Large investment cycles and investments in infrastructure have infused ‘fresh blood’ into the construction industry
by Ivana Vuletić, Secretary-General of the Chamber of Commerce and Industry of Serbia’s Construction Industry Association
A cursory glance at the official statistical data is sufficient to get the impression that the construction industry has been expanding for several years now.
Large investment cycles and investments in infrastructure have infused ‘fresh blood’ into the construction industry.
Currently, companies in the construction industry employ over 160,000 workers, and they number over 11,000.
The construction industry in Serbia currently employs slightly less than 160,000 people, which is equal to the number of people living in the three central Belgrade municipalities – Stari Grad, Vračar and Savski Venac. The area that these three municipalities span and the total area of all constructed buildings in 2020 differ by only 20km2.
The previous year was marked by large-scale investment activities in construction, which accounted for more than 5% of the gross domestic product, while the value of the construction work increased by as much as 35%, and the number of employees by almost 10%.
To remind, in the first quarter of 2021, the year-on-year growth of gross added value in the construction sector was the highest among all economic branches, i.e. 19.6 percent compared to the same quarter of the previous year.
Salaries in the construction sector in 2021 went up by over 5%, while in December 2021, 2,916 building permits were issued in December, a 34.3% increase compared to December 2020.
In the coming period in Serbia, the continuation of investments, especially in infrastructure, has been announced, and we expect positive trends in construction to continue.
In 2022, the aforementioned trends have continued, so in February 2022, 1,995 building permits were issued, which is 31.6% more compared to the same month of the previous year. Judging by the number of permits issued in February 2022 in the Republic of Serbia, they cover the construction of 3,434 apartments, of an average size of 68.9m². Observed according to the type of buildings, in February 2022, 78.5% of permits were issued for buildings and 21.5% for other types of objects. Looking only at the data regarding buildings, 72.8% of them are residential and 27.2% non-residential, while the majority of objects are pipelines, communication and electrical lines (64.3%).
Currently, companies in the construction industry employ over 160,000 workers, and they number over 11,000
The greatest construction activity is expected in the Belgrade region, 35.3% of the predicted value of new construction, followed by the Raška region (17.4%), the Mačva region (9.5%), the Srem region (7.8%) and the Južna Bačka region (6.8%), while the sum total of other areas ranges from 0.1% to 3.6%.
According to the data collated in the first quarter of 2022, the value of the construction works in the Republic of Serbia increased by 10.3% (expressed in current prices), while expressed in constant prices, this value declined by 5.9% compared to the first quarter of 2021. Of the total construction works, 97.1% were carried out in the Republic of Serbia, while the remaining 2.9% were carried out on construction sites abroad.
In the first quarter of 2022, 4.3% more employees were engaged in the construction of buildings, structures and specialized construction works, including the manufacture of products from non-metallic minerals and architectural and engineering activities compared to the same quarter of the previous year. Of the total employment in the Republic of Serbia, the construction industry accounts for 7.5%. In January and February of 2022, the average salary in the construction sector was 11.5% higher compared to the same period in 2021.
According to the data collated by the State Statistical Office (RZS), the export of bricks, cement, concrete, mortar, stone and other raw materials for construction materials in the period from January to March 2022 amounted to 18.9 million euros (an increase of 52.9% compared to the same period in 2021), while imports amounted to 15.0 million euros (an increase of 8.5% compared to the same period in 2021). The export to import coverage was 125.8%.
State authorities have been consistently helping construction companies
In 2021, the Chamber of Commerce and Industry of Serbia tried to assist construction companies in doing their business as much as possible, provide answers to current questions, launch initiatives for amendments and additions to the existing regulation, and represent the sector’s interests before decision-makers in the executive branch, and jointly improve the business environment.
The lack and outflow of qualified labour is a problem that the construction industry in the entire region has been facing for a long time
At the Expo 2020 Dubai”, Serbia brought business delegations for nine thematic weeks, which were jointly organized by the Cabinet of the Prime Minister of the Republic of Serbia – Platform Serbia, the Development Agency of Serbia and the Chamber of Commerce and Industry of Serbia.
The Construction Industry Association organized two thematic weeks – “Urban and Rural Development” and “Water”
77 domestic companies that employ over 4,500 workers and generate a total income of more than 50 billion dinars took part in the Urban and Rural Development thematic week. They concluded five business contracts and ten preliminary contracts for projects worth from 10,000 euros to 3 million euros.
65 companies, whose turnover was over 15 billion dinars, took part in the Water thematic week, during which they concluded several contracts worth from 10,000 euros to 500,000 euros.
