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Talent pool shrinks as output demands skills renaissance

Latest numbers suggest the gap between required and available skills is reaching critical levels. So which areas are in most urgent need and what obstacles must be overcome?

While the construction industry is among the first to feel the force of a recession, it is among the last to catch the slipstream of recovery. But what are the facts behind the industry’s much-discussed skills shortage issue?

Industry leaders have spoken frequently about the current skills shortage. This was apparent in the most recent Construction News Barometer, in which 90 per cent of construction leaders surveyed said the skills shortage was one of their business’s top three challenges.

Eighty-eight per cent of respondents said a lack of skills or staff would be one of their greatest concerns over the next year. 

Shrinking talent pool

Recent employment figures have also raised fears that the industry is set for a critical shortage of skilled workers.

The number of unemployed people whose previous job was in construction has fallen steeply since the downturn and is almost at the lows seen during the construction boom around 2007, according to Office for National Statistics data.


That means the one pool of experienced workers that could be added to the workforce is shrinking – just as construction output is rising. 

Some previously unemployed construction workers will already have re-entered the industry, while others will have found work in different sectors.

Experian head of construction futures James Hastings says: “The assumption is a significant proportion of construction workers in 2007, before the recession, have gone off to do other things. Hopefully, a proportion will be willing to come back to the industry.”

CITB research and development operations manager Lee Bryer says: “Many of them may be lost to the industry for good, as that has happened with other recessions, but other people could be waiting for the right conditions.

What’s the issue?

“The issue is where the work is: whether the wage is attractive enough and whether they are appropriately skilled.”

While some of those who have left construction in the UK may be foreign workers who have since left the country, Mr Bryer says these did not comprise a significant proportion of the lost construction workforce.

Could contractors raise wages enough to tempt people back and deal with the skills shortage? One barrier is client expectations.

“Contractors have cut their margins to survive and a lot of clients have got used to having those prices. It will be difficult for contractors to start putting up prices,” Mr Bryer says.

Even if the industry managed to tempt back a significant number of former workers, the construction workforce is ageing and needs to train new people. 

Apprenticeships halved

This is something it failed to do during the downturn, with the number of people completing construction apprenticeships in England halving between 2008/09 and 2013 to hit 7,280, according to No more lost generations – a report produced by a parliamentary inquiry into construction training for young people.

However, industry surveys show the degree of concern over the shortage of skills varies. While some leaders are hugely worried about it, others are more optimistic.

For example, 61 per cent of respondents in the Federation of Master Builders’ state of trade survey for Q2 2014 said employment levels at their firm were unchanged in the quarter – and a similar proportion thought staffing levels will remain the same for the next six months.

“There has been an uptick in the percentage of firms citing skill shortages, but it has not reached epidemic proportions,” Mr Hastings says.

There may be some room to increase output without hiring more people by making the existing workforce more productive.

Output per hour was 8.5 per cent behind its Q1 2011 level by Q4 2013 and output per job in construction was 5 per cent down.

Construction vacancies rise

The number of vacancies in construction has been climbing since the end of 2013 to reach 20,000 in January to March 2014, with the exception of a slight drop in March to May 2014, although it is too soon to say whether this is a blip.


Source: ONS

Furthermore, the CITB forecasts that more than 182,000 additional construction jobs will need to be created over the next four years.

Almost all of the main occupations within construction have seen a fall in the number of people employed between Q2 2008 and Q2 2013.

Some occupations within construction have experienced far larger falls than others.

For example, the number of steel erectors has fallen by over 46 per cent during the period, although this only equates to 7,536 people because it is a much smaller occupation than some others within construction.

The number of plasterers fell by 38 per cent and the number of bricklayers and masons reduced by almost 35 per cent, whereas the number of roofers, tiles and slaters dropped by less than 1 per cent. 

Variation in falling occupation demand

In absolute terms, the largest declines were among the largest occupations – carpenters and joiners, at almost 70,000, followed by bricklayers.

Of these main occupations, only rail construction and maintenance operatives have seen the number of people employed rise since 2008.

This rise may be connected to Network Rail’s increased spending plans from April 2014, which were announced last year – with the intention to provide time to hire the necessary people.

Industry employment in major occupations 2008 vs 2013 ONS

Source: ONS

Demand for these occupations will vary according to the mix of construction work.

For example, complaints by contractors about shortages of bricklayers is connected to the rise in housebuilding as well as the loss of a large number bricklayers during the downturn.

As Mr Bryer says: “Housebuilding was the first sector that got hit and a lot of jobs were lost there.

“They were hit hard and fast but will have been among the first to benefit from growth.”

Even though construction is far from back to its previous levels of output, there are reasons to think that a short-term skills shortage is likely. 

Initially companies may need to pay more – and possibly also offer some refresher training – if they are going to tempt back more of the people who left the industry in the recession.

But firms will also need to start taking on new apprentices in order to prevent a longer-term skills gap.

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