Labour availability and rates

Slightly higher levels of contractor respondents reported issues with labour supply in the 3Q 2023, with those seeing labour rate increases reducing to 71% from reasonably consistent levels of between 80–90%, saying there had been increases in the quarter.

Sourcing particular roles remains challenging, with survey respondents highlighting directly employed trade operatives in particular, noting that pay expectations continue to be demanding. Also highlighted were mechanical and electrical trades, mainly the specialist trades such as fire, access control and lighting. Also noted as difficult was general labour with poor availability and some respondents noted that what workers are available are not always as efficient or proactive as previously.

Hudson Contract reported record-high earnings for self-employed tradespeople for August due to the demand for skilled labour on building sites. Average pay was £1,012 per week — only the second time average wages have exceeded £1,000 per week. Particularly in demand were joiners (7.6% increase), plumbers (5.7%) and insulators (5.4%).

Engineering workers, covered by the National Agreement for the Engineering Construction Industry (NAECI), voted to strike, rejecting an improved offer of a 10% rise for 2024 and 5% for 2025. The Construction Enquirer reported that the Blue Book agreement, as it is known, covers up to 8,000 workers in the sector and the action could involve up to 3,000 workers at Stanlow, Fawley, Valero, Grangemouth and Mossmorran oil refineries as well as at the Sellafield nuclear facility. A representative from the GMB Union said that its members’ pay had fallen over 20% behind inflation.

Whilst ONS data shows that construction vacancies have reduced to 35,000 in July–September 2023 from 49,000 in August–October 2022, they remain elevated