It is ironic that after decades of lamenting the construction industry, the government now turns to the sector as one of its main economic planks of social and economic reform.
With the federal government investing $123 billion over the next 10 years in infrastructure and state governments throwing in extra funding for their own smaller “shovel-ready” infrastructure projects to stimulate local economies, it is somewhat ironic that after decades of lamenting the construction industry as corrupt, inefficient, unproductive, unsafe and unreliable, the government now turns to the sector as one of its main economic planks of social and economic reform.
The social and economic impacts of COVID will be profound
The COVID-19 pandemic has decimated Australia’s economy and the social impacts on peoples’ economic and mental health and wellbeing will be multiple, profound and long-lasting.
Treasury estimates conservatively forecast the jobless rate to reach 10 per cent cent in December 2020, although this all depends on what happens next with a pandemic that follows few rules.
While economic predictions are uncertain, COVID will certainly have long-lasting scarring effects on society. The number of calls received by Lifeline have increased by over 20 per cent since March. Calls to advocacy group Women’s Safety NSW have increased by 40 per cent and Family Court of Australia has reported a 39 per cent increase in family disputes.
Young people have borne the brunt of this crisis. Youth unemployment rose to 13.8 per cent in April (17.1 per cent for men and 15.7 per cent for women) – double the headline unemployment rate – with more than one-in-three young people between the age of 15 and 24 being unemployed or underemployed.
Existing systems are struggling to cope
Many long-standing concerns have been raised by employers and job-seekers about the ability of Australia’s privatised employment system to support people back into work. These include: complexity and bureaucracy; poor matching of jobseekers and training with employers’ needs; perverse incentives which prevent collaboration; “parking” and “churning” of job seekers to attract payment; and disincentives to help job seekers with complex needs.
In 2018, it was estimated that 75 per cent of job seekers get stuck in the employment network for more than 12 months, while only 4 per cent of employers used the system, down from 18 per cent in 2007. Many of these problems have not been fixed and charities are also struggling to pick up the pieces left by COVID 19
The government is looking to construction to help
New ways of thinking are clearly required and there is wide recognition that government-led siloed approaches are no longer appropriate to address this social and economic crisis. So, following the lead of other countries, major industries like construction have become central to the government’s economic recovery strategy.
Through new social procurement policies, governments are seeking to leverage their construction and infrastructure pipeline to require the construction industry to create jobs in the communities in which it builds, as a new condition of construction contracts Indigenous Procurement Policy; Aboriginal Participation in Construction Policy; in Queensland and Victoria
As a tool of social and economic policy, the construction industry is unique.
It is our third largest employer (8-10 per cent of the population), it employs a higher proportion of indigenous businesses than any other sector (27.5 per cent), it is the third largest employer of youth in Australia (16 per cent), it is the largest provider of apprentices and trainees (87,000 in 2018), it contains twice as many refugee start-ups as any other sector and it has a major multiplier effect of around 1:3 into the wider economy.
The construction industry also faces a looming skills shortage (50 per cent of all trades will be in shortage over the next 5 years).
By levering construction spending through social procurement governments can:
- Build much needed infrastructure where it is most needed
- Strategically leverage its spending to stimulate the economy
- Address a looming skills shortage for the construction industry
- Address growing unemployment and disadvantage in society
- Build productive community infrastructure, capital and resilience for the future
Significant barriers exist to the successful implementation of these new policies
The government is expecting the construction industry to step-up and there is a unique opportunity for leadership in this area. But recent research shows that many barriers remain to the implementation of these new policies on which so many people will depend for a job.
While these policies can make an important difference in getting people back to work, this research shows that social procurement policies imposed with rose tinted glasses into an unprepared and unwilling industry, could do more harm than good to the already vulnerable people which the government is seeking to help.
Recovering from COVID will require new ways of thinking and for these new policies to have their intended impact, it is crucial that governments don’t just impose new targets, but also enforce and monitor their implementation and support the organisations on which they depend.