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Construction sector under de-construction 

20 Apr 2022

  • Contractors, companies, employees and clients under pressure 
BY Sumudu Chamara  Before the Covid-19 pandemic broke out in early 2020, Sri Lanka was a land of hope with many developmental and economic activities taking place with the involvement of local and international stakeholders. However, a large number of development activities, especially construction activities, have come to a halt, and those sectors are stuck in a situation where they cannot continue.  According to construction sector experts and those making a living out of the construction sector, despite the role the country’s construction sector plays in national development and the economy, the said situation has worsened to an unbearable level and the future of the sector and the fate of those working in it are uncertain.  Rise in prices of essential materials  The main challenge the construction sector is facing – which, according to industry leaders and professionals, is the main reason that has led to countless other issues – is the lack of and exorbitant prices of materials, especially cement and sand.  According to a site manager at a construction site in Pamankada, P.N.A. Chandana who spoke to The Morning, the rapid and massive increase in the prices of materials and the lack of availability of cement are the main reasons why the construction sector has ground to a halt. He added that a black market has also been created around cement.  “Cement is more expensive than any other essential raw material we need on a daily basis. Even if we were able to pay high and unreasonable prices for cement, it is difficult to find sufficient cement nowadays. One construction site I oversee requires at least 400 bags of cement on a daily basis. But our usual suppliers cannot provide that amount of cement as they used to,” he said.  “When we reach out to new sellers, they try to sell the same at exorbitant prices. During the past two to three months, there were times when we had to purchase cement at Rs. 4,000 a bag, which we cannot do in the long run even though it was an option for a day or two.”  He pointed out that overall, the prices of materials required for everyday construction work have increased by 80-150%, which has affected the sector significantly, resulting in several individual contactors and small-scale construction companies shutting down during the past three months.  He explained: “During the past few months, the prices of almost all materials have gone up. This includes cement, iron bars, paint, cement blocks, and granite. While the cost of production of these materials has increased substantially, middlemen and sellers have also increased their profits and commissions.”  He lamented that this situation has affected not only contractors and construction sector companies, but also their employees. “Most of our workers have been working with us for years, and it is difficult to find workers who are equally competent and familiar with the kind of work that we do. We do not intend to put the burden of increasing prices of materials on our workers, and therefore, we do not intend to impose pay cuts or go for layoffs,” he said. “At the same time, we have to increase their wages, because the prices of almost all essentials have gone up and we cannot ignore the plight of our workers. This means that we either have to reduce our costs, or increase our charges, both of which seem almost impossible in the current context.”  He noted that if the prevailing circumstances continue for long, the construction sector would cease to exist. Doing business amidst economic crisis Even though increasing charges is seen as the immediate solution to the increasing prices of materials, according to those in the construction sector, it is not that simple, and increasing their charges to reflect the actual costs of materials is a challenging task due to the nature of their clientele. According to them, even if charge hikes were an option, the lack of availability of materials has made it difficult.  Chathuranga Samarasinghe, a 30-year-old construction worker working at a construction site in the Piliyandala area, explained this situation to The Morning.  “The construction sector is a business, which means that we should be able to increase our charges when the prices of materials and labour costs increase, unlike in the case of a normal, nine to five job. However, it does not seem like a very practical option, because the main problem we are facing is not the increase in prices of materials but the lack of availability of materials,” he said.  “In the past few weeks, there were a number of occasions where we could not purchase materials even if we were willing to pay high prices. There is another big issue that is really affecting the contractor I am working for. It is difficult to increase our charges, even though we badly want to match the cost of the materials and the true value of the labour costs with our charges, because most of our clients are middle and low-class people in terms of their financial status.  “They can manage to pay higher prices only to a certain extent, and at some point, the charges become unbearable to our clients and it will stop them from continuing with ongoing construction work. At the same time, my bosses have entered into agreements with or have provided quotations to most of our clients. Having to increase our charges means that we have to change our agreements and quoted charges, which is not really a good thing in our business.”  Samarasinghe further said that even though wealthy and educated clients may agree with contractors having to increase charges, in the long run, it might affect their businesses. Making a living through construction work The plight of those working in the construction sector has been overlooked by the authorities and there is little to no support available for them, according to some construction sector workers who spoke with The Morning. They lamented being hit by inflation, pay cuts, and limited contracts, especially in a context where their jobs have also been affected by shortages and the high prices of materials, especially cement and sand.  In this regard, Saman Kumara Perera, a 39-year-old construction worker, said that their struggle is not limited to their profession, and that their families too get severely affected due to the present situation. He added: “Our jobs are not permanent or stable, and therefore, our bosses can fire us at any moment citing financial issues. We do not have any form of job security except our employers’ need to keep us because we have built some kind of reputation, trust and dependability over the years.  “Despite the instability of our job, our families still have to eat and pay bills. We still have to send some money to our families every month, which is not sufficient anymore due to worsening inflation. For example, I send Rs. 30,000 to my family per month, and another Rs. 20,000 to my brother and sister for their higher education and other basic expenses. I still send the same amount.  “However, that amount of money is no longer adequate to cover their expenses, and I have to send at least Rs. 50,000 to my family and at least Rs. 40,000 to my brother and sister a month. The unfortunate situation is that I cannot afford to send such a big amount, because I too have to spend a lot of money for my basic expenses, such as food, rent, and other personal expenses.”  Meanwhile, 45-year-old construction sector worker Vijaya (name changed on request), explained the hardships he faces due to inflation.  “Just around three months ago, my rent was just Rs. 20,000 a month, and my food expenses were around Rs. 22,000 a month. Now, they have been increased up to Rs. 32,000, and the monthly food cost has increased up to Rs. 32,000. However, my monthly salary was increased by just Rs. 4,000, which is clearly not sufficient to cover even the most basic expenses.”  According to him, this situation has resulted in some within the construction sector looking for alternative sources of income, some of which are illegal. He noted that people tending to engage in illegal activities is understandable, even though unacceptable, when looking at the rate at which inflation has been rising.  “Some of my friends are selling drugs now. While some left their job, some are selling drugs while working as a construction worker to those working with them. One of my friends left for their hometown to be self-employed, and according to what I heard, some have become farmers while some have become street vendors. Another friend of mine started selling hand sanitisers and facemasks, because he can earn more through that.” The Government has stated that it was endeavouring to prevent the further collapse of this sector. Even though a massive cement factory was opened last month, according to those in the construction sector, it has not alleviated their struggle. The construction sector, which is one of the leading sectors in the country and according to unofficial statistics, provides jobs for over one million people, should not be left to collapse this way.


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