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Jobs and wages to keep growing in 2016 but 2017 could be even better

Despite a mixed bag for many top contractors in 2015, jobs numbers and wages continued to go up – with housing and infrastructure leading the way.

2015 was a rather mixed year for construction.

Output grew for the first half of the year before taking a small step back – a 0.1 per cent year-on-year fall – in the third quarter, with the fourth quarter’s data still to come.

Industry employment fared better with the numbers of jobs filled in the industry rising slightly year on year in each one of the three quarters for which there is data.

But the numbers are about 200,000 behind their 2008 heyday.

Housing growth threatened by skills

Duncan Bullimore, director of construction and property at recruitment firm Hays, agrees that 2015 was a “jittery year, with growth having degraded through the year”.

Uncertainty around the general election, problems in the eurozone and concerns over Chinese economy were all contributing factors. Yet Mr Bullimore voices confidence: “I think next year will be more settled.”

So what can we expect from 2016?

Housing has been a buoyant sector, particularly earlier in the recovery. Private housebuilding looks good for next year, but if there is a drag on affordable output then “housing as a whole may struggle to grow,” Mr Bullimore says.

He raises the question of where the spare people in the social housing building sector will go. Will they get squeezed out, end up in private housing, or in general building projects in other sectors for example?

“Anyone involved in housebuilding is likely to see demand for their skills rise even further – as well as the value of their skills and potential earnings”

Owen Goodhead, Randstand CPE

Owen Goodhead, managing director of recruitment company Randstad CPE, predicts a skills shortage in housebuilding next year. “Our own research shows that to even start to move towards UK-wide targets for new homes, this section of the construction industry will need to find 200,000 extra workers just in 2016,” he say.

“Based on current skill availability, this target is a tall order for the sector, but even given trend growth we’ll see tens of thousands of new jobs generated for bricklayers, electricians, carpenters, roofers, plasterers and decorators.

“Plus there will be a wealth of opportunities in technical roles – from planners to architects. Anyone involved in housebuilding is likely to see demand for their skills rise even further – as well as the value of their skills and potential earnings.”

Specialists required for HS2

Infrastructure is another area where construction workers will be needed, although the extra recruitment may not happen until the end of next year or during 2017. Mr Goodhead expects to see hiring of site workers on High Speed 2 in “serious numbers” towards the end of 2016 ahead of construction getting under way the following year.

“Across all areas of construction and engineering, there’s a growing shortage of technical, specialist and managerial skills”

Owen Goodhead, Randstad CPE

“Across all areas of construction and engineering, there’s a growing shortage of technical, specialist and managerial skills,” he says.

“Site managers, project managers and quantity surveyors will be in even starker demand in 2016 – not just because of waves of housebuilding projects, but also in the recovering construction of commercial property and for serious feats of engineering and national infrastructure.”

“There is not much in the way of efficiencies you can make in the number of people on site. If you go from five to 10 sites you probably have to double the number of people, whereas in commercial roles, such as estimating and quantity surveying, you have perhaps better opportunities to get economies of scale.”

Labour demand: Big vs small firms

Mr Goodhead thinks pay packets will continue to rise in much the same way as they have this year. But there are differing views on whether demand for staff will come predominantly from large or small companies.

Mr Bullimore notes that there is a trend of people moving from large companies to smaller local, regional or specialist firms.

Sometimes they are in search of a new experience in their career, or see the opportunities for better margins in small or niche companies.

Mr Goodhead says growth is likely to come from the bigger firms after the SME sector was hit hard by the recession. “Demand for skills in these regions has been strongest in recent months by a long way, especially in terms of housebuilding activity – and there is little on the horizon that seems likely to change that dominance of twin hubs in the North and South-east,” he says.

Next year then is shaping up to exceed 2015 on several levels. However, assuming no great economic or political surprises, 2017 may be better still.

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