A concrete future?In the first of a three-part series on the construction sector, Barry O'Halloranlooks at the likely impact on employment of any downturn in the building trade and considers the prospects for workers

As the Republic's 282,000-plus building workers signed off for their annual holiday last week, there have been dire predictions for their future.

Some of the media dubbed the day the traditional break began "black Friday", as they voiced observers' fears that many builders may not be returning to work on Monday week as the industry continues to slow.

While there may well be some casualties, it is unlikely that our biggest industry, worth about €36 billion a year, is going to go into meltdown. However, there is general agreement that housebuilding hit its peak last year, with the completion of almost 90,000 new homes, and that it has to slow down. As housing accounts for two-thirds of the entire industry, it is assumed that this will have an impact on jobs.

Just what this impact will be is hard to call, but a number of experts have tried to put a figure on it. This week Davy economists Robbie Kelleher and Rossa White predicted a 35,000 fall in the number of people employed in construction by the end of next year. This amounts to about 12 in every 100 building workers and 1.6 per cent of all those working in the Republic.

Kelleher and White based their estimate on a fall in the number of new homes built, from 88,000 last year to 65,000 by the end of 2008 (they say the number will drop to 80,000 this year).

Earlier this month, Ulster Bank chief economist Pat McArdle said a fall of 30,000 was likely. He warned that this would drive up the Republic's rate of unemployment to 5 per cent - from 4 per cent - next year. He based his forecast on Central Statistics Office (CSO) figures showing that the number of people employed in building firms with more than five staff fell to 108,000 in May from 110,000 in January.

The same CSO figures said that, overall, the industry employs 282,100 people. While housing is thought to account for 66 per cent of the entire construction business, the sector's representative bodies say it does not follow that two out of every three building workers are employed in that part of the sector.

Hubert Fitzpatrick, director of the Irish Home Builders' Association, says it is not possible to put a definitive figure on how many work in housing, partly because of the way the industry is structured, and partly because the total number is based on those who class themselves as construction workers in CSO surveys, which do not ask them to differentiate between the sector's elements.

Dr Peter Stafford, the Construction Industry Federation's (CIF) research and policy executive, says you cannot say employment in building breaks down in proportion to its various elements, but adds that housing is more labour-intensive than other areas.

Both men are sceptical about predictions of falls of 30,000-plus in the numbers working in construction. They say other areas of the overall industry are poised to kick in as housing slows down.

"There are really four or five pillars in the industry," says Stafford. "Activity in each one is going to vary at different times. The point is that if some of them are slowing, others should be picking up."

One area that is already showing signs of picking up is a generally overlooked sector - repair and maintenance. Fitzpatrick says this has been growing in importance in recent years, as much of the Republic's housing stock dates back to the 1970s and beyond, and will have to be refurbished. This is going to provide a safety valve, he argues.

CIF figures show that, in 2003, this business was valued at €2.9 billion, out of a total value for construction of €24 billion. Last year, it was €4.4 billion against the industry's overall output of €36 billion.

Stafford says DKM Economic Consultants recently predicted that repair and maintenance would grow by 4.4 per cent for the next two years.

If that safety valve is less obvious, another is blindingly so: the National Development Plan (NDP). This will see the Government attempt to spend €184 billion on infrastructure over the next seven years, with the bulk of this going on projects that involve building and civil engineering work.

Public projects will account for about €6 billion of the industry's projected €36 billion output this year. Allowing for the fact that this will ramp up as housing slows over the next 15 months or so, how easy is it going to be for workers to transfer from one to the other? Fitzpatrick says there is already a precedent for this, in that firms and their employees moved from big projects to housing earlier in the decade.

But there are a host of issues surrounding the NDP, not least the industry's dispute with the Government about fixed-term contracts for public projects, which demand that contractors name a price and stick to it. The CIF says this provides no mechanism for dealing with unexpected risk and argues that no other European country uses this model.

The other, more serious, issue is the Government's ability to deliver. Throughout the life of the last NDP, the CIF says the State and its agencies were not spending the amounts for which they budgeted, and projects were not getting out of the starting blocks. When they did, many ran into planning difficulties.

Fitzpatrick and Stafford agree that the manner in which Government departments and other agencies managed the last plan was unwieldy. However, they also argue that, while it was slow in finding its feet, the National Roads Authority has proved to be professional and efficient. Fitzpatrick suggests that similar agencies for other areas, particularly waste, would be a good idea.

Stafford says the infrastructure legislation, which gives An Bord Pleanála, rather than local authorities, responsibility for granting permission to big projects, will make a difference this time. However, they agree that "implementation will be key" with the NDP.

Alongside public projects sit other big-ticket developments that fit under headings such as commercial, industrial and retail, and include anything from factories to shopping centres.

Depending on your definition, these are worth at least €6 billion a year - about half of all non-residential building, which is estimated to be worth €12 billion. Anecdotal evidence indicates this is continuing to perform.

None of this will offer much comfort to people if they are laid off, or simply finish one job and find there's no work to replace it.

Reacting to the forecasts released this week, the head of Siptu's construction branch, Eric Fleming, says many workers have not benefited from the boom.

"Most building companies are employing less direct employees as a percentage of their workforce than before the boom," he adds. Fleming blames the growth of subcontractors and agencies, who he says undercut each other in "bidding frenzies" to get the next job.

He says that if it were predicted that 35,000 jobs were to go in another industry, there would be immediate demands for Government action. At the very least, the State should organise retraining for anyone facing unemployment, he says.

Only time will tell just how many people are likely to need such support.

Next week:We ask which construction players will be left standing in the event of a downturn.