Labour

In the second quarter of 2024, the percentage of contractors facing issues with labour supply slightly increased to 20%, up from 15% in the first quarter. Despite this rise, the current figure is still significantly lower than the 55% reported during the same period last year.

The easing of pressure on labour supply can be attributed to lower activity levels. Several respondents observed greater availability of skilled tradespeople recently, particularly entering 3Q 2024, with labour suppliers actively seeking new opportunities.

Nevertheless, challenges in recruiting and retaining high-quality, reliable labour persist. One respondent highlighted that labour constraints prevented the acceleration of a major public sector project. The difficulties were particularly pronounced among specialists, such as those in cladding and mechanical and electrical trades. Some regional hot spots were also noted, such as Northern Ireland and Wales.

Six in ten of our survey respondents reported labour rate increases in their regions during 2Q 2024, marking the third consecutive quarter around this level.

According to Hudson Contract's June 2024 pay data, labour rates remained relatively stable overall, with average weekly earnings for self-employed tradespeople only 1.1% higher than in June of the previous year. However, there were notable regional variations. For example, Wales experienced a 7.8% increase in labour rates over the year, while the North East saw a 2.6% decrease.

Construction vacancies remain at high levels, and the skills shortage is likely to constrain construction activity in the coming years.

In May, the Public Accounts Committee published its Delivering value from government investment in major projects inquiry report. The report highlighted significant barriers to the UK’s “unprecedented” infrastructure spending, including global competition for skills. It noted that shortages are already evident in specific trades, such as welding, and in design and project management skills.

The report warned that failing to build market capacity could result in higher prices. Currently, the government over-relies on the supply chain, particularly in technical and engineering disciplines, leaving it in a weak position to act as an intelligent client and ensure value for money.

Although the report was published before the general election, the industry’s reaction to the new Labour government’s pledges echoes its concerns. For instance, Construction Products Association director Noble Francis warned, “there just won’t be the people” to meet the 1.5 million homes target.

Respondents to our 2Q 2024 survey felt that an injection of overseas labour would be necessary to meet future requirements. However, a strict stance on migration may complicate this, risking damage to vital sectors like construction, manufacturing and hospitality, which are already suffering from the effects of Brexit.

The new government recently launched Skills England to reduce reliance on overseas workers. In a statement, the Department for Education said: “Skills England will bring together central and local government, businesses, training providers and unions to meet the skills needs of the next decade across all regions, providing strategic oversight of the post-16 skills system aligned to the Government’s Industrial Strategy.”

Some have questioned whether the Construction Industry Training Board (CITB) should be scrapped and merged into Skills England. While this seems unlikely, construction businesses will be consulted on levy proposals for 2026–2029 later this year. It has also been confirmed that Mark Farmer’s review of the CITB will be published at the end of the summer, following concerns that it might be shelved as it was commissioned by the previous government.