CONSTRUCTING CAPITALI$M
TURKIYE
Crisis of construction sector deepening

The crisis experienced by the construction sector, which has been functioning as the locomotive of the Turkish economy in recent years, is deepening.

ANF
ISTANBUL
Sunday, 6 Aug 2023

The AKP government used the construction industry illegally to increase its political power, to maintain its power and, at the same time, to increase its personal wealth. The AKP dragged both the industry and the country into political and economic disaster. The construction sector, which was the locomotive of the Turkish economy in recent years, is also experiencing a deep crisis. The AKP wanted to end or minimize all kinds of production mechanisms except the war economy.

Producing society is also a questioning society. And this was a problem for the AKP government, which invented different mechanisms to avoid any social confrontation. In recent years, the contraction process in the construction sector has accelerated due to the effects of developments in the world (such as the Covid pandemic and war). The uncertainty and contraction in a sector with high employment capacity, actually meant that unemployment in the construction sector reached its peak. This caused hundreds of thousands of workers to become unemployed, forcing many to emigrate.

While there was a partial activity in the construction sector of the coastal areas as a result of the increasing demands of foreigners to acquire property, the sector came to a standstill, especially in Kurdistan and many provinces of Anatolia, with the increase in input costs and the deepening of the economic crisis.

The contraction in the construction sector has been continuing for the last 5-6 years. When the data of TURKSTAT and the professional chambers of each province are examined, it is possible to see that the construction sector is completely at a standstill. Employers working in the field of construction point out that the sector has been inflated by the AKP to create capital, rather than social needs, and state resources have been used for this purpose, especially in the last 15 years.

A contractor interviewed by ANF about the situation in the construction industry and who does not want his name to be given, summarized the situation in the industry as follows: “Resources have to be transferred for many years to projects such as roads, hospitals, airports, bridges and similar projects built with this model. In doing so, the government created a capital group of its own. It has a capital group at its disposal that it can use as it wishes when it needs it. Especially in elections, important tasks fall on this group. It met the electoral economy it needed in cities outside the metropolises by using these groups. It should not be forgotten that the construction sector is a sensitive sector that can shrink very quickly as well as grow quickly. At this point, the sector, which has entered the process of contraction due to the improper use of economic resources, will continue to shrink as it will not be able to provide stability unless there is a political change in management.”

Sector shrinking

Underlining that the contractors who have been doing business with the public for a long time have problems with their progress payments, the contractor said: “It does not seem possible for the segments that feed the government (economic and political) and that are fed by the government (power and economy) to be affected by this problem. The affected segment is the laborers without unions, who are condemned to lack of job security, low wages, small-sized contracting firms and small-scale subcontractors working for large firms.

With the courage given by the political uncertainty before the elections, even participation in many public tenders could not be achieved. Unemployment reached its peak when the public works came to a standstill and the irregularity in the payments in the ongoing works caused the works to come to a standstill and partially to slow down. The sector has affected the general unemployment rate in proportion to its economic size.”

Housing prices increase

Connecting the rise in housing prices and rents to the results of the collapsed economy, the contractor said: “There has been a tremendous production problem in housing in recent years. This sector is experiencing the reflections of the state of the country's economy at a peak level. In other words, since the supply could not be stabilized, the accumulated demand became unmet. The deepening crisis continues to grow by the day. They could not find a solution to the deepening crisis by providing resources. They ignored the warnings of the economists, causing the crisis to deepen. The vast majority of the country continues to experience this crisis to the bone. As in all sectors, the construction industry does not seem likely to recover quickly. As a matter of fact, we are far from a solution that can stop the price increases of houses, which are supplied in very few numbers, and thus prevent the increase in rents. All in all, yesterday was better than today.”

Foreign investment meant temporary recovery in coastal areas

Stating that the construction sector in the coastal areas is partially active due to excessive acquisition of property by foreigners compared to Kurdistan and other interior regions, the contractor explained: “The construction seems more lively in coastal areas. However, this is a temporary situation. It is a fact that the rich in Ukraine, Russia and Syria, especially due to the war, see the coastline as a safer region. These people acquire property in coastal areas. They are more in demand because they can be acquired without any problems. In recent years, there has been a movement due to the preferences of those who come from abroad and launder money. But now we can say that the bottom of it has come to an end.”

Stating that construction works such as dams, airports and city hospitals, which are carried out under the name of infrastructure, are planned for a single purpose, the contractor added: “Capital groups have been created to build and run these huge projects. These capital groups are also unofficial partners of the government. It is their own capital. These infrastructure projects are difficult to do in the country again. Because it doesn't seem possible with the current economic crisis. However, those who do these projects will be fed by the state for years. They will receive all the losses from the treasury of all the figures under the contract. But there is another unknown and unspoken problem. It is the repair of these gigantic projects. The repair of these huge projects will also put a serious burden on the treasury. Because these projects were built on unsuitable grounds with the understanding of rent. This will also have an extra economic burden.”