SALARY CUTS, SHUTDOWNS IN CONSTRUCTION

MBABANE – The advent of the COVID-19 pandemic has culminated in the closure of some and scale down in operations of most construction companies.

This is as per the findings of a survey by the regulator, Construction Industry Council (CIC). A survey was undertaken by the CIC between May and June 2020 to assess current developments and to ascertain the impacts on the construction industry. The study revealed that the pandemic had an impact on employment levels, project implementation rates, prices of construction materials and on sourcing logistics. About 50 per cent of surveyed companies reported to have scaled down operations since the emergence of COVID-19, with most operating within the 25 -75 per cent capacity. “Companies faced challenges in sourcing materials from both the local and external markets. Sourcing challenges included difficulty with receiving stock of materials from local suppliers as most had shut down and with sourcing goods externally as borders had been closed.

Challenge

“Furthermore, efforts were made to understand companies’ future plans. However, the challenge was that COVID-19 continued to persist during the survey period, hence posing a difficulty for contractors to have definitive plans in place. Companies were further impacted by rising costs particularly purchase costs of construction materials including cement and steel,” concluded the survey. In an effort to adjust to the effects of the pandemic, companies reportedly implemented various measures. These included effecting salary cuts, notifying clients on project delays, adjusting schedules and activating insurance provisions. Out of a total of 1 071 contractor and consultant companies registered with CIC during the 2019/2020 financial year, 55 companies formed part of the survey and were mostly those that were operational during the early stages of the COVID-19 pandemic.

Limitations

Out of the 55 surveyed companies, 28 companies returned questionnaires, which represented a 50 per cent response rate. There were limitations faced by the CIC survey team due to non-response and non-availability of most industry players during the period. “Of the surveyed contractors and consultants’ construction companies, 32 per cent were operating at full scale. At least 48 per cent reported to have scaled down their operations,” reads the report in part. Scaling down of operations implies that businesses were operating at less than full scale(within the 25-75 per cent operation capacity).  “Furthermore, 16 per cent of construction businesses reported that when COVID-19 was first declared a national emergency by government, they shut down operations but had eventually and gradually resumed partial operations at the time of survey. However, only a few surveyed companies (4 per cent) had completely shut down.

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