Weak growth in UK construction, shortage of workers

Should a hard Brexit materialise and the points-based system for non-EU migrants be extended, the UK could miss out on additional 215,000 migrant workers by 2020  

Andy jalil –
andyjalil@aol.com –

Having begun the year strongly as house-building dominated activities with the value of new building contracts rising to £6 billion, Britain’s construction industry then rapidly ran into difficulties.
Weaker housing growth weighed on the industry in March despite the civil engineering sector continuing to benefit from big infrastructure projects. According to IHS Markit, the construction purchasing managers’ index (PMI) dipped to 52.2 last month from 52.5 in February.
The measure of growth in the sector fell to its joint-lowest since September, when the industry moved into expansion, indicated by a reading above 50.
However, almost half of the constructions companies surveyed remain confident of a rise in business activity in the next 12 months, against only nine per cent expecting a decline in business. Construction firms account for around six per cent of the UK economy’s output.
The survey also showed some signs strong inflationary pressures are easing from January’s highs. Producer price inflation rose by 3.7 per cent in the year to February as the devaluation of sterling raised import prices.
Director of customer relationships at the Chartered Institute of Procurement and Supply, Duncan Brock, said, “Overall purchasing activity in the construction sector was disappointingly tame, shackled by a lack of new orders and rising costs.”
However, the increase in work on civil engineering projects — such as London’s Crossrail — was the fastest of the year so far, offsetting some of the weakness in housing and the business sector, which saw growth stay steady. Expansion in the construction sector had plummeted in the aftermath of the EU referendum vote, as confidence surveys showed a sharp decline in sentiment among both businesses and consumers. However, the retreat of Brexit-related anxieties and a strong economy have helped the sector.
Shortage of workers in the sector is a matter of growing concern.
A new report from engineering and consultancy firm Arcadis has examined the extent of the skills gap across the UK’s entire infrastructure and housebuilding workforce.
It said the gap is independent of any potential effects of Brexit, which would “exacerbate the situation”. Should a hard Brexit materialise and the points-based system for non-EU migrants be extended, the UK could miss out on additional 215,000 migrant workers by 2020.
The research found that to meet forecast national infrastructure requirements, an additional 36,500 people will need to be employed every year.
James Bryce, Arcadis Director of Workforce Planning, said: “What we have is not a skills gap; it is a skills gulf.” Around 8 per cent of construction workers in the UK come from the rest of the European Union and could be lost to the workforce as a result of Brexit, the Royal Institution of Surveyors has found.
It warned that 176,500 jobs could be lost as a result of a hard Brexit, jeopardising a construction pipeline worth £500 billion.
While 8 per cent of construction workers across the country are EU migrants, in London the figure rises to an average of 25 per cent.
However, Chief Executive of Housing Association London & Quadrant, David Montague said that on some sites up to 70 per cent of the workforce was made up of EU migrants, and Tony Pidgley, the chairman of house builder Berkeley said before the EU referendum that 50 per cent of his subcontractors were from Eastern Europe.
This threat comes on top of the loss of workers in the ever-shrinking construction industry. Due to an ageing population and a lack of new entrants, put off by the boom and bust cycle, the workforce will decrease by 20pc-25pc in the next ten years.
Last month, Arcadis said the UK needed to hire more than 400,000 workers every year for the next five years to meet demand for house building and infrastructure projects, without the threat of foreign workers departing as a result of Brexit.
Head of UK policy at Royal Institution of Chartered Surveyors (Rics), Jeremy Blackburn, said: “A simple first step would be to ensure that construction professionals such as Quantity Surveyors feature on the Shortage Occupation List (whose visa applications would be prioritised).”
Rics has also called on the government to seek out and attract private investors for construction projects, provide skilled international workers with visas, and set out a clear timeline in order to ensure continued investment in house building and infrastructure.