UK market intelligence: Call for government support in construction recruitment to help maintain productivity levels
As the UK construction market faces rising interest rates, continued inflation, and a recent Budget that offered little comfort for the sector, the government must take immediate action to help tackle the construction industry’s recruitment crisis.
While construction – like the UK economy – is showing signs of strain, our latest UK market intelligence report (UKMI), acknowledges the impact of the recent Budget; which loosens rules on bringing foreign construction workers into the market and credits the sector for boosting traditionally stagnant productivity.
However, this recent proposal offers respite, not a resolution, to the capacity problems. The UK government and the sector need to redouble efforts to tackle the recruitment crisis, invest in training, and not allow a dwindling labour force to erode the hard-won productivity gains.
This edition of our UKMI report examines where and how productivity is being improved, which technologies and techniques boost efficiency most effectively and help attract new talent, and how progress can be extended and accelerated.
Martin Sudweeks, UK Managing Director, Cost Management, said:
The construction sector showed its resilience during the pandemic, helping to power our economy back to strength. Then as energy and material costs soared, and the fiscal climate tightened, we’ve shown we can do more with less – growing productivity far faster than the economy at large.
"Yet the recent Budget, and weakening commitment to major infrastructure, does not show us a government as committed to the growth of this vital industry as it has historically been.”
Our latest report forecasts that real estate inflation is expected to fall to 3.5 percent in 2023, down from 9.5 percent in 2022, while infrastructure is predicted to fall from 10.0 percent to 5.5 percent.
The disinflationary effect over 2023 is being driven by a series of factors – with reduced demand on one hand and productivity improvements on the other. Construction output is estimated to have contracted by 1.7 percent month-on-month in January 2023, with softening demand likely to continue through the year.
Meanwhile construction productivity has performed strongly, with an 8.6 percent rise in productivity over the last 12 months, and an 11.0 percent increase since COVID-19, while wider economic productivity growth has been lacklustre.
Nevertheless, our latest report warns that the ongoing labour shortage and high level of industry insolvencies are putting a major blocker on the growth of the construction sector and must not be allowed to undermine productivity progress.
The total number of people working in construction has fallen by 10.5 percent since Q1 2019, and market capacity is being hollowed out by a surging number of insolvencies, with 1,112 construction firms going out of business in Q4 2022 alone.
Martin Sudweeks continues:
The number of 16 to 24-year-olds enrolling in construction training schemes is now barely a quarter of its 2007 level, and too many still see the sector as low-tech, manual labour, with limited opportunities for progression.
"This is far from the truth, and it is our joint responsibility – government and industry – to showcase the modern reality of high-tech, high-skilled construction that is powering our economy forward.”