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Skills shortage drives up construction pay by 5%

An increase in demand for labour and a shortage of skills has seen construction workers’ pay increase by nearly 5 per cent in the last three months.

A study by KPMG and the Recruitment and Employment Agency found that workers’ pay in the construction sector rose on average by 4.9 per cent between February and May, as the industry’s skills shortage continued to drive up costs.

This increase was well above equivalent rises in average UK workers’ pay (3.2 per cent) and the service industry in particular (3.4 per cent).

The latest figures represent a marked jump in wages compared with the last two years. Pay in the construction sector was static for the same period in 2013 and grew by only 1.7 per cent in 2014.

KPMG’s head of infrastructure, building and construction Richard Threlfall said: “The construction industry in particular is struggling to keep pace with demand, with businesses heavily recruiting both permanent and temporary workers. 

“This is driving significant pay growth in the sector of almost 5 per cent, even outstripping Britain’s surging services industry, which in comparison saw pay increases of just over 3 per cent.”

Construction workers were found to be the most in demand of all professions across the UK, ranking top ahead of nursing and IT services for temporary jobs, and second behind engineering for permanent roles.

Demand was offset by a shortage of skills across the industry, with technical staff in the sector seen to be particularly hard to come by.

Mr Threlfall said: “It is clear we are in the grip of an industry-wide skills shortage, which shows no signs of abating.

“Businesses are struggling to find the talent they need and this will have long-term implications for their growth plans and potentially impact the wider performance of the UK’s economy. 

“In July, more than two-fifths of recruiters reported a fall in the number of people looking for work, the steepest decline seen in eight months

“The risk is that a shortage of skilled labour in this sector could impede Britain’s major building projects and put the brakes on the country’s booming real-estate market. 

The likelihood is we will see no immediate improvement to this situation. We are already seeing hints of a summer slowdown, as both businesses and candidates put their jobs plans on hold and take holiday over August.”

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