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25/09/2016

Construction industry’s recovery can drive economic growth

Innovation & Industry

Construction industry’s recovery can drive economic growth

Construction can provide a boost to the economy, according to a new research.

[Department for Business, Innovation & Skills/Flickr]

SPECIAL REPORT/ Europe’s construction industry was badly hit by the financial crisis, suffering from the “double dip” recession hot on the heels of the 2008 meltdown.

The industry is still recovering. Its travails mirror the struggles of the European economy to return to growth. But that return to growth could be driven by construction, which would benefit both the industry and the European Union as a whole.

Construction is a bellwether of the economy, and, crucially for a bloc toiling to create jobs, generates local employment. It is the single largest economic activity and the biggest industrial employer in Europe. About 20 million people are employed in the construction industry.

European Commission analysis has suggested that every job created in construction results in two additional jobs elsewhere. And it can help promote growth through its links to other manufacturing sectors, such as the transport infrastructure.

But, according to the Euroconstruct network, the industry will only resume solid growth by 2017. In the meantime, it is down to national and European policymakers to create a favourable regulatory framework to stimulate investment.

New research

Today (18 November) in Brussels, the Concrete Initiative, a group of trade associations, is holding its first annual conference. The event will focus on how sustainable construction can help the environment, and crucially, the economy.

It will also see the launch of a new report, which researched the impact of the cement and concrete industry, a major part of the construction sector, on the economy.

The study, conducted by Le Bipe for the Institute, found that the cement and concrete industry directly generated €20bn in 2012. It estimated that it created 384,000 jobs.

According to the research, the industry generates a total of €56bn of value in the EU, and over a million jobs.

Those figures are based on industry purchases and the spending of its direct and indirect employees. Le Bipe claimed that represents a multiplier effect of 2.8.

“This means that, in the EU28, for each €1 of value added generated in the Cement and Concrete Industry, €2.8 are generated in the overall economy,” the study said.

The consultancy said that their figures only considered contributions in the upstream value chain. This means that the activity of contractors, builders, concrete workers, and joiners, for example, were not taken into account.

A new circular economy

The European Commission plans to launch its revamped Circular Economy Package before the end of the year.

The package of waste, recycling, incineration and landfill laws is a first step towards a fundamental shift in the way the economy works.

Policymakers, faced with a booming global population and finite resources, recognise the need to shift to a low-carbon, sustainable economy, where as little as possible as wasted.

The construction industry will have to adapt to this shift, to remain a driver of growth. According to the Concrete Initiative, steps have already been taken to achieve that.

Cement and concrete can contribute to the circular economy, notably through the use of recycled materials and waste as a fuels in their production processes.

The industry has also cut its carbon footprint when cement is produced. Specific emissions related to the cement production process have been reduced by 13% between 1990 and 2013

Europe’s building sector represents 40% of CO2 emissions in the EU. But today’s concrete can reduce energy use and CO2 emissions over the life-cycle of a building by 60% compared to 20 years ago.

Ongoing research in the recarbonation of crushed concrete allows for the uptake of up to 25% of the CO2 emitted during production, according to the Concrete Initiative.

>>Read: Policy convergence hands opportunity to construction industry

Background

Construction is the largest single economic activity and the greatest industrial employer in Europe with some 20 million jobs. A European Commission analysis has concluded that one job created in construction means two additional jobs are created elsewhere. The sector has an important role to play in stimulating Europe's recovery. However, it needs the right economic incentives and regulatory framework to do that.

Further Reading