22 Jun 2020

Covid-19: Retail, construction sectors fear more job losses

10:41 am on 22 June 2020

While life has largely returned to normal for many in New Zealand, the worst may be yet to come in terms of business failures and job losses in many sectors.

plumber generic, file pic

Photo: 123RF

But with billions of dollars sucked out of the economy, the worst may be yet to come in terms of business failures and job losses in many sectors, including retail and construction.

Master Plumbers chief executive Greg Wallace said most tradies had more work than they could take on pre-Covid, which meant many have a big backlog of work.

"The rubber will hit the road really the end of 2020 and 2021, because projects take a long time to come to fruition in the construction industry."

Master Plumbers currently has 240 apprentices in its mentored masterlink scheme and their hours are back up to 87 percent of pre-Covid levels.

There has also been a huge spike in inquires following the government's free fees offer, Wallace said.

"But the reality is no-one can be an apprentice without an employer.

"So pre-Covid, we were taking on about 110 apprentices a month. Once the impact of Covid hit, that's dropped down to less than 10 a month."

Research by software company Tradify showed hours charged fell by nearly 90 percent in lockdown, but most tradies were now back up to almost 100 percent of pre-Covid levels.

However, the picture was very mixed with some industries, such as engineering and property maintenance still markedly down.

Tourist hotspots Queenstown and Rotorua were also depressed.

Registered Master Builders Association chief executive David Kelly said people who lost their jobs or whose employment prospects looked shaky would be unlikely to start renovating.

But with overseas holidays no longer an option, those with cash may choose to spend it making their homes more comfortable.

"Actually for some customers, it might be a perfect time to go ahead because of low interest rates and availability of builders."

The apprenticeship package was a huge boon for the industry, but Kelly said its success relied on demand.

"What will need to accompany that is that there is sufficient work for builders. So that's one of the things we're talking to government about, about incentives for work to go ahead."

The construction industry as a whole was lobbying the government to follow Australia's lead in giving cash grants to people to build new homes or renovate.

Specialist Trade Contractors Federation president Graham Burke said there was huge variation between sectors, with some tradies busier than ever, and others - such as civil construction - seeing forward orders dry up, as councils cut costs.

Everyone was keen to see more of the government's "shovel ready" projects announced but it was important to keep it all in balance, he said.

"We need to be really careful with government spending in particular because they are such a big client, that they don't do a whole lot all at once and then back off, because that accentuates that boom and bust cycle."

In the retail sector, it was more bust than boom for the foreseeable future.

Retail Association chief executive Greg Harford said one in four businesses were at risk of going under and 60 percent were not confident they would survive long-term.

"In the medium term we're expecting about 6700 businesses at serious risk, so that's a very large number, and it's possible we could see job losses of between 17,000 and 65,000 over the next six to eight months."

It was up to the government again to boost consumer confidence, with either cash in the form of so-called helicopter payments (lump sums paid out to encourage people to spend) or cuts to GST or income tax, Harford said.

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