Autumn 2021 UK Market Report
Site productivity and labour
Contractor respondents to our latest survey indicated significantly lower estimations of site productivity than our previous surveys. While 91 percent of respondents to our Autumn survey said that site productivity is between 61-100 percent, only 41 percent said that productivity is between 81-100 percent, compared to 70 percent in our Summer report. Our Summer survey had seen slightly lower estimations of site productivity than our previous surveys for the Winter and Spring market reports.
Despite the changes to self-isolation rules, sites continue to be impacted by COVID-19 cases. During the pandemic, the Construction Leadership Council (CLC) Site Operating Procedures and Branch Operating Procedures were adopted by the industry to continue working safely and provide consistency to the supply chain.
With the lifting of restrictions, these procedures have become reference documents from 19 July 2021. However, whilst COVID-19 remains widespread, 91 percent of contractor respondents to our Autumn survey said that the procedures continue to be followed on their projects.
Issues with deliveries and materials availability are also affecting productivity. Data from the ONS shows that monthly construction output fell 0.2 percent in volume terms in August 2021 compared with July 2021. The slight fall follows the 1 percent decline in July 2021 and anecdotal evidence suggests that this is due to the rising prices of raw materials such as steel, concrete, timber and glass as well as the difficulty of sourcing these materials for jobs.
83 percent of contractors who responded to our survey said that delivery issues are affecting their projects. Comments on the issues faced include:
- Long lead-in times and delayed deliveries
- Rescheduling of deliveries; three to four times in some cases
- Builders’ merchants asking contractors to collect materials rather than delivering them to site due to the shortage of HGV drivers
- On-going fuel availability issues impacting deliveries.
Contractors mitigate the issues with bulk deliveries by advanced planning/early orders and combining deliveries where possible, either with other sites or other subcontractors/suppliers.
Of the contractors who responded to our survey, 81 percent said that they had experienced issues with labour supply in the past quarter, up from 44 percent in the second quarter, increasing from 17.5 percent in the first quarter.
This was in line with our expectations that labour issues would start to become apparent during 2021. Particularly as the volume of construction work has picked up following the pandemic and the effects of Brexit are being felt more keenly as the demand for labour increases, highlighting labour shortages.
Recent data from the ONS shows that construction vacancies have increased further to 43,000 between July and September 2021, which is the highest number ever recorded since 2001 when records began. The previous record was 36,000 between July and August 2021, and the 7,000 increase in this period is the highest recorded, with the month-on-month change not previously exceeding 5,000. The ONS data shows that vacancies have reached 2.9 per 100 employee jobs.
Contractor respondents also noticed increases to labour rates, with 93 percent saying that they had observed increases to labour rates in their region in the past quarter, compared to 63 percent in the second quarter and 44 percent in the first quarter.
Respondents noted that they are currently experiencing most labour supply issues for carpenters/joiners, bricklayers, dry liners, mechanical installers and electricians. There is concern surrounding consultant roles, with shortages of project managers particularly noted.
Provisional government data indicates that 8 percent of the construction sector’s eligible workforce were furloughed at the end of August 2021, down from 10 percent at the end of June 2021. The construction sector has been slower than others to reduce the number of persons on furlough in August, and with the scheme having now ended, it is hoped that those on furlough return to the industry.
Earlier in the report we mentioned that the changes to IR35 are having implications for HGV drivers and availability of such, there is concern that the changes could also impact construction.
