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Regional skills challenges laid bare by CITB report

New report reveals 232,000 workers will be needed between 2016 and 2020. So which regions face the biggest challenge and which trades are in greatest demand?

The CITB Construction Skills Network report, produced by the training board and Experian, forecasts that the construction industry needs an additional 232,000 workers between 2016 and 2020 – an annual recruitment requirement of 46,420.

The construction workforce will have to grow by 5.6 per cent each year to meet this requirement. It’s a huge challenge – and some trades and regions will have to push particularly hard to avoid major skills shortages that could threaten industry growth over the next four years.

Welsh workforce woes

London and the South-east have been the boom markets as construction has recovered, but the CITB report suggests regional hotspots will need more recruits than at any point since the beginning of the last recession to keep up with the recovery.

Of all the UK’s nations and regions, Wales will require the highest percentage growth: the industry in Wales will need to increase its workforce by 15.6 per cent between 2016 and 2020 if the demands of major projects such as new nuclear at Wylfa are to be met..

In comparison, the workforce in the South-east will need to grow by just 0.6 per cent over the same period.

The historical data for Wales suggests meeting this demand will be a major challenge. The forecast for Wales means it will have to increase its pool of workers by 4.7 per cent a year. But since 1996, its workforce has grown by an annual average of just 1.5 per cent, according to the Office for National Statistics.

Forecast change in employment by region 2016-20_CITB

Forecast change in employment by region 2016-20_CITB

Source: CITB

There are positive signs: Wales’s average workforce size across all four quarters of 2014 was up 9.5 per cent compared with 2013. Yet this was still below pre-recession levels and followed three consecutive years of declining numbers.

CITB policy director Steve Radley says the scale of the challenge in meeting these requirements is still “significant”, but that there is “optimism and an opportunity to plan ahead” for certain trades and projects.

“You can see the industry is starting to rise to the skills challenge; we estimate that there were 22,500 construction apprenticeships in 2015, which is well up on the previous years,” he says. “It’s still off the peaks we saw in 2006 when it was around 28,000 a year, but it’s certainly rising and apprenticeship recruitment intentions are strong.”

South-west source

Much like Wales, the South-west has traditionally struggled to increase construction employment. The CITB suggests the region will need to grow its workforce by 11.2 per cent from 2016 to 2020 – 2.8 per cent a year. Yet it has only managed average annual growth of 2 per cent since 1996.

The big positive here is that in September 2015 jobs in the industry rose above pre-recession levels, and work at Hinkley Point C is expected to resume within weeks and will bolster demand. Nevertheless, hitting the 2.8 per cent target will be a challenge.

Looking at requirements by number rather than percentage, the North-west faces the greatest need, requiring 6,650 recruits each year from 2016 to 2020 – nearly double the amount required in London and more than treble the number needed in the South-east.

“You can see that industry is starting to rise to the skills challenge”

Steve Radley, CITB

The chancellor’s ‘Northern Powerhouse’ strategy has been designed to boost growth in the region and Manchester has emerged as a major centre of activity.

According to the Greater Manchester Chamber of Commerce’s latest data, the North-west will see construction output in 2016 hit £8.37bn. This is largely driven by infrastructure (£2.86bn) and housing (£2.11bn), sectors that will continue to drive skilled worker demand in the near term.

Change in output by work type 2016 20 CITB

Change in output by work type 2016 20 CITB

The high level of housing output in particular will require wood trades and interior fit-out workers; the region needs to recruit 1,030 a year to meet construction’s needs. This is closely followed by bricklayers – another heavily housing-weighted skill – of which the North-west will need 730 more each year.

It’s a similar story in the West Midlands, driven by Birmingham, which recorded its highest-ever level of office construction for 13 years in Q4 2015.

The region will require 1,040 wood trade workers to be recruited annually, while 370 electrical tradespeople will be needed each year to 2020.

Apprenticeships crucial

Mr Radley points out that apprenticeships are vital to tackling these challenges – and that much rests on the government’s reforms in this area.

“One thing that will be absolutely critical over the next few months is the government outlining its reforms on apprenticeship funding,” he says. “Certainly our plan is to ensure we align with and support small companies through the grant scheme.”

Average change in output per sector 2016 20 CITB

Average change in output per sector 2016 20 CITB

The Department for Transport has announced an apprentice quota system for major infrastructure projects, with contractors to be required to either create one apprenticeship for every £3m to £5m spent on a contract, or deliver a year-on-year increase in the number of apprentices employed during a contract’s lifetime.

Measures such as this may help to increase the uptake of apprentices, but this alone will not be enough. Mr Radley says encouraging those who had left the industry to return will also be crucial in tackling the skills challenge.

As of September 2015, there were 70,000 unemployed people in the UK whose previous job was in construction – the lowest level recorded since the ONS began gathering the data in 1995, and less than half what it was only two years ago.

With demand still outstripping supply, this particular well is beginning to run dry, putting the need to recruit and train the younger generation into sharp focus.

Annual recruits needed to meet demand by 2020_CITB

Annual recruits needed to meet demand by 2020_CITB

Source: CITB

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