Spain goes back to building homes

The once-ravaged Spanish construction industry is creating jobs at the fastest pace in almost three years.

Well-paying jobs will take longer.

The country that used to build more houses than France, Germany, and the UK combined added 32,300 construction jobs in the second quarter, the fifth consecutive period of expansion.

Unions agreed to a minimum-wage increase that’s below the national average after a two-year freeze as Europe’s second-highest jobless rate favours employers.

“During the good times, you’d get paid €8 an hour, maybe €10; now it’s €5, if you have a job,” said Fernando Fernandez, a 38-year-old foreman who landed his first construction job in 1998.

Foreign investors are seeing opportunities to build as Spain’s economy rebounds from a debt-fuelled property collapse that left the country with a surplus of 1.4m homes.

Increasing construction and a rise in home sales isn’t yet trickling down to workers, who face longer hours, lower pay and little job security.

US private equity firm Varde Partners this month bought Banco Popular’s 25% stake in developer San Jose Desarollos Inmobiliarios as it bets on a recovery.

Minneapolis-based Varde will carry out a €60m capital increase in San Jose to finance the construction of 1,500 homes across Spain, following Lone Star Funds, which is investing €500m buying land to build houses.

Spain’s economy is expanding at the fastest pace in eight years and twice the average for the eurozone following the worst recession in the country’s democratic history.

Despite the progress, the IMF this month expressed concern about “very high” unemployment, low productivity and high levels of debt.

Joblessness stands at about 22%, second only to Greece.

The Spanish construction industry will grow by 3% in 2015 after seven years of decline, with most of the increase coming from refurbishment of residential and commercial buildings and about 45,000 homes being built, according to a report by Spanish credit institution Cesce.

Growth will accelerate in 2016, it said, without being more specific.

Home sales surged 17% in June from a year earlier, the biggest gain since March 2014.

To put the job gains into perspective, the industry employed about 1.1m people as of June compared with 2.7m jobs at the market’s peak in the first quarter of 2008.

The 59% drop compares with falls of 25% in industrial jobs, 15% in agriculture and 1.4% in services.

Construction wages fell 4.4% from their peak in 2010 through 2014, the biggest drop among professions in Spain.