THE construction industry is experiencing strong growth but the spread across sectors and regions is uneven, according to the Construction Industry Federation (CIF).
Direct employment in the sector has grown by 12,000 over the last two years and now totals 80,000, according to the federation which yesterday published its 1995 review.
The sector is expected to grow by 4.2 per cent overall this year, but the bulk of the increase will come from general contracting, which is expected to grow by 10 per cent.
House building is expected to level out, due in part to the rise in land prices. The sector is only expected to grow by 1 per cent.
Civil engineering, which showed the least growth last year, is predicted to grow by 3.8 per cent. The sector is expected to benefit from the 12 per cent increase in funding for non national roads and the 13 per cent increase in spending under the sanitary services programme announced in the Public Capital Programme for this year. Spending on airports, harbours and by Bord Gais outlined in the programme should also benefit the sector.
A continued recovery is predicted in the general contracting sector as the economy continues to grow by around 5 per cent a year.
Although construction activity increased by 8 per cent last year, the industry is not experiencing a boom, according to Mr Liam Kelleher, director general of the CIF.
Output grew by 2 per cent more than the economy as a whole but, says Mr Kelleher, this level of growth in required to catch up on earlier years of poor performance
"Last year was good year after many lean years," Mr Pat Harrington, president of the federation, said. The industry has not yet achieved the level of profitability needed to rebuild capital depleted during the slump, he warned.
The level of investment in construction is not sufficient to ensure that the country will have an adequate level of infrastructure after 1999, believes the federation. At least another £20 million should be spent on the national roads programme, according to the CIF.
The federation has called for a number of measures to be introduced in the Budget, due to be published later this month. It says progress towards reducing corporation tax to a target level of 30 per cent must be maintained.
The federation is against the introduction of a lower corporation tax rate for small companies and believes the first £100,000 of all company profits should be taxed at the lower rate instead.
The CIF has also expressed concern about the increasing level of competition from companies based in the North and Britain which have lower cost bases. Companies based in the North have labour costs 10 per cent lower than competitors in the Republic. They also enjoy lower rates of employers social welfare contributions and cheaper insurance premiums.
Employers PRSI costs in the Republic should be reduced by extending the threshold for the application of the 9 per cent rate to £14,500 from the current level of £12,000, the CIF believes. The federation is also calling for a more pro active approach from the planning framework which it claims can sometimes frustrate or hinder development.
The value of construction activity last year was approximately £4.5 billion which is equivalent to more than 13 per cent of the Gross National Product.
More than 115,000 people were directly and indirectly employed in the sector, which is equivalent to almost one in every 10 members of the workforce, according to the federation.
The CIF also claims that the industry accounted for 13 per cent of the Iota increase in employment over the last two years.
A strong construction sector has major benefits for the economy as over 30 per cent of the money spent on construction is paid to the State in taxes, points out the CIF.
