The removal of the ceiling on employers' PRSI could cost the construction industry up to £30 million (#38 million) next year, the new president of the Construction Industry Federation said yesterday.

At the federation's annual review, Mr Frank McCaffrey said the move would incur a significant direct cost to the construction industry, would contribute to inflationary pressure and would lessen the capacity of the industry to recruit and retain highly skilled professionals.

"The increase will cost the industry £30 million in 2002 and will have a knock-on effect on all services provided," he said. "The action is anti-job creation and flies in the face of the Government's stated intention of trying to keep prices and inflation down. It should be reversed."

He said the federation would raise the matter within the Programme for Prosperity and Fairness (PPF) in advance of the Finance Bill and would be supporting efforts by other social partners to get it reversed.

However, Mr McCaffrey welcomed some of the other Budget proposals, such as the reduction in tax rates and increasing the threshold for the lower corporation tax to £200,000. He said the former would help with flexibility and overtime in the sector while the latter would help small construction companies investing in plant and equipment.

"This should help capacity," he said.

The past six years had been a period of exceptional growth and expansion for the industry, now the largest sector in the Irish economy, he said.

In 2000, the industry had grown to about 20 per cent of GNP, according to Mr McCaffrey.

"The weight of the construction sector in the Irish economy is greater than the construction industry sector in any other economy in the European Union," he said. "In 1995, direct employment in construction was 97,000. It now stands at around 175,000. We estimate that an additional 10,000 jobs will be created in the construction industry in the coming year."

However, giving the economic review and outlook, Mr Liam Kelleher, director general of the CIF, said growth over the next six years would be more measured. Growth this year was likely to dip below 10 per cent for the first time since 1994, he said.

Mr Kelleher said the industry would be able to deliver the National Development Plan in full.

"Capacity within the industry is expanding generally and the industry welcomes the new national and international alliances which have been forged to deliver on the larger more complex projects such as the Dublin Port Tunnel. These will help to deliver the plan," he said.