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Shrinking talent pool heightens skills crisis

Workloads are rising yet the workforce has actually declined while construction’s existing talent pool becomes increasingly stretched.

In Q3 2008, just before the financial crash hit home, there were 2.58m people working in the construction industry.

But with the crash came massive redundancies: the number of unemployed workers whose previous job was in construction grew by 76.8 per cent in only a year between Q3 2008 and Q3 2009, according to the Office for National Statistics.

Total construction employment Q4 05 Q4 15 ONS

Total construction employment Q4 05 Q4 15 ONS

Workforce numbers hit a trough of 2.10m but had been slowly recovering as the industry picked up.

Yet with workloads still growing and skills in increasing demand, the industry’s headcount actually shrank by 16,000 between Q4 2014 and Q4 2015.

So why is the industry struggling to expand its workforce at a time when firms are busier than ever?

Talent pool shrinking

Part of the problem is that the recruitment pool of trained construction workers is plummeting to alarming levels. As part of its collection of labour force statistics, the ONS records unemployment numbers by previous industry. For construction, this has now fallen to a record low.

As of Q4 2015, there were only 68,651 unemployed workers whose previous job was in construction, down from nearly 70,000 in the previous quarter.

At the depths of the recession in Q3 2009, these former construction workers numbered 249,759 – nearly three times the latest figure.

Number of unemployed workers whose previous job was in the construction industry ONS

Number of unemployed workers whose previous job was in the construction industry ONS

Many contractors are struggling to attract appropriately skilled staff – 62 per cent of firms reported difficulty filling vacancies because of a lack of trained workers during the last quarter of the year, according to Build UK.

Actually quantifying the talent pool, which can often be a nebulous concept, can be difficult. However, these statistics suggest the number of workers already trained to a high standard is running dangerously low, meaning that contractors need to both train new workers and retain their existing workforce.

“The data shows that application rates are maintaining pace with job growth”

Lee Biggins, CV Library

The issue is not a lack of demand or a shortage of applicants, according to Lee Biggins, managing director and founder of job site CV Library. He says application rates for construction jobs are higher than ever; the problem is a lack of the right skills.

“Application rates for construction jobs rose by 36.5 per cent in 2015,” he says. “Typically when an industry hits a period of rapid growth that results in job creation, the sector struggles to fill vacancies due to a lack of available and qualified candidates.

“This data shows that application rates are almost maintaining pace with job growth, which means there should be plenty of candidates to fill the growing number of jobs.”

However, this is at odds with what contractors are reporting, and with the number of prequalified workers in decline, upskilling and training existing staff is more important than ever.

Does money matter?

The data also suggests it isn’t pay packets that are discouraging potential recruits – average weekly earnings in December last year hit £641, the second highest level seen since March 2012. Earnings in December 2015 were also 22.3 per cent higher than the recessionary trough recorded in August 2010.

Mr Biggins adds that this is at odds with the wider economy, which saw a minor decline in average weekly earnings over the course of 2015.

Average weekly earnings construction workforce Dec 05 Dec 15 ONS

Average weekly earnings construction workforce Dec 05 Dec 15 ONS

CITB head of policy and research Gillian Econopouly says there are still “several thousand” workers that could be tempted back by current wage growth in the industry.

But she warns this is by no means a long-term solution. “Companies have worked hard in the last couple of years to get workers back into construction,” she says. “I think we’re coming to the end of that, or at least the numbers are significantly smaller now.”

So if pay is not the issue, how can construction firms add to the talent pool?

“We work in a very similar way that we did 50 or even 100 years ago”

Danna Walker, CIC

Ms Econopouly says appropriate talent is often “snapped up” by other industries, and that construction should look to act quickly and target other areas that might have transferrable skills.

“We need to look at sectors close to construction that might have some skills overlap where we can pick people up – the steel industry, for example,” she says.

Attracting new blood has long been a crucial challenge for construction, but Construction Industry Council project manager Danna Walker says there are a number of fundamental issues making it difficult for the industry to retain existing workers.

“There’s an argument that we work in a very similar way to 50 or even 100 years ago – so what is it in our processes that isn’t necessarily helpful to retaining staff?” she asks.

She argues that “addressing the way the industry works” is one of the major challenges contractors face in retaining workers, and that the industry a whole “is not making the most of the technologies available to us”.

Changing these cultural attitudes is needed to attract more talent to construction, and Ms Walker says she is “pleased” the industry is showing signs of attracting a more diverse workforce.

The CIC report published last week, A Blueprint for Change, aims to highlight how firms can encourage a more diverse workforce and attract a broader base of workers to the industry.

Diversity failings

But again the stats suggest the industry as a whole is still falling short.

As of Q4 2015, women made up only 11.2 per cent of the total workforce in construction – the lowest proportion recorded for three years. Alarmingly, the proportion is significantly lower than in Q4 1997, when women made up 12.7 per cent of the industry.

The nature of construction is part of the issue: women are often employed in back-office or administration functions, which are normally among the first to be cut during a downturn.

Between Q4 2008 and Q3 2009, the number of unemployed female workers whose previous job was in construction grew 51.2 per cent as the recession struck.

Proportion of women in the construction workforce ONS

Proportion of women in the construction workforce ONS

Ms Econopouly says the statistics show that women typically stay in construction for less time and often do not view it as a long-term career – something she says needs addressing urgently. “I don’t think people have the attitude that it’s not important – it’s just a question now of how we make it work,” she says.

The number of unemployed women who previously worked in construction fell to its lowest level on record in Q4 2015, dropping by more than 50 per cent quarter on quarter. As with the overall total, the talent pool is becoming desperately small.

Ms Walker says there has been “more engagement” from professional services and consultancies when it comes to hiring women, with design and engineering making particular inroads with younger recruits.

But contractors and trades need to be doing much more if they are to take advantage of the potential talent and tackle the skills gap, she adds.

“I started as an electrician and that wasn’t a trade [that firms] would come to our school and speak to us about,” she says. “I think it can still be the case now that many young women wouldn’t necessarily think of doing something technical or trade-based.”

To address this, trades should be better at “selling the benefits,” Ms Walker argues. “The thing that attracted me to it is the idea of having a trade for life, and offering people something to progress from.”

Contractors have started on the road to addressing the lack of skills and diversity in the industry, and while the majority of firms acknowledge there is a shortage of talent, what these stats show is that far more needs to be done.

Any idea of ‘making do’ with existing talent is banished by the shrinking numbers of experienced, available workers, making the training of new recruits the immediate focus.

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