60,000 Construction Jobs Cut In March

The Romanian construction industry concluded last year with some 400,000 employees. However, the financial crisis and the subsequent drop in construction projects have caused a wave of job cuts in most construction companies. Laurentiu Plosceanu, President of the Romanian Association of Contractors (ARACO), told BURSA that the overall number of job cuts would reach 60,000, equal to 15-17% of the 400,000 jobs existing at the end of 2008.

"The situation could become even worse, if the overdue payments that State institutions owe to private construction companies for the works performed in 2008 are not made soon. We are hoping that the recent endorsement of the State Budget 2009 will lead to the rapid settlement of these payments in March," Plosceanu added.

In his view, the cost of labour on the Romanian construction market cannot become any cheaper, as it is already low compared to neighbouring countries and extremely low compared to Western Europe. "Despite the crisis, the contractors are seeking ways to keep their employees without touching their salaries. It is true that the salary growth rate will be even slower compared to the previous years, but we are hoping to reach some 550 EUR for specialists at the end of this year," Plosceanu added.

He believes that the survival of construction companies depends on the orders that public authorities may place this year, as well as on the absorption of structural funding. In his opinion, if the State understands its role as a strategic investor in the economy, then the tendering process must follow quickly, and so should funds for co-financing E.U. disbursements.

The ARACO leader also said that the first results of the crisis management plan and the optimized public spending would become visible in the second half of the year. Until then, only minor works will be performed on sites started in 2008. Considering that the State Budget was only recently approved, local budgets will not be approved before March. Thus, new works can be tendered out in the Summer, with actual construction works to begin in Autumn.