The government invited us to discuss, it listened to our opinions, but it seems that the opinions of other specialists, especially in the field of macroeconomics and in the field of economic consultancy, take precedence over our arguments, said, on Wednesday, Cristian Erbasu, the president of the Federation of Company Patronages from Constructions (FPSC).
“As you know, there are a lot of debates on topics related to construction lately, not only on facilities, or they can be looked at from several angles. There are also laws that encourage the development of additional production of construction materials in Romania. We want, on the one hand, the development of the field, but on the other hand, probably for macro reasons, we also want to reduce or completely eliminate the facilities for construction workers. We need to recover two years in which, practically, we stayed and produced very little, but if we look at the numbers in Romania, they represented the main essential engine for the economy not to collapse during the pandemic, even post-pandemic.
In the last three quarters, for example, without constructions, the Romanian economy would have entered recession. We are between a rock and a hard place, and this press conference is meant to sound yet another alarm signal. It may be the last before decisions are made at government level. I had a dialogue with the Government. The government invited us to discuss, listened to our opinions, but it seems that the opinions of other specialists, especially in the field of macroeconomics and in the field of economic consulting, take precedence over our arguments”, mentioned Erbasu in a press conference, making reference to the intention of the authorities to eliminate fiscal facilities for construction wages.
The builders are going to tighten the belt
According to the FPSC president, the National Recovery and Resilience Plan (PNRR) states that these construction facilities will be phased out gradually, in the period 2025-2028.
“We, in parallel, assumed other things. We are the only ones who assumed a minimum wage in the field that is 33% higher than the minimum wage in the economy – 4,000 lei instead of 3,000 lei per month, which means extra fees and taxes. At the same time, we undertook to finalize some very large-scale contracts in extremely short terms, if we take into account their scope and compare with the possibilities in Romania, terms which even more will not be able to be respected if such things happen dramatic changes in legislation. As far as we are concerned, we are trying to stimulate the production of materials. It’s very good, but any change, any initiation of laws that stimulate the production of materials in Romania will have an effect in 2-3 years (…)
By the time we realize it, it will be too late and it will be much harder. From the point of view of the deficit, a measure that does not take into account in any way predictability, bearability and does not take into account the consequences, not future, not distant, but very close, of the possibility of companies to take on this burden. Therefore, the decrease in income will lead to a decrease in the number of workers in construction sites, who are not enough anyway, they are very difficult to find to satisfy the requirements of all construction sites and projects in Romania,” said Cristian Erbasu.
He added that, by eliminating fiscal facilities in the field of construction, the state could collect “a little more, not much more, but next year it will collect less than it collects now”. The most serious effect is, according to Erbasu, the fact that the construction sites will be reduced in size and the GDP in the sector will be lower than the potential.
The decision affecting the field of construction
“But the most serious effect will be that the construction sites will be reduced in size, their progress will decrease dramatically, and the GDP that can be created by the construction sector, by construction investments, will be decreased or maintained at a much lower level lower than it could have been. We are now somewhere at 8% of GDP, but we could have been, considering the budgets from PNRR and from European funds and other resources, at over 10% and that is normal for a developing country like Romania. But we will be forced to stay down. A GDP that will be made with our people outside, in Germany, France, England. Just think that a construction worker contributes to Romania’s GDP with an average of 70,000 euros per year (…)
We will have 7 billion euros in GDP deficit that we could have spent on construction. Think about taxes here, VAT and these taxes that exist on salaries, which will be missing, and another major problem will be the proliferation of illegal work. We know well that, in general, collection is cumbersome. The construction companies fought with the samsari companies, as we call them, which steal labor and pay for it illegally. And people are tempted to go for an extra penny… We were told that more than likely, until 2025, as it is in the PNRR, no more changes will be made on this subject (removal of fiscal facilities from constructions, no) . Unfortunately, after only one year, there is the question of halving or even abolishing these facilities, a subsequent effect being inevitably a negative, unavoidable and unpredictable effect”, explained the FPSC representative.
Recently, the Government approved the Emergency Ordinance regarding the development of the “Construct Plus” national program, which aims to balance the trade balance in this area, develop new production capacities in disadvantaged areas, support the acquisition of licenses and patents, stimulate intellectual property, so that the Romanian builders are also more involved in the part of research – development on new materials.
The amount that will be allocated to the program for this year is the equivalent in lei of 150 million euros
In the context, in the field of constructions there are fiscal facilities valid until 2028, which consist in the exemption from income tax, from the payment of the health contribution and the reduction of contributions to pensions and work. In parallel, a minimum gross salary of 3,000 lei must be ensured in this field.
According to the analyzes carried out by FPSC, after the first year of application of GEO 114/2018, in September 2019 the number of new employment contracts (contracts coming mainly from the “black market”) had increased by about 60,000, and the related state budget receipts of the construction sector registered over 12 percent more than in the previous year.
Also, in October 2021, around 430,000 employees were registered in construction, compared to 317,732 employees, in 2018, according to the data of the National Institute of Statistics (INS), while the share of construction in Romania’s GDP increased in these three years, reaching around 7%.
The Federation of Employers of Construction Societies (FPSC) organized, on Wednesday, a press conference with the theme “Fiscal facilities for construction wages – political decision to continue investments in Romania or to send the Romanian workforce to foreign construction sites”.
source: Agerpres
2023-07-12 12:02:26
#construction #market #collapse #Entrepreneurs #pessimists
