SPENDING on construction could exceed R100bn this year due to low interest and inflation rates, says the Master Builders Association of SA.

This would represent an increase of about 75% on expenditure of R57bn only three years ago.

There was an increase of about 150000 workers over the past year, the association said in its annual report, released this week.

The association, one of 12 industry bodies, said the construction sector employed 813000 people in March this year.

Reduced liquidation figures further underscored buoyant conditions in the industry. The association quoted Statistics SA liquidation figures for the industry at 554 in 2001, declining to 254 last year.

The bulk of the growth in the construction industry had occurred mainly in residential and retail developments, the association said

But rising building material and labour costs as well as shortages of both these resources were of concern, said the association.

Opinions on the magnitude of skills shortages differed, but "all would undoubtedly agree that it exists", said Pierre Fourie, CEO of the Master Builders Association of SA, in the report.

He said skills shortages had been identified across the spectrum of the construction industry, from management to tradesmen.

The association quoted from a report by building economist Johan Snyman, saying that shortages of skills and materials were driving up building costs.

Bottlenecks in the supplies of labour and materials posed a "serious threat" to the industry’s profitability, said Snyman.

He said options such as importing skills from developed countries and accelerating local training programmes were among the options that had been considered.

Black economic empowerment remained the single most important issue to shape the future of the industry.