The construction sector may hold the key to kick-starting economies ravaged by the fallout from COVID-19 pandemic, the International Labour Orgsation (ILO) has said.
Past crises have shown that although households and private sector businesses may be reluctant to invest while the economic future is uncertain, governments can increase investments in infrastructure projects, particularly maintenance schemes because these usually involve simpler and quicker approval processes.
"Investing in infrastructure can be among the first set of measures to kick-start economies because governments can directly stimulate demand and job creation, compensating for the lack of private sector and household spending," said Maikel Lieuw-Kie-Song, Technical Specialist at ILO Employment Policy Department.
In most other sectors of the economy, the government is reliant on the private sector being willing to hire extra workers and cover their share of the costs. As a focus for national economic recovery programmes construction has many advantages.
It is labour-intensive and employs a lot of people -- 7.6 per cent of the global workforce. It absorbs workers from other sectors relatively easily, and projects can target regions and towns where the post-COVID recession is hitting hardest.
"There is also a good economic 'trickle down' effect from construction work. Local businesses benefit from large projects by supplying raw materials, transport, accommodation, food, and other goods and services," said Lieuw-Kie-Song.
Before COVID-19 struck, many construction workers were on short-term, project-based contracts, and so lost their incomes almost immediately. Those in or from developing countries, where the sector is highly informal, are likely to lack severance pay, unemployment insurance, or any other safety net. They need to get back to work as soon as possible.
Equally, many enterprises in the sector, or those which rely on it, are small or medium-sized and at serious risk of bankruptcy if the business does not return soon.
Lieuw-Kie-Song said the right infrastructure projects can support not just employment and business activity, they can also provide the foundations for the 'build back better' approach of inclusive and sustainable development that policymakers are talking about, if they include environmental objectives and improve access to basic services for the poor.
Before the crisis, underinvestment in infrastructure related to Sustainable Development Goals and Agenda 2030 was estimated at 6.9 trillion dollars per annum. Recovery packages can help plug this gap.
Where individual countries lack funds, debt relief and restructuring can provide support, said Lieuw-Kie-Song.
( With inputs from ANI )