Construction in Uruguay generates 52,000 jobs and hits 6-year record

RIO DE JANEIRO, BRAZIL – The construction industry has proved to be one of the most thriving sectors of the Uruguayan economy this year and this has translated into higher employment levels. According to BPS data, in September there were 51,812 directly employed construction workers, almost 6,000 more than the 46,000 jobs in April, and a record since November 2015.

An important aspect of this increased dynamism in employment is directly linked to UPM’s industrial megaproject in Paso de los Toros – in full occupation peak – and also of the Central Railway.

Chamber of Construction chairman Diego O’Neill explained that these two projects currently account for 20% of the industry’s employment.

The construction of the pulp mill currently employs some 6,000 workers, although this figure is expected to gradually decrease from the first half of 2022, as the plant is expected to start operating in the second half of that year. Meanwhile, the Central Railway will maintain a similar level of employment next year (about 3,000 workers), as this project is expected to be completed in the first half of 2023.

In general terms, the entrepreneur considers that the sector will most likely be able to sustain its employment levels in 2022 as a result of increased investment in Promoted Housing and also through real estate initiatives submitted to the Investment Law Commission (COMAP).

In addition, there is a significant volume of investment projects from other activity sectors -which were also submitted to the COMAP- including public works to be executed in 2022.

The Association of Private Construction Developers estimates that investment in housing will exceed US$4 billion next year. The sector currently has more than 2 million square meters under construction in Maldonado and Montevideo, the main departments for the sector.

The latest survey of expectations by the Center for Economic Studies on Construction (CEEIC) in December showed an improvement in both the current situation and the entrepreneurs’ expectations. Accordingly, there was an increase in the number of responses from companies planning to increase their production capacity. Almost 60% of companies plan to expand both machinery and personnel.

In the April-June quarter, construction increased 14% compared to the same period last year, according to the Central Bank’s National Accounts Report. Data for the Uruguayan economy’s third quarter will be released next Wednesday, December 22.

“We currently have over US$3 billion in investment projects submitted to the COMAP. That is another UPM. Should all these investment projects materialize, it would be equivalent to an additional UPM. Once UPM’s investment impact begins to wane, we will have private investment, which we expect to begin to materialize in 2022,” MEF Macroeconomic Advisory Director Nicole Perelmuter said.

WAITING FOR THE PUBLIC SECTOR IN 2023

The Chamber of Construction chairman says that today “the main uncertainty” is what major projects in 2023 will absorb the 10,000 direct jobs currently linked to the UPM project. “It’s not an easy number to replace,” he warned. O’Neil said that what is failing today is the “dynamism of public investment,” given that it has accounted for 1/3 of the activity the sector has historically posted.

“We hope that instruments will emerge to boost public works. So far we have not been successful,” he admitted. The executive indicated that there are instruments such as PPPs, Crema contracts or concessions, which do not necessarily count on the current levels of public debt, given the special interest that the MEF and OPP authorities have in reducing the fiscal deficit.

Accordingly, the Chamber is concerned about the slow progress shown by initiatives such as the construction of a new water treatment plant for OSE in Arazatí (San José), as well as another project that foresees the investment of some US$1 billion to take sewage to 124 localities throughout the country.

With information from El Observador