The Chamber of Construction, chaired by Alejandro Ruibal, is moving towards a preliminary agreement with SUNCA that gradually reduces the workweek from 44 to 40 hours without a loss of salary, with countermeasures and some flexibility, in a multi-year agreement. It is presented as a balanced advance. In practice, it is an artificial increase in labor costs that distorts the sector, benefits large companies with state contracts unevenly, and ultimately gets paid for in housing prices, hitting low-income households particularly hard.
The cost mechanism
Reducing hours while maintaining the same salary raises the hourly cost of labor by nearly 9%. In Uruguayan construction, labor and social charges account for between 45% and 54% of total costs. This increase does not dissipate: it is passed on to production costs. The closest international evidence—a study by the Brazilian Association of Incorporators (Abrainc) and the consulting firm Ecconit that analyzed exactly the same change from 44 to 40 hours—estimates a 10% increase in the total cost of projects and a 5.5% increase in the sale price of new homes. Over a ten-year horizon, once the reduced workweek is consolidated and accounting for delays in construction, lower supply, and possible rigidities, the additional impact could range from 5% to 10% compared to the scenario without the agreement.
This is not a small number. For a home costing $150,000, it represents an additional $8,000 to $15,000. And it is a permanent floor: it does not disappear over time.
Who can pass on the cost and who cannot
Here the decisive asymmetry appears. Large companies that bill massively to the state—like Saceem, of which Ruibal is the general director—have a comfortable escape valve. An approximation of identifiable state contracts since 2018 (Viaduct of the Port Rambla, participation in the Central Railway, PPP Educational II, Routes 21 and 24, and others) exceeds $440-480 million. With that volume, the labor cost overrun is incorporated into the certifications, and the treasury pays for it. The state, which does not face the discipline of a private client, usually accepts. The company itself recognizes a share close to 10% of the public works market.
Medium and small companies, on the other hand, compete in the real market. They cannot “add everything to the invoice.” They absorb the increase in their margins, lose contracts, or reduce staff. The preliminary agreement, therefore, not only raises costs: it further concentrates activity among those already operating under the public umbrella and weakens those who generate most of the private employment in the sector.
The blow to the poorest
Housing is the most significant expense for low-income households. A 5.5% (or more) increase in the price of new units reduces the number of homes that can be built with the same social housing resources and pushes up the entire price and rent structure. The Brazilian study calculated that the same change would make financing affordable housing unfeasible for 1.6 million families. In Uruguay, the effect is analogous: fewer units per public peso invested, longer queues, and an even greater proportion of income from the lower quintiles allocated to housing.
When costs rise, developers prioritize higher-margin segments. The supply of affordable housing contracts precisely where it is most needed. The poorest not only face higher prices; they face fewer options.
The lesson of incentives
What is visible is more free time with the same income for a group of workers. What is not visible is the diffuse cost that falls on the rest: companies that stop hiring, projects that are postponed, more expensive homes, and a transfer of resources from the private productive sector to public spending. Markets adjust hours according to productivity and voluntary preferences. When that adjustment is replaced by a generalized long-term agreement, a rigidity is introduced that privileges some at the expense of overall efficiency.
The preliminary agreement is not neutral. It consolidates a permanent overcost on housing construction, protects large firms with privileged access to the state, and particularly harshly punishes those with the least capacity to absorb the blow. In ten years, new housing will cost between 5% and 10% more just because of this effect. That difference is not abstract: it is measured in families that cannot meet the mortgage, in rents that consume a larger part of the salary, and in a scarcer supply of social housing.
