The Malta Independent 19 April 2019, Friday

The economics of the construction industry

Thursday, 14 March 2019, 10:03 Last update: about 2 months ago

These past days, we have been trying to get our heads around the economic facts of the construction industry in Malta.

Construction has become, far more than it has ever been, a serious and very significant factor in the national economy, even without considering its spill-over concomitant add-ons.

Visually and ecologically the prevalence of construction everywhere in this small island has become a blight with cranes dominating every possible landscape, with residents besieged in their homes surrounded, many times, by houses that are being pulled down, digging goes on and on shaking the remaining houses to their foundations, let alone the other factors such as the dust, the noise, the confusion, the problems poised to the ordinary living of citizens who had no idea this was coming and who now find themselves at wits' end.

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There are suddenly a whole crowd of would-be developers all buying property, pulling down houses, digging and constructing. Many began their working life as labourers, workers with another constructor and then they branched out on their own.

Compared to other jobs, or business ventures, this job requires next to no training, preparation, background. There are no qualifications to obtain, no training courses, no exams to sit, no grading of constructors/builders.  More, they seem to find a ready supply of labour, equally untrained, who can be recruited at practically no cost at all. More about this in a minute.

On the strictly technical side, the industry seems well-established, and so too is the work organisation. People may not immediately realise this but many times parts of the work is subcontracted to other companies who specialise in this or that area. They seem to mesh and work in a manner that is the result of long years of working in the sector. Equally, most of this work is done on a barter basis.

We do not know enough about the economics of the sector. We can say, as a generalisation, that very few have been the construction companies that have gone under and in many cases there have been specific reasons for the collapse. Many just do building, many others go vertical and produce the finished product and market and sell it. The fact that from humble beginnings many prosper and develop seems to show that many, or most, in the sector do good for themselves.

The recriminations from the outside regard mostly the multiplier effect of having so much construction going on at the same time and in the same area, the confusion they create, etc.

Then there is the issue which has become a talking point in these past weeks - the mass importation of workers from another country, in this case Turkey, to help in some big-budget construction sites. On one level, there is little difference between importing workers from Turkey to employing asylum seekers waiting at the roadside in Marsa. In both cases, we have foreign casual workers substituting for the (non-existent) Maltese workers who are now mostly graduated to constructors.

In both cases we have construction following market rules and finding new recruits from the ranks of outsiders, foreigners. It would make little sense if one were to, hypothetically, ban such imports. The market itself needs these foreigners and keeps attracting them despite all the hardship involved.

But it is on the opposite level that we must look, not at ground level, so to speak, but at an upper level. We speak here about the cumulative impact of so much development that is changing, drastically and for ever, the landscape of our towns and villages as has been the case, over the past years, of Sliema and Bugibba.

It cannot be denied that we have turned entire towns into wastelands of construction where the quality of life has been drastically curtailed. Whenever one goes, on the social media as well as on the papers, one hears so many complaints that it may come to seem this is the only thing that is going bad in our country, which it isn't.

Over the past days there has been a public discussion and many have argued there should be more planning. The prime minister has apparently said he favours flexibility rather than strict rules. One can see where this is coming from (and one can also see the impact of this flexibility all around us) but one cannot not ask oneself if all this is stoking a balloon that will ultimately burst.

After all open spaces will have been taken away and built up, after traffic gets snarled up even more than it is today because no one planned decent roads inside the towns and villages, after our countryside has disappeared, then it will be too late to weep and lament the Malta that has disappeared. 
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