THE EDITOR, Madam:ONE OF the recent major news items was your announcement of signs of economic growth over the period of January to September 2000.
This was again repeated in your presentation to Parliament on December 12, where, among the sectors identified as doing well was the Construction Industry, in which you reported that the latest PIOJ update showed some growth, based on indicators such as housing starts and cement sales.
While there may well be statistics that suggests some improvements, the reality for many of the people involved in the construction industry is entirely different, as we have found in the Joint Consultative Committee for the building and construction industry, which is comprised of four organisations which represent the major participants in the industry: the contractors, architects, engineers, and quantity surveyors.
The general feedback from member firms continue to be about a significant overall decline in activity, with reports of staff cuts, loss of business, difficulties in maintaining operations, closures and migration. A reduction of over 20 per cent in membership in our individual organisations over the past 2-3 years, also speaks to the level of contraction which has taken place.
For the period 1995 to 1999, the Economic and Social Survey of Jamaica showed an average decline in the construction industry of over 4 per cent per year. So, while the current statistics relating to cement sales and housing starts show some slight improvements, the net effect is that the sector has severely contracted over the past few years.
Our own investigations suggest, that aside from the usual upgrading of hotel facilities, construction activities have occurred in two main areas:
1) Small house additions
This has been one of the areas of fastest growth, and would be a welcome sign, except for the following concerns:
a) While the main sources of financing include remittances from abroad, and various "informal" activities, some of this activity is fueled by people who have lost their jobs, and have had to use their redundancy money to add to their homes in order to have a rental income.
b) Many of these constructions are not designed and built to national codes and standards, and may in fact pose a safety threat to the inhabitants and others. Also, many are built in contravention of restrictive covenants, and do not have parish council approvals. Examples of these abound in the Portmore area.
Given the foregoing, the sustainability of this market would be very doubtful.
2) Government spending
Government has been doing the bulk of spending in construction, in the areas of housing (low and middle income), a luxury hotel (Ritz Carlton), roads and other infrastructure projects, and on various "work" programmes which have been created and allocated billions of dollars to uplift the plight of the ever rising number of unemployed.
While it is important and necessary for governments to carry out certain developmental projects, some of our concerns about our present situation are as follows:
Private sector decline
The high interests rates of the past decade have culminated in the virtual exclusion of the private sector from any significant involvement in construction developments. In fact, the lack of activity in the private non-residential sector speaks directly to the reducing capability in the productive sector.
Work programmes
With unemployment increasing due to continued closures and downsizing of factories, businesses and public services, government has embarked on a wide variety of programmes, set up primarily to assist the needy. While these have contributed to the perceived "growth" in the construction sector, we do not consider this the most productive use of limited national resources, nor sustainable.
Contracts to foreigners
While increased government spending has served to moderate the decline elsewhere in the construction sector, the widespread employment of foreign consultants and contractors would result in approximately 30 per cent of the cost of these projects, normally allocated to local fees and construction overheads and profits, being remitted abroad. This results in a significant reduction of the overall benefits to the Jamaican economy.
Mismanagement
and waste
With the current debt burden, and the ever increasing dependence on loans, it is very important that projects undertaken by government are well conceived, with a clearly demonstrated national priority, and managed with efficiency to minimise delays and cost over-runs. The record so far has not been good.
In conclusion, the construction sector as a whole has contracted significantly over the past years, and is still continuing on a path of decline, despite recent positive changes in some of the indicators. We believe that a collaborative effort is needed at this time.
To this end, the Joint Consultative Committee for the Building and Construction Industry, will be presenting to the Government, our thoughts for reviving and growing the construction sector, which is one of the major employers of labour and a key ingredient and indicator of economic development.
We look forward to productive dialogue which will redound to the benefit of our nation.
We are etc,
Joint Consultative Committee for the Building & Construction Industry
