UK Construction Skills Shortage Drives Up Labour Costs

In 2015 the construction sector was the second largest UK employment sector, accounting for a quarter of job growth.  However, the industry faces problems as an expanding market due to rising construction material costs, rising labour costs, and a lack of qualified technical construction professionals to enter the roles that need filling.

72% of employees said there’s a real gap between work waiting to be done and staff available to do it, according to the Construction Industry Training Board (CITB).  The UK construction workforce needs to grow by 9,650 workers a year to meet current targets with engineering particularly feeling the pinch.  Current figures estimate an extra 48,000 engineers will be needed to meet the expected population growth.

Why are Technical Job Roles Not Being Filled?

According to Building UK's State of Trade Survey, over 50% of the reason for difficulties filling vacancies was due to either lack of required skills or experience.  Lack of qualifications accounted for just under 50% of cases for not being able to fulfil a new role!

The closing gender gap could help to resolve some of the skills gap over time.  According to a survey conducted by Randstad CPE, women now account for 20% of the entire construction workforce and this is expected to rise to 26% by 2020. Critically, the number of women in senior construction roles has also leapt from 6% in 2005 to 16% in 2015.

Building Costs Increase – London Now 3^rd Highest in the World

To add more frustration, building costs have increased with almost 40% of contractors reported a rise over the past 3 months around two thirds reporting a rise over the last year. In fact, according to the Turner & Townsend International Construction Market Survey 2016, construction costs in London are now the third highest in the world per square metre behind New York and Zurich, having increased by 5% in the 12 months leading to Spring 2016, and expectations stating a similar rise in costs over the next 12 months also.

Cost of Labour Increases

Building costs aren’t the only increasing costs though as the cost of labour is also increasing in the same time frame, as reported by the majority of contractors. We have experienced counter offers ourselves from construction companies attempting to keep quality candidates we are assisting to find work, and we assume this is more common in the current market due to the fact there is a large shortage of the right skill sets, meaning they would find it much harder to find a replacement candidate. The competition for good candidates in the current market is fierce which will only drive labour costs upwards.

SUMMARY

So the situation in London is that there continues to be a high level of demand for construction works, but a lack of capacity in the supply chain to match that demand at the rate it wants. However, even with these frustrations, construction companies remain positive with the majority expecting their workloads to rise further over the coming 12 months. The problem is being able to increase their maximum capacity to be able to cope with the increasing demand for construction works on the UK.

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Adam Cadwaladr
Recruitment Consultant – UK