An Impact Analysis of Construction Sector on Economic Growth and Household Income in South Africa

Abstract

Application of Social Accounting Matrix (SAM) in the study has enabled the insightful analysis of the relationship between construction industry, economic growth and household income in South Africa. Construction sector plays a key role in the economy as it results in infrastructure stock/capital accumulation which leads to increased economic social and economic activities. Construction industry further contributes to employment, household income and economic growth. Activities in this sector shows that increased productivity in the construction industry will result in increased economic growth. Further increase or activities in this industry will absorb more of semi-skilled and unskilled labours more compared to highly skilled labourer within the sector. High income household will benefit more from construction industry activities followed by medium income households with low income households benefitting less. Clearly, highly skilled labourers are occupants of high income households and the study therefore shows that though few labours is absorbed from high skilled labour market, they benefit more in terms of income. However, noting the impact construction industry is able to make in the economy, further investment in infrastructure is encouraged as it results in more construction activities which have both the short to long term economic benefits to the country.