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Within three years (2008-2011) 157,000 jobs were cut in the construction industry - more than in any other sector of the Greek economy - ie one and half times more than the jobs created for an entire decade (1998 - 2008).

In particular, the 295 thousand employees in the construction industry in 1998 had increased to 400 thousand by 2008 only to drop to 242 thousand in the third quarter of 2011.

One of the main reasons for this dramatic development is the continuous shrinking from one year to the next of the Public Investment Programme as well as the continued cuts within the same year. What is typical is that, in the budget for this programme in 2011, 8.5 billion euro were provided, but it ended with 6.6 billion euro after continuing layoffs during the year (the reduction was 22.3% or 1.9 billion euro) .

After the vote of the second Memorandum, the Public Investment Programme for 2012 was reduced by a further 400 million euro (from 7.55 to 7.15 billion euro).

The reduction in the programme - in combination with the general economic crisis - led to the point that one in four of all construction companies, which had worked in 2004, left the industry.

In particular, from the register of construction firms in the period 2004-2011 (a total of 712 companies) 176 were deleted, and out of them 37 were deleted only in the last year.

These data were accounted for in the published report of the Association of Greek construction companies for the second half of 2011.

The report describes in detail not only the collapse of the construction industry, but also helps to explain to a great extent the dramatic deterioration in the overall economic activity in the country. In particular:

• the production index in construction (general for the industry) has continued to shrink for 12 years now, but in the third quarter of 2011 it decreased by 9.4% as compared to the same period of 2010,

• The share of the construction sector in the formation of the GDP has been declining for nine consecutive quarters, reporting its lowest value for the last 12 years - only 3.9% in the third quarter of 2011, as compared to the 4.8 percent during the same period in 2010 and 8.8 percent in the fourth quarter of 2006.

• total gross investment in the construction industry registered a decrease of 19.7 percent in the third quarter of 2011 as compared with the same period in 2010, bearing in mind that their downward movement has continued for 11 consecutive quarters to reach only 4 billion, i.e. its lowest value for the last 13 years.

As a consequence of all this, companies in the industry are facing very serious problems which are as follows:

- Significant increase in the percentage of construction companies reporting losses in 2010 - 29.3% as compared with the 17.2% in 2009,

- Increase of the average amount of short-term debt by 6.2% in 2010 as compared to 2009 - from 8.4 million euro to 9.0 million euro and as a result, each company owed 11.8 million euro in 2010 as compared to 10.8 million euro in 2009

- Reducing the average turnover of the companies by 16.4% in 2010 as compared to 2009, from 12.1 million euro to 10.1 million euro.

This unfavourable trend is a consequence of:

- The 28.2% reduction in the new tenders with a budget of over 2 billion euro in 2011 (370 construction projects with a budget of 3.5 billion euro) as compared to 2010 (516 construction projects with a budget of 3.5 billion euro), and

- The apparent reduction in orders for private construction, calculated according to the number of building permits that for the first 10 months of 2011 amounted to only 18.4 million square metres, which is the lowest value in the last 31 years, and the second lowest value was registered in 2010 - 29 million square meters

According to the estimates of the Association of Greek construction companies among the main causes of deterioration of the Greek economy, and hence the serious problems the construction industry is facing, are:

- Uncertainty or inability to implement the necessary changes in the public sector (removal of the unnecessary services, privatization, following transparent procedures on recruitment, reducing the salaries of civil servants)

- The inability for an effective and reliable tax mechanism to be drawn up for three years in order to reduce tax evasion and collect taxes imposed without a delay, in the future

- The inability to absorb for two years the blocked funds from the National Strategic Reference Framework for the implementation of infrastructure projects and other activities to control unemployment,

- Inability to "inject" fresh capital into the market.

According to the report it should be understood that the reduction of the public investment programme as a way to reduce the deficit is a particularly onerous practice, as it results in the reduction of the GDP and this is for a long period of time, so the end result is exactly the opposite of the aim pursued. An irrefutable proof of this is the recession in the country continuing for five consecutive years.

Today everyone accepts that in order for the efforts for a fiscal adjustment of Greece to be successful there must be prospects for economic development, which is the basic prerequisite for the debt reduction over the long term. A major role in these perspectives for development will need to be played by public infrastructure investments either with public funds or through the National Strategic Reference Framework and other structural funds. They will have to be invested in small and medium-sized infrastructure projects with immediate absorption and multiplier effect.