Lack of workforce
Serbian builders are traditionally engaged in Africa, Asia, South America, and the Middle East. There has been an increasing presence of our companies that are engaged in design and project management tasks, and less and less in the execution of works in the field.
The lack and outflow of qualified labour is a problem that the construction industry in the entire region has been facing for a long time. In Serbia, this problem is quite pronounced, considering that the increased investment activity in the construction sector in Serbia in the previous period directly leads to the higher demand for construction workers.
In addition to the lack of qualified labour, there is also the problem of an insufficient number of students enrolled in secondary vocational schools. By including as many companies as possible in the dual education system, students would be prepared for construction work through practice during schooling. Construction companies have launched an initiative whereby, with the help of subsidies, training and re-training centres for construction workers should be formed in companies.
Given all the above, it is necessary to better inform both students and their parents about educational profiles and employment opportunities in the construction industry, before they choose which high school to enrol in.
Development of BIM technology
Since modern life and the modern approach to work are inseparable from digital solutions, earlier this year, the Construction Industry Association formed the Building Information Modelling Technology Section, which consists of representatives of companies that perform activities related to BIM technology in Serbia. BIM or information modelling of objects is a technology in which a 3D model of the building occupies a central place, with data presented in a formalized way, suitable for communication, interpretation or processing, which is then used in the stages of conception, design, construction and utilization of facilities. Every month, among other things, the Section holds expert meetings called “BIM in Practice” at which companies that are BIM leaders present their projects.
In the spirit of the aforementioned support for digitization of construction, our Association presented the report titled “OROOK Report 2.0 – Digital, innovative and sustainable solutions in the construction industry” together with Orook last month. At the meeting, representatives from various segments of the construction industry discussed current challenges in the process of dual transition, green and digital transformation.
Green construction is a relatively new concept globally. The first ideas about this type of construction emerged back in the 1960s
Also, we hope that having the digitalization of the construction industry as a goal, our initiative to introduce the possibility of electronic maintenance of the construction site diary and measurement book will be welcomed.
Companies that have production in Serbia and use domestic raw materials have the opportunity to participate in the Chamber of Commerce and Industry of Serbia’s campaign called “Made in Serbia”, which supports domestic producers whose products are assigned with Čuvarkuća quality trademark, as proof that the product was produced in Serbia.
Energy efficiency as an inevitable topic
Energy efficiency is an inevitable topic in the modern world. Announced subsidies for citizens in the form of funding for replacing doors and windows are also a way to help the construction industry and raise awareness of the inevitability of this approach in construction. We hope that in the future there will be room in the Serbian state budget for subsidies for companies that implement energy-efficient solutions during construction.
Green construction is a relatively new concept globally. The first ideas about this type of construction emerged back in the 1960s.
Given that global trends in the entire industry are directed towards sustainable development, green construction is expected to experience full expansion in the coming period. I hope that the expansion of such projects will be boosted by the announced project “Dorćol Marina”, which is implemented in the spirit of these trends.
Serbian companies have the potential to support green construction. I am confident that subsidies that would encourage this type of construction would further increase the number of companies interested in such investments.
When sustainable development and ecology are mentioned, most people think of environmental protection and waste. Green construction is preventive for environmental protection, as it creates benefits to the environment, but also the users of so-called green facilities. Costs associated with green construction are higher than usual, but green buildings are cheaper as they rest on green energy principles.
Antrfile: Instability of supply and price of construction materials
Fluctuating prices of building materials, i.e. metals on the global stock exchanges, have been noticeable since January 2021. Since then, prices have been constantly changing to a lesser or higher degree.
Namely, the disruption of the prices of building and raw materials on the global market was caused by the coronavirus pandemic, but construction companies have managed to overcome the resulting situation with the help of state-funded measures and economic measures to mitigate the negative consequences of Covid-19 on the economy.
However, since the beginning of the Ukrainian crisis, the construction materials market has been recording a constant increase in the prices of certain materials, primarily steel products/rebars.
There is a noticeable increase in the prices of construction chemicals, bitumen and bitumen emulsions, brick products, timber, etc. Of course, I have to mention growing energy prices.
Also, from talking to local manufacturers of building materials, we found that they currently have no problems with production, given that they have several months’ worth of supply of raw materials.
Nobody can estimate how long will this instability in the supply and price of building materials will last. The Chamber of Commerce and Industry of Serbia has proposed to the Serbian Ministry of Construction, Infrastructure and Transport to host a meeting of construction contractors and the Ministry.
The goal of this proposal is to eliminate the consequences of the current instability of the construction material market, as well as to identify mechanisms for price-updating to reduce the disparity.