Major labour force issues for the construction industry
February 29, 2024
The construction industry had a total labour force of 2.15m in Q2 2023, equivalent to some 7% of the total UK labour force. This compares with the pre-pandemic level of 2.3m in Q1 2020 and the peak over the past twenty-five years of 2.6m in Q3 2008 just as the global financial crisis was starting. The employment trend can be seen from statistics provided by Statista here.
Within these statistics is a long-standing, endemic issue with both the overall size of the workforce and the availability of certain specific skills. This is now reaching crisis point. The Construction Industry Training Board has predicted that by 2027, the industry will require an extra 225,000 workers to meet UK demand.
According to the UK Trade Skills Index 2023, the construction and trades industry needs 937,000 new recruits over the next decade, including 244,000 qualified apprentices.
The consequences of these shortages are unfortunate: firms having to turn work away and pressure on profit margins and pricing from sky high labour rates.
How construction got to this point is a debate which involves Brexit, falling numbers of completed apprenticeships, poor workforce retention, the increasing role of advanced technology in the workplace and many other factors. What matters now is identifying and applying the solutions to put things right.
Changing the demographics
Currently, 35% of the construction workforce is over 50. This ageing workforce and the physical ability of some older workers to continue in the sector until they reach the official retirement age of 67 presents a major challenge. Without a pipeline of young talent in place, the UK will certainly not be able to meet construction demand once this cohort reaches retirement age and probably some years earlier.
Embracing diversity & improving workplace culture
Only 16% of the construction workforce were women in Q2 2023 and there are no comprehensive statistics for the numbers of people identifying as neurodiverse nor those from minority ethnic backgrounds. Not only are these issues the subject of increasing public scrutiny, but they are a clear barrier to the recruitment of the younger generation the industry so desperately needs and for whom these are important issues.
Find out more about the current state of the UK construction industry in our recent sector report.
Ramping up apprenticeship numbers to address skills shortages
One of the most concerning trends is the sharp rise in skills shortages across the construction industry, which has grown from 29% in Q1 2021 to 55% in Q4 2021, persisting throughout 2022 and beyond. Plumbers, bricklayers, carpenters, and electricians are among the trades experiencing the most significant shortages, which are having a substantial impact on the industry’s ability to complete projects and meet demand.
One of the root causes of the skills shortage is the decline in the number of completed construction apprenticeships, which since 2017/18 has fallen by around 11% annually. The UK Trade Skills Index 2023 picks up this key point and calls for the UK to ramp up the number of completed construction apprentices by around 25k per year to meet demand and avoid the skills gap worsening – that’s an increase of around 34% above levels achieved over the past five years.
Recognising technology issues in recruitment, retention and training
Like every other sector in the economy, construction is having to come to terms with a revolution driven by the breakneck development of AI technology and machine learning. Hiring and then keeping younger staff in this scenario depends on the ability to convince them that the firm is on top of these developments and most importantly of all, will support their staff in adapting to the ongoing change brought about by technology.
Immigration
First Brexit caused an exodus of skilled labour from the industry and subsequently the government’s determination to limit immigration has restricted the industry’s ability to recruit from overseas to fill skills gaps.
Following a report in March 2023 by the Migration Advisory Committee, the government added a number of key construction skills to the Shortage Occupation List in June last year, thereby opening the door to bringing in migrants to address the skills shortages currently plaguing the industry.
However, the complexities and potential pitfalls of using immigration routes to address staff shortage issues are well explained by immigration specialists, Michelmores.
Expert help and advice
Turning round the industry’s labour issues will be neither straightforward nor quick. Unfortunately, many of the solutions outlined above can be legal and HR minefields. Not every management team can hope to have the breadth or depth of expertise to avoid costly missteps. Knowing when to call in outside support is crucial. Properly briefed, their input need not be a cost, but instead a net benefit.
If you are seeking professional advice for your business, Opus is here to help. You can speak to one of our Partners who can discuss options with you. We have offices nationwide and by contacting us on 020 3326 6454, you will be able to get immediate assistance from our Partner-led team.