By Belén Carreño and Clara-Laeila Laudette
MADRID, Oct 21 (Reuters) - Labour shortages and supply bottlenecks will likely undermine Spain's ability to use EU funds to kick-start its construction industry, further threatening the country's economic recovery from COVID-19, the main building association said.
Construction firms are waiting to compete for around 6.8 billion euros ($7.91 billion) in housing rehabilitation projects funded under Spain's EU-financed pandemic recovery plan.
But rather than celebrating the bonanza, many companies have warned that they do not have enough material or workers to handle the extra contracts - shortages that will drive up costs when the work starts, exacerbating the country's economic woes.
"We need labour and the European funds have not yet arrived. When they arrive, we are going to have strains," National Construction Confederation chief Pedro Allen told Reuters.
Builders have been warning of difficulties in finding wood, aluminium and other key materials. The UGT-Fica labour union told Reuters building firms are short of about 700,000 workers for the upcoming deluge of projects.
"There may be digestion problems," Allen said, referring to problems in absorbing the EU funds.
That, along with "the increase in the price of materials and lack of workforce will cause bottlenecks which may slow down the pace of recovery", he added.
Construction has long been a major contributor to Spain's economy and represented around 10% of Spain's GDP until the housing bubble burst in 2008.
At its pre-crisis peak it employed 3 million people, though that shrank to a low of barely 900,000 workers at its lowest point in 2013.
Since then, the workforce has edged back to around 1.3 million, but employers and unions say there is still a shortage of skilled workers, particularly plumbers, carpenters and bricklayers.
Spain, alongside countries across Europe and beyond, has been suffering from worsening chokepoints in the global supply chain, compounded by soaring energy prices.
Production costs have surged up to 25% for cement due to the rise in energy prices in Spain, industry group Oficemen said on Wednesday. Cement exports fell 6% year-on-year in September, it added. ($1 = 0.8593 euros) (Reporting by Belén Carreño, Clara-Laeila Laudette and Corina Pons; editing by Andrei Khalip and Andrew Heavens)