Recent research conducted by one of the building industry’s leading peak bodies highlights a significant stalling of construction projects as a result of the coronavirus (COVID-19) pandemic, emphasising the need for immediate economic stimulus in one of the economy’s biggest employing sectors.
A survey by the Australian Institute of Architects (AIA) of its members revealed that almost two-thirds (64.87 per cent) of respondents have had projects stalled as a direct result of COVID-19.
Projects affected ranged in scale with the biggest impacts felt on projects valued between $1million and $5 million (30.48 per cent) and $10 million to $50 million (15.75 per cent).
Uncertainty caused by the pandemic was cited as a significant reason for the disruption to project pipelines. Clients’ reticence to commit and issues with financing, including a lack of investor confidence and slowing financial approvals from lenders, were key factors behind the slowdown.
Yet town planning delays remained the most prevalent factor holding up the progress of projects, despite government initiatives to fast track approvals as a way of stimulating Australia’s economic recovery.
AIA CEO Julia Cambage said the survey results were consistent with recently released Australian Bureau of Statistics data which showed a significant drop off in residential approvals.
“These findings have serious implications for jobs, not only in architecture but also in the broader construction sector which employs nearly 1 in 10 Australians,” Ms Cambage said.
“The number of projects that have been put on hold or postponed indefinitely indicates that the pandemic will continue to have a significant negative impact on jobs beyond the short-term pain currently being felt.”
“Clear opportunities exist to stimulate activity in the sector in ways that will deliver immediate and longer-term benefits, especially in the residential sector, as outlined in our Economic Stimulus submission.”
Ms Cambage said the AIA urges governments to consider further stimulus measures to protect people’s livelihoods.
“Incentivising people to improve the energy efficiency of their homes, paired with a program of upgrades to public buildings is one compelling example.”
“Further substantial investment in social and affordable housing is another priority area that has yet to be fully addressed.”
Notably, almost 1 in 8 survey respondents indicated they had lost their job or suffered a change in their employment status as a result of the economic impacts from COVID-19.
Nearly one-third of those surveyed (27.27 per cent) indicated that their practice had been forced to lay off or stand down staff with the profession’s unemployment rate rising by 2.35 per cent.
In addition to an overall drop in aggregate employment levels, the survey also showed a change in employment mix with a move to more casual and part-time employment.
As full-time employment decreased by around 10 per cent (from 69.09 per cent to 59.72 per cent) there was a corresponding increase in part-time and casual employment, rising to 13.58 per cent and 2.35 per cent respectively.
The AIA’s survey was conducted in June 2020 and comprises data from 428 responses.
Below is a summary of the survey’s key findings:
- 87 per cent of respondents (consistent across practice size) reported they have had projects that have stalled as a result of COVID-19.
- 68 per cent of respondents indicated either they had become unemployed or had a change in their employment status as a result of COVID-19.
- 27 per cent of respondents indicated that their practice had been forced to lay off or stand down staff. Among these, the hardest hit cohort was large practices where 69.39 per cent of respondents reported forced layoffs or stand-downs.
- 18 per cent of respondents indicated that their practice had lost earnings as a result of the pandemic.
- 11 per cent of respondents indicated that government relief initiatives have been extremely or somewhat helpful with a similar percentage indicating they have accessed JobKeeper either themselves or through their employer.
- There was a measurable shift in employment status with full-time employment decreasing from 69.09 per cent to 59.72 per cent and a corresponding increase in part-time and casual employment, to 13.58 per cent and 2.35 per cent respectively.
- The increase in part-time employment status as a result of COVID-19 was consistent across genders. Women increased by 6.96 per cent to 17.39 per cent and men by 6.1 per cent to 9.54 per cent, reflecting the generally higher rate of part-time employment for women pre-pandemic.
- 59 per cent of registrants reported they were able to negotiate a reduction in practice overheads, with 45.67 per cent of respondents reporting they haven’t tried or needed to negotiate a reduction.
- 39 per cent of respondents indicated they are having supply chain issue due to delays from importing building materials from overseas – including, carpet, tiles, joinery, stone, steel, light fittings, windows, furniture and building facades, computers and equipment.