South Africa’s construction industry saw its average profit margin plunge from 5% in 2009, to 2.8% in 2011, said Statistics South Africa (Stats SA) statistician-general Pali Lehohla on Wednesday. Income in the sector reached R267-billion in 2011, down from R285-billion in 2009, the year the industry probably benefited most from the construction of infrastructure for the 2010 Soccer World Cup.

The local construction industry in 2011 earned the smallest profit margin of all nine industries it was compared with for the purpose of the study, noted Lehohla, with mining and quarrying at the top, recording a profit margin of 16.5%, followed by finance, real estate and business services, at 12.1%.

Lehohla released the newest Stats SA report on the construction industry, following on from a previous 2007 report, in Pretoria.

According to the new report, it appeared as if parastatals had been the big spenders over the last few years.

The share of income generated through services rendered by the construction industry to the private sector declined from 71.9% in 2007, to 58.5% in 2011. However, revenue generated from major public entities (parastatals) increased from 14.7% in 2007, to 23.6% in 2011, with national, provincial and local government upping their share from 13.4% in 2007, to 17.9% in 2011.

Large construction companies earned 64% of industry revenue in 2011, medium-sized enterprises 21%, and small and micro enterprises 15%.

Gauteng generated the most revenue for the construction industry, at 40.4% (down from 47.5% in 2007), followed by the Western Cape, at 13.7% (down from 16% in 2007).

Limpopo (6.8%), Mpumalanga (9.4%), the Free State (4.4%), KwaZulu-Natal (11.2%) and the Northern Cape (2.7%) all showed improvement from 2007 numbers.

Lehohla attributed the geographical shift to a number of large projects outside Gauteng and the Western Cape, such as the construction of new power stations in Mpumalanga and Limpopo.

The Stats SA report also noted that the construction industry’s contribution to the country’s gross domestic product (GDP) dropped from 4% in 2009, to 3.8% in 2011.

Lehohla said employment in the formal and informal construction sectors amounted to 1.054-million people in 2011, down from 1.16-million people in 2008.

Men made up 89.3% of employees in the sector in 2011, and women 10.7%.

One area where the construction industry could show improvement was in employee benefits.

“You are much better off as a miner than you are in construction,” commented Lehohla.

Only 11.3% of employees in the construction industry had medical aid, compared with 76.9% in the mining industry. Just more than 43.3% of construction industry employees had paid annual leave, compared with 94% in the mining industry.

The 2011 Stats SA report used data from a sample of 4 000 private and public enterprises operating in the construction industry. The questionnaires were completed for the financial year of the enterprise, which could end on any date between July 1, 2010, and June 30, 2011.

It focused only on income generated in South Africa, said Stats SA large sample surveys manager Tshepo Pekane.

Lehohla explained that 2011 numbers were used, as “data takes time to process”.

Pekane added that the report launched on Wednesday also served as a follow-up to the study’s first results, released last year.

Lehohla made little reference to the fact that the Competition Commission earlier this year fined 15 major construction firms a collective R1.46-billion for what it called “rampant” collusive tendering related to projects concluded between 2006 and 2011, noting that Wednesday’s briefing should be focused on the Stats SA report.