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MP calls for urgent action to save construction sector

By INÊS LOPES – [email protected]

Portugal’s Minister for Economy has promised to look into the current crisis affecting the construction sector in the Algarve.

The assurance came after local PSD MP Mendes Bota called on the government to save the public works segment in the region from “imminent bankruptcy”.

Mendes Bota, who presented minister Álvaro Santos Pereira with an in-depth analysis of the current situation, said the construction sector was going through hard times and could collapse in the next four months.

Following a meeting with dozens of members of the Associação de Empresas de Construção e Obras Públicas (AECOPS), the association of construction and public works companies, to discuss measures to save the industry, Mendes Bota fears that around 4,000 jobs could be lost in the process and if nothing is done soon, “whatever companies are left within the sector will close their doors within four months”.

Most complaints from construction companies relate to the late payment from clients, mainly the Câmaras, a lack of job vacancies, financing difficulties and mass unemployment. According to the Algarve MP, the total debt owed to construction companies in the Algarve amounts to €40 million with some outstanding bills dating back to 2004.

“Payment of this debt is practically frozen due to the disastrous financial situation affecting the Câmaras,” stated the document produced by Mendes Bota.

“If Câmaras do not receive financial support from the Plan for Economic and Financial Aid (Plano de Ajuda Económica e Financeira) to be able to pay off these debts, businesses in the construction industry will not resist, generating a domino effect.”

Only three companies represented at the meeting with Mendes Bota said they had work to last a year but would only commit to it if financing was secured, an additional problem with the banks limiting access to credit.

As a consequence, Mendes Bota said around 4,000 direct and indirect jobs would be lost and reminded the Minister of Economy that in 2011 alone, 935 workers in the sector had lost their jobs. “The construction sector in the Algarve is four months away from insolvency. If nothing is done now, it may be too late,” concluded the PSD MP.

Álvaro Santos Pereira has since confirmed that he would analyse the situation and would soon meet with construction companies to discuss the future of the industry.

Job creation

Meanwhile, Reis Campos, president of the Confederação Portuguesa da Construção e do Imobiliário, which represents companies in the construction and real estate industry, says Portugal needs a dynamic construction sector if it is to see its unemployment level decline.

The statement made by Reis Campos followed the recent announcement that Portugal had the third highest unemployment rate in Europe, at 15.3% in March.

He said he was not surprised at the figure as no measures had been implemented as yet to encourage economic growth and particularly to breathe new life into the construction and real estate industry.

Although European predictions of economic growth appear positive for the second half of the year, Reis Campos does not expect this scenario to happen in Portugal. He said: “The time has come for the government to refocus. While austerity measures are essential for the country to combat its public debt, the creation of wealth and employment must not be sacrificed.”

He stressed that the construction sector was responsible for 39% of unemployment in Portugal in 2011 and if nothing was done to revitalise the industry, a further 140,000 jobs could be at risk.

“It is not at the cost of companies closing down and high unemployment that Portugal will solve its problems. Any funds available in the QREN (National Strategic Reference Framework) should be used by the construction and real estate sector in favour of economic growth and job creation,” he said, adding that investment in urban rehabilitation was vital.