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Network News • 04-08-2022

The true contribution of the construction industry

Author: Dr Lina Klesper - Legal Assistant PKF Malta
Published on Malta Business Weekly: 4th August 2022

Malta has changed a lot; especially in the last five years. A drastic change became visible when looking at Malta’s skyline. New buildings seem to be popping up daily and Malta’s makeover is far from over. Nearly every centimetre of the Island is being covered and it is even discussed whether Malta should reclaim land from the sea to win more space for more building projects. Cynics would say that building permits are being handed out like candy. It is the construction industry that is irreversibly changing Malta’s aesthetics and with it also our daily lives. Construction sites, cranes, dust, noise, blocked roads, old polluting vehicles and congestion are everywhere. Wherever construction is taking place a trail of devastation is left behind. And not to forget the daily news about injured or dead construction workers and civilians as well as the cases of collapsing buildings. It is no secret that the construction industry has a bad reputation and only a little trust lies in the industry that is faced with endless suspicions of foul play. A certain feeling of untouchability surrounds the sector followed by the damaging culture of getting away with anything. Scandal after scandal, tragedy after tragedy leaves us wondering about the true costs and contributions of the construction industry.

The contribution of the construction industry is about 3.1% to the national GDP. This makes up a contribution, which is not as huge as some may think but also the industry is by no means to be considered small, since it directly generates about a €1bn. The crux behind the industry may however be the plan of never-ending growth at every expense and the fact that only those on top seem to make a profit. So, the question is how much does the construction industry really contribute to the economy when also considering indirect, unquantifiable costs and further consequences?

We daily experience that there are unquantifiable costs needed to be included in the calculation of cost and benefit of construction. Rather easier to quantify in terms of money are the costs of fixing pavements destroyed at a construction site, health issues arising from polluting the environment, work hours and petrol wasted in traffic and lives lost, even though more difficult to quantify. Unquantifiable parts, where it is nearly impossible to determine the monetary costs are for instance, the quality of life, peace of mind, blocked views and uglified skylines. One can only imagine the devastating consequences this may bring. The construction madness may even be damaging to the tourism industry making Malta a not-so-attractive holiday destination anymore. Moreover, in the past months, it has made the news that the younger generation cannot wait to leave the Island because, among other reasons, they are missing a good quality of life. This is enhancing the already very present and problematic brain drain effect on the Island. Malta is clearly losing value and appeal making it necessary to change the question to how much the construction industry is costing the Maltese economy. However, up to now, there are no official calculations of those invisible costs no one talks about. Hence, there is regrettably no hard proof to be found on a statistical level, only smart guesses that the industry is possibly operating at a loss.

It seems that the construction myth is in the process of being debunked. With all the social and environmental costs, the construction industry may be costing the country more than it contributes to its economy. What remains are buildings erected as monuments of the eccentric construction industry as a constant reminder of the ravishing island we may have lost forever.

Author: Dr Lina Klesper - Legal Assistant PKF Malta
Published on Malta Business Weekly: 4th August 2022
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