After five years of declining employment in the industry, the number of construction jobs is set to grow in 2014 for the first time since the start of the recession in 2008.
Construction was among the sectors hardest hit by the prolonged downturn. At the end of 2013, output was down 15 per cent compared with its 2007 peak and employment in the industry had shrunk by around 13 per cent over five years.
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But, according to new research by the CITB, more than 182,000 additional construction jobs are needed across the country from 2014 to 2018 as output continues to grow with the threat of a skills shortage looming.
The annual Construction Skills Network report found that, on average, the industry will need to recruit 36,400 people a year over the next five years to keep up with demand, due to faster-than-expected recovery.
This is a significant revision to the CSN report’s 2013 forecasts, which set out an expectation the number of jobs in the construction industry would fall until 2016 at the earliest.
The 182,000 recruitment requirement includes increases in demand for employment based on anticipated levels of workload, and those needed to fill roles left by those moving in and out of the industry due to retirement, death and moving between industries.
Unexpected rate of recovery
The CITB expects that construction output will grow by an average of 2.2 per cent a year from now until 2018, having fallen by 8 per cent in 2012 and by 1 per cent in 2013.
CITB deputy chairman Judy Lowe admits the speed of turnaround over the past 12 months was unexpected, as work in the housing and infrastructure sectors picked up.
“We’re cautious because we’ve been doing this for eight years and we know what happens in reality”
Judy Lowe, CITB
“We seem to be turning relatively rapidly from recession to growth. That has been a surprise to me,” she says.
However, Ms Lowe says the CITB was cautious over employment growth projections because there the largest infrastructure projects can often be subject to delays.
“We’re cautious because we’ve been doing this for eight years and we know what happens in reality; the picture is immeasurably positive compared with where we were a year ago, let alone two years ago.
“But we think it may not be as rampant a growth as others are saying, even though housing is very strong,” she adds.
The ONS said this week that UK economic growth in 2013 was the strongest since 2007, with growth of 0.7 per cent in the final quarter of last year taking annual growth to 1.9 per cent.
Construction output dipped by 0.3 per cent in Q4 2013 compared with Q3 2013, but the Construction Products Association is still forecasting a 3.4 per cent rise in construction output for 2014.
As order books grow, the CITB expects the number employed in the UK construction industry to climb to 2.59m by 2018, although it would remain 290,000 fewer than were working in the industry a decade earlier in 2008.
New nuclear impetus
New nuclear work will provide the single largest regional recruitment impetus in the UK. An estimated 6,370 new jobs will be created annually over five years in the South-west, where work on the £16bn Hinkley Point C power station is due to begin in mid-2014.
EDF Energy and the Department of Energy and Climate Change agreed a strike price for the electricity that would be generated by the nuclear power plant in October 2013, however the final investment decision is not due until July.
Output growth will also be strongest in the region at 3.5 per cent on average per year from 2014 to 2018, compared with a UK average of 2.2 per cent, driven by annual average expansion of 21 per cent in the infrastructure sector as a result of the Hinkley project.
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The importance of new nuclear for job creation is similar in Wales, where Horizon’s Wylfa Newydd nuclear power station in Anglesey would increase Wales’ annual construction output average to 3.4 per cent over the five-year period, compared to 2.5 per cent if work does not begin in that time.
The government is desperate to see the new nuclear industry flourish in the UK and announced it was backing the Wylfa plant with a UK Guarantee last December.
However, EDF’s final investment decision could be crucial in securing future developers’ commitments to the new nuclear sector in the UK.
The effect of either nuclear developer pulling out of its proposed plants, expected to be worth around £30bn to the economy in total, would be a large reduction in the new jobs on offer in both Wales and the South-west.
In the South-west, the largest skills requirement is for senior manager, electrical and labouring roles. However, the largest growth in demand will be for civil engineers.
The region is expected to see a 4.5 per cent increase in demand for civil engineers annually as nuclear work gathers pace.
The recruitment need is high in the region because construction projects are intermittent, meaning skilled workers will move to other regions for work as and when projects are completed, Ms Lowe says.
“We know it’ll be children in primary school building Sizewell – but we need to get the training facilities in place”
Judy Lowe, CITB
However, she adds that the CITB is already providing training to equip people with the skills needed for nuclear build projects and, despite the large scale of nuclear power stations, she is not concerned about possible skills shortages.
