homes that Spain so desperately needs.

    Two out of ten companies in the sector warn that the impact of the war could end up affecting employment in a sector that still lives with the consequences of the 2008 crisis, when it was responsible for widespread job losses in the country.

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