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January 30, 2006 - NEWS RELEASE
Double digit construction inflation predicted to continue
Burnaby, B.C. – Recently completed research shows that the construction cost inflation experienced over the last five years is unlikely to abate for the foreseeable future according to Philip Hochstein, President of the Independent Contractors and Businesses Association of BC.
“We have just completed a detailed analysis of where we think construction costs are going and why,” says Hochstein. “And the short answer is that the 45% increase in costs over the past 5 years is likely to continue for the next five with average yearly inflation of approximately 10%.”
The reasons cited for construction cost escalation include: upward pressure on wages after 20 years of declining real incomes, sharp increases in construction material prices driven by world commodity prices and declining labour productivity due to the high ratio of new entrants into the industry.
“We are in a unique market not seen since the late seventies,” says Hochstein. “The labour market is extremely tight because construction is busy across the country, BC volumes continue to grow, and all costs are going up at the same time that our productivity is dropping because of all the new trainees we are taking on.”
Hochstein is calling on both the provincial and federal governments to work together on a strategy to streamline the immigration process to bring young skilled trades into BC to raise productivity and help mentor all the new apprentices being hired into the industry.
“The apprentices we are hiring now will supply the skilled labour a few years down the road, but the only way to bridge the immediate gap is to look beyond our borders and cut through the red tape that prevents or delays the infusion of much need skilled workers into the province,” says Hochstein.
Hochstein adds that the 1990s, where contractors and workers both saw their compensation cut, set unrealistic price expectations for construction clients and that cost inflation is the new reality for the short to medium term.
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Click here for background information
For more information, please contact:
Philip Hochstein, ICBA President
Office: 604.298.7795
Cell: 604.880.7700
Email: philip@icba.bc.ca
| ICBA is the voice of BC's construction industry. For further information, or if you have any questions or comments regarding this article, please contact ICBA. |
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