The temporary reduction in employers’ costs has been taken into account as from April, and central government compensation to employers for sick pay costs as from June, which has had a major impact on total wage costs. Wages and salaries account for about 40 percent of the Construction Cost Index.

Developments between June and July 2020

The Construction Cost Index for multi-dwelling buildings increased by 2.9 percent in July 2020 compared with June 2020. In the corresponding period in 2019, the Construction Cost Index remained unchanged compared with the previous month. Contractors’ costs, which account for more than 82 percent of the Construction Cost Index, increased by 3.0 percent between June and July 2020. This increase mostly comes from a return by employers’ costs to the same level as in the beginning of the year. This is why contractors’ wage costs increased by 9.4 percent between June and July 2020, which led to an increase of 2.0 percentage points for the total index in that period.

Contractors’ other costs, which include wage costs, increased by 3.2 percent. Costs in the group ‘building materials’ rose slightly, largely due to rising costs of electric material and other building materials. Contractors’ costs in the group ‘transport, fuel and electricity’ fell by 0.2 percent. This decrease came from a 5.0 percent drop in the cost of electricity compared with June. Costs of diesel oil and heavy goods transport increased by 3.5 percent and 0.6 percent respectively.

Over the past month, investor costs rose by 2.8 percent. Investor costs are also affected employers’ costs return to the same level as before the support measures. The increase in investor costs also came from higher interest costs.

Developments between July 2019 and July 2020

The Construction Cost Index for multi-dwelling buildings decreased by 0.1 percent between July 2019 and July 2020. Contractors’ costs fell by 0.8 percent in July. This decrease in contractors’ costs led to a decrease of 0.7 percentage points for the total index in the same period.

Contractors’ costs for wages and salaries decreased by 2.7 percent in July. This decrease came from central government compensation to employers for sick pay costs. Wages and salaries fell by 11.0 percent in June, as the temporary reduction in employers’ costs also affected the decrease. On an annual basis, wages and salaries in May amounted to -8.5 percent. In May, data for calculating the sick pay cost was lacking.

Contractors’ other costs and costs in the group ‘transport, fuel and electricity’ decreased, while costs of machinery and building materials increased. White goods and material for painting accounted for the largest price increase in the building materials group.

Investor costs increased by 3.1 percent on an annual basis, which led to a decrease of 0.6 percentage points for the total index in the same period. This increase was mostly due to higher interest costs. The increase was offset by central government compensation for sick pay.