As part of CN’s week-long look at the industry’s skills challenge, James Wilmore discovers how fresh data and political investigations are shedding more and more light on the impact Brexit is having and will have on workforces.
“It’s a bit of a gamble to stay in the UK when you’re an EU national.” So said a former Arup employee in an exit interview given in the wake of Britain’s vote to leave the EU.
“With Brexit, a good friend – the UK – has betrayed [EU nationals],” was another worker’s parting comment.
Since those snapshots were revealed in Arup’s evidence to the government’s Migration Advisory Committee (MAC) last October, Brexit negotiations have moved forward yet at the same time seem to have produced little real progress.
Despite Theresa May’s ‘deal’ announced in December last year, uncertainty still hangs in the air for the UK’s 3.2m EU nationals.
Under the current agreement, EU citizens who have been in the UK for five years continuously will be able to apply for ‘settled status’. The online system is being developed from scratch, but the government promises it will be “user-friendly” and draw on existing data to “minimise the burden on applicants to provide evidence”.
For EU nationals, however, the Windrush scandal will have done nothing to settle fears. As the CITB’s policy director Steve Radley says: “There is a big communication job to do. These issues have only been resolved recently and it’s inevitable it will take some time. There’s a lot of work to do to build trust.”
Steve Radley director of policy and strategic planning CITB
The EU workforce’s contribution to the UK construction sector cannot be underestimated – particularly in London. As the Construction Industry Council pointed out in its evidence to the MAC: “Nearly 200,000 people working in construction are from the EU, which is the equivalent workforce for building 16 Crossrails.”
Only one more Crossrail is planned, for now, but that’s part of a £500bn pipeline of major infrastructure projects – including HS2, Hinkley and Heathrow. In addition, housebuilding is expected to ramp up as the government aims to tackle the UK’s shortage of homes.
In the scaffolding sector alone, thousands of employees will be needed for major nuclear power stations at Hinkley and Wylfa, leaving workers in short supply up and down the country.
Infrastructure plans are concentrated on the South-east, where the EU labour issue could become particularly acute. According to the MAC, 26.8 per cent of London’s construction workforce is from the EU.
Two years on from the EU referendum, how worried should the industry be about a ‘Brexodus’ and what are the current trends around labour?
Numbers don’t lie
The latest figures from the Office for National Statistics show that the number of EU nationals working in the UK has fallen 28,000 in a year to 2.29m.
ONS data published in February revealed that the number of Eastern European nationals working in the UK last year slid by 5 per cent.
“Workers here from Poland are generally regarded as being some of the best. But it may be that those from some other countries don’t score as highly”
Steve Radley, CITB
Meanwhile its latest employment survey, published in May, showed that in Q1 2018, 80 per cent of main contractors were reporting difficulties with recruiting bricklayers, 76 per cent were having trouble finding carpenters and 56 per cent were struggling to find plasterers.
These issues can partly be attributed to the long-running skills crisis in construction. But they also emphasise the need to address the status of EU nationals.
Anecdotally, Mr Radley says the CITB is hearing that the number of EU workers in construction is remaining generally stable, but there is some concern about the quality of workers arriving.
“A lot of workers here currently are from Poland and are generally regarded as being technically some of the best – multi-skilled and with good language skills,” he says. “But it may be that immigrants from some other countries don’t score as highly on those fronts.”
Mace, which boasts an onsite workforce that is 40 per cent EU nationals, has also seen EU employee numbers remain stable since the referendum. “We’ve not seen a huge exodus of people since 2016, and we’re not expecting any significant changes in the near future,” says chief executive Mark Reynolds. However, he adds: “Beyond the transition phase, there is considerable uncertainty.”
Mark Reynolds chief executive Mace
At Hertfordshire-based Morrisroe, the number of EU workers has also been stable. Yet the uncertainty is hampering its ability to plan for the future, according to head of people and communities Davina Debidin. “We are concerned it’s less attractive to come here [for EU nationals] as it’s not clear what the situation is,” she says. “People are likely to fear the atmosphere here could change.”
She adds: “The reality is we get some of our best candidates from Europe. People fly over for interviews.”
Engineering and consultancy firms appear equally rattled by the Brexit effect. Arup’s evidence to the MAC revealed that graduate applications from the EU dropped by around a fifth in its most recent round prior to last October.
Aecom meanwhile told the committee it had seen a fall in applications from the EU in “certain offices” – particularly outside London. It also pointed to a higher leavers rate among EU staff, and that fewer EU nationals were applying for roles.
“We are concerned it’s less attractive to come here as it’s not clear what the situation is. People are likely to fear the atmosphere here could change”
Davina Debidin, Morrisroe
One other interesting revelation in Aecom’s evidence to the MAC was that it was seeing more staff coming from Greece and Spain, two countries that have suffered from high unemployment rates since the 2008 financial crisis.
Contractors also appear to have shown interest in recruiting staff from these regions. One source tells Construction News that, prior to its collapse, Carillion was actively recruiting in Greece and Portugal to work on the troubled Aberdeen Western Peripheral Route. “There were Portuguese project managers and Greek engineers who were really good,” the source says. “There were lots of people being flown in from all over the place.”
As contractors work out how to fill the gaps, others are still concerned about how government views the construction industry in the context of Brexit. A leaked document last year revealed that construction was rated as a ‘low priority’ by government.
However, Liberal Democrat peer and former coalition government minister Lord Stunell believes this is the wrong approach.
“Everything about growth in the economy is dependent on construction, but the government seems completely transfixed with getting its immigration figures down,” he says. “The industry needs to expand its workforce by 30 per cent to get these big infrastructure projects done, but could lose 10 per cent of its workforce.”
Noble Francis economics director Construction Products Association
Construction Products Association economics director Noble Francis echoes this sentiment. “As far as I’m aware, government isn’t looking at the lack of skills in construction as a short-term issue or a long-term issue.
“If they were then perhaps they would be more concerned about why there are consistent skills issues in construction, why employment in UK construction is still 250,000 lower than it was 10 years ago, where those people have gone and why they have not come back.”
But the CITB’s Mr Radley is slightly more optimistic. “There is an understanding [in government] that you can’t turn off the tap straight away,” he says.
In an update to its analysis back in May, the Migration Advisory Committee took an worrying line on the concerns of business.
“It is unsurprising that employers do not welcome restrictions on their ability to hire migrant workers,” it said. “Running most businesses is very hard and any additional costs or administrative burdens unwelcome. But, while the views of employers are important, they should not be the only analysis or opinion to be considered.”
Yet is not just the lack of EU workers that is weighing on the minds of construction bosses. The industry’s ageing workforce – with 30 per cent of workers over 50 – remains a deep-seated concern. The added sting in the tail is that there is a higher proportion of young migrant workers compared with their UK counterparts.
The industry needs to recruit a million people by 2024 to “stand still”, according to Mace’s Mr Reynolds, as well as re-skill more than 600,000 to meet emerging client needs.
The chief executive adds: “In the longer term, Brexit undoubtedly will have an impact, but we’re equally concerned about our ageing workforce.”