VILNIUS - A recent survey has shown that 70 percent of Lithuanian construction companies are looking to fire staff. The layoffs come as 77 percent of companies see a drop in orders.
The trends in the construction sector remained similar in May as in the previous month.
A total of 77 percent of construction company bosses stated that the number of orders went down, while 2 percent said that it went up, according to the survey conducted by the Department of Statistics of Lithuania. Some 95 percent of all respondents noted weak construction demand.
Robertas Dargis, president of the Lithuanian Real Estate Development Association, told The Baltic Times the goal for construction companies now was simply to remain afloat.
"Our sector has been hard hit by the crisis. The last few years saw a huge growth in demand 's especially in apartments and commercial properties, offices and warehouses. After the financial crisis hit the banks, they stopped financing," he said.
"A huge amount of projects that were started had to stop and now they are going into bankruptcy. In the last two years, there was a big demand for office space in Vilnius and Klaipeda. When the crisis hit the companies, they cut to make a smaller staff. A lot of buildings built are now half empty."
According to the results of the survey, 76 percent of respondents said the financial situation of companies worsened and 23 percent indicated that it remained unchanged.
The forecast for the number of construction orders in the coming months has remained the same as previously 's 59 percent of executives of companies predicted a decrease in construction orders and 4 percent of respondents said the number of construction orders would go up in the upcoming months.
Among those polled, 70 percent of the surveyed leaders of companies intended to dismiss employees and only 1 percent of respondents planned to increase their staff. A drop in construction prices was forecasted by 63 percent of heads of companies.
The Labor Exchange, the government body responsible for finding jobs for the unemployed, had around 193,000 people registered at the time TBT went to press.
Between May 22-29, 5,600 new people registered at the Labor Exchange.
STIMULUS PACKAGE
The construction industry, which in 2008 constituted 9.97 percent of the country's total Gross Domestic Product, is at the center of a multi-billion-government stimulus package aimed at giving work to companies.
Dargis said, however, that it could be too little too late. The government has set out ambitious plans to renovate hundreds of buildings, but this could be expecting too much from the industry.
"I am very afraid the renovation projects will only start next year. We were not prepared for so many houses to be renovated. These could be up to 100 apartments in each. This is ambitious and we are not ready."
He said people need to be informed about the opportunities and new laws need to be passed before construction could begin.
"They have just made the financial instrument for this and people will be cautious to take loans. The people who live in these places are old 's they are very passive in this. It will not be accomplished," Dargis said.
He said that the government would better spend its money renovating its own property.
"We are pushing the government to make PPP [public-private partnership] projects. More energy efficient buildings 's schools, hospitals, police and so on. They should prepare documents and start the projects for 1 or 2 or 3 billion [litas] here."
Aside from the stimulus package, the construction industry is expected to return to growth around 2012 or 2013.
