Insolvency risk in construction is growing

Insolvency risk in construction is growing

High construction costs and labor shortages are hurting construction companies. Insolvency threatens small and medium-sized businesses in particular.

Damian Kazmierczak, chief economist at the Polish Association of Construction Employers, says the construction industry is heavily dependent on workers from the East. In 2021, there were about 373,000 Ukrainians working in the sector. After the outbreak of war with Ukraine, 20-30 percent of them disappeared.

In addition, through the war, the construction industry is struggling with rising energy and fuel prices. There are also major problems with the availability of construction materials. There are shortages of steel, wood products and cement, among others.  As a result, prices for virtually all building materials are rising dramatically. On top of that, inflation is driving upward pressure on wages. All this is pushing up costs at construction sites sharply. Companies are struggling to maintain the profitability of previously acquired contracts. The situation is most difficult in small and medium-sized companies, and it is among them that the biggest wave of bankruptcies and insolvencies can be expected. However, large construction companies are also experiencing considerable problems.


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