Rising wages and increasing debt burden squeeze BC construction sector: industry group – BC News
The BC Construction Association says the latest statistics show a “dire” picture of contractors in BC.
Investment in the province’s industrial, commercial and institutional construction sectors has fallen more than 10 percent since February 2020, while the non-residential building price index has risen nearly 20 percent.
According to a recent report, construction has increased the value of current projects by 80% compared to five years ago.
“Contractors are struggling to balance declining commercial demand with rising material and labor costs, even as procurement standards for public sector projects increase project risk,” says a news release from the association.
Record low unemployment in the sector has pushed wages up 26 percent in five years, well above inflation of 16.7 percent over the same period. Wages were up 11% from last year, with 2% attributed to the five sick days mandated by the province in January.
BCAA urges the government to proceed with the fast payment legislation. The group says contractors are taking on higher debt loads as they wait months to be paid.
“Waiting to get paid is even more expensive,” BCCA president Chris Atchison said.
“Slow payment for services rendered is unique to our industry, and with material, labor and borrowing costs rising, many BC contractors are reaching a crisis point. Quick payment legislation is not experimental, it’s proven. Unlocking cash flow is an economic imperative and BC’s it is in the best interest of all communities”
The association says the number of occupations in the industry has fallen by five percent over the past three years, and company sizes have shrunk by an average of seven percent.
“The construction industry is massive, vital and struggling,” Atchison added.
“Make no mistake. Many business owners are reaching a breaking point. There is a serious need to develop more housing and other infrastructure.”
The full statistical report can be viewed here.
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