Construction woes

The German government has earmarked billions of euros in stimulus spending for large-scale construction projects. But that won’t be enough to make up for a general slowdown in the building sector. Many employers will be laying off workers before stimulus projects begin towards the end of the year, an industry group warned Monday.

Germany's construction industry is expecting a two percent decline for 2009 compared to last year, industry spokesman Hans-Hartwig Loewenstein said on Monday. Particularly worrisome is the drop in homes being built, a big job generator for the sector. So far this year, home starts are down by 3.5 percent and commercial construction is down by 8.6 percent compared to last year.

Wage dispute could turn ugly

A wage dispute also appears to be heating up. The IG Bau trade union announced on Monday that it will seek arbitration in order to come up with a new wage agreement for its 700,000 members. If those efforts collapse, IG Bau has said it will go on strike at the end of June. Workers are demanding a six percent pay raise.

There is concern among workers that their employers will try and use the financial crisis to squeeze wages even further.

Construction workers will not “shy away from an industrial dispute,” with employers IG Bau’s Dietmar Schaefers said.

Hopes for more stimulus measures

While the German government has said it has no plans for additional stimulus measures, the construction industry would like to see more government money go towards “green” construction projects. Loewenstein said he supports programs, which allows homeowners to get tax credits for adding insulation or solar to make homes more energy efficient.

The German government approved two stimulus packages worth more than 70 billion euros ($95 billion) for infrastructure projects, tax breaks and reductions in health care contributions. The government has also introduced a bonus to encourage car owners to scrap their old vehicles and buy new ones.