“Two years ago we signed the first agreement with [CITB national construction college] Coleg Menai about Energy Island [energy research and development programme run within Isle of Anglesey County Council] and starting the specialist training for new nuclear.
“We do these things a long way ahead, we’re already having early discussions with Sizewell – we know it’ll be children in primary school building Sizewell – but we need to get the training facilities in place,” she adds.
Across the country, growth in the housebuilding market is expected to be the biggest contributor to new employment.
Housebuilding, including private and public new build and repair and maintenance work, will account for more than a third of the industry’s total output from 2014 to 2018 according to the CITB’s forecasts, with private housebuilding in particular to grow by 4.6 per cent a year on average to 2018.
The CSN report outlines the impact that the government’s Help to Buy scheme has had on output growth since April 2013.
However, Ms Lowe admits that there is uncertainty about how the sector will fare when the current stimulus ends. It is currently expected to be withdrawn in 2016.
“The big question for the industry is what will happen to housing when the artificial schemes to encourage housebuilding decline, and most economists say the money will run out in 2014.”
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Infrastructure, including nuclear new build projects, will also contribute to employment growth, with overall sector output expected to grow by an average of 3.6 per cent a year over the period.
Ms Lowe adds that employment will not increase until the current underemployment in the industry has been absorbed.
Output vs employment
The CSN report expects output to grow at a rate of 2.2 per cent per year from 2014 to 2018, however employment is forecasted to grow by an annual average of 1.2 per cent.
During the downturn, employment has not fallen as much as output.
“You won’t see much of a change in the employment numbers until they are working full time, because we’ve got that spare capacity”
Judy Lowe, CITB
As a result, Ms Lowe believes, small traders are working on a part-time basis, with spare capacity to increase their hours when the work is available.
“You won’t see much of a change in the employment numbers until they are working full time, because we’ve got that spare capacity. That’s why we’re not forecasting huge growth,” she says.
According to the CSN forecasts, employment will need to grow across all of the UK’s 13 regions and devolved nations over the next five years, with the exception of the West Midlands, to deliver the forecasted output.
Output in the West Midlands is expected to grow at an annual average rate of 0.8 per cent over the next five years, well below the UK average of 2.2 per cent.
As a result, it is the only region to see a decline in construction employment over the forecast period, at an annual average of 0.2 per cent.
Disciplines in demand
Across the country, demand is expected to be strongest for plant mechanics and fitters, with employment numbers expected to grow by 3.9 per cent a year on average; civil engineers, with demand to grow by 2.8 per cent a year on average; and construction process managers – such as health and safety officers and environmental professionals – and surveyors, which will need to grow by 2.5 per cent a year on average.
Ms Lowe speculates that more construction process managers and surveyors will be needed as building information modelling is used more widely in the industry.
In absolute terms, the highest number of jobs will be created for wood trades – including carpenters and joiners – and interior fit-out (4,260), painters and decorators (2,680), and electrical trades and installation (1,950).
“Construction is quite slow to turn around; the bigger the programmes that would have a major impact, the less likely a change of government will really alter that”
Judy Lowe, CITB
The CSN consults the industry on the pipeline of regional projects, and employees needed to set out their expectations twice, in autumn and spring 2013.
Between the first consultation in the spring and the final consultation in the autumn, in all but one case the annual average output growth rates were revised upwards by those surveyed, reflecting greater optimism within the industry in the second half of the year.
In the West Midlands, for example, annual average output growth from 2014 to 2018 was forecast to be 0.2 per cent last spring, before it was revised up to 0.8 per cent in the autumn.
The only exception was in Yorkshire and Humber, where the output growth rate forecast dropped to 2.2 per cent at the final forecast, from 2.4 per cent in spring.
So with construction output on the rise and set to fuel employment growth across the UK, what of next year’s election and the impact it might have on the industry’s forecasts?
Despite a general election falling within the forecast period, Ms Lowe says she is not concerned about the outcome having an impact on the forecasts. Schemes like HS2 would also expect to fuel employment and output growth, and replace that of Crossrail coming to a close, for example.
“Construction is quite slow to turn around; the bigger the programmes that would have a major impact, the less likely a change of government will really alter that. 2015 is more likely to influence 2018 onwards, and that will fall into next year’s report,” she says.
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