Ticino: No recovery in sight for the construction industry

“Large construction sites have become rarer, but we see a greater need for rehabilitation work,” argues Nicola Bagnovini, director of the Ticino section of the SSE.

After the construction industry in Ticino survived the pandemic relatively well, there is still a risk of uncertainty for some time between galloping inflation and rising mortgage interest rates.

“I am concerned about the consequences of the war in Ukraine,” Nicola Bagnovini, director of the Ticino section of the Swiss Entrepreneurs’ Confederation (SSE), told AWP on the sidelines of the general assembly held in Mendrisio on Thursday. In his opinion, even if the conflict is resolved, prices for inputs, especially materials and energy, will not return to 2020 levels any time soon.

Construction activity is going fairly well in the Italian-speaking canton, as shown by the recovery in building permit applications, which have been declining since 2017 and reached almost 3,500 applications in 2021, although the volume has been more or less stable since then. three years around 2 billion francs.

“Large construction sites have become less frequent, but we see a greater need for renovation work,” argues Nicola Bagnovini. Of the approximately 120,000 buildings that have been built in Ticino over the past 100 years, 80,000 were built before 1980. If you consider that the energy consumption of a modern building is 4 to 7 times lower, there is great potential in sanitation.

All the more so since “the renovation rate is currently below 1%, but it should be tripled in order to achieve the climate neutrality targeted by 2050 as part of the energy strategy developed by the Federal Council,” says the manager.

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The housing stock in Ticino currently comprises around 7,000 unoccupied apartments. With a vacancy rate of 2.8%, Ticino occupies the penultimate place in this area – just behind Solothurn with almost 3.2% – far away from the national average, which is around 1.5%.

The phenomenon has been exacerbated in recent years by the rise of investors who have shifted their liquidity to the real estate market due to negative interest rates. However, the prospect of a rate hike is not positive because “it will complicate the situation for investors,” warns Nicola Bagnovini.

The payroll of SSE-related companies south of the Alps has slowly fallen over the past ten years to CHF 325 million in 2021. This is due to the reduction in permanent positions – currently around 6,000 – in favor of temporary workers.

The cantonal collective labor agreement (GAV) prohibits both wage planning and the replacement of permanent employees by temporary workers: “On construction sites, the maximum rate is set at 10%,” assures Nicola Bagnovini. A new nationwide CCT is currently being tensely negotiated, the previous one expires at the end of the current year.

The Ticino section of the SSE criticizes the unions for reducing the social partnership to a “catalogue of demands”, while the industry is “at the forefront”, among other things with an average monthly wage of over CHF 5,500 for 13 months’ salary and blanket early retirement from the age of 60 Years of age with more than 70% of the last salary.

Recognized exceptional situation

The Ticino government has already recognized the extraordinary nature of the price increase within the meaning of Art. 373 of the Swiss Code of Obligations (OR) and allowed companies – but also work agents – to reconsider contractual obligations.

“So far I have not heard of any public contracts being cancelled, on the contrary, the municipalities have reaffirmed their commitments in terms of investments,” assures Nicola Bagnovini, acknowledging that the question is different for the private actors and not in the same way from the Impact on employment affected.

For the time being, no construction site has been stopped in Ticino due to a lack of material. “The rebar we use comes mainly from Italy and that of our German-speaking colleagues from Germany,” says the manager, but the current situation affects the entire supply chain. If necessary, companies should resort to partial unemployment measures again, as was the case during the pandemic.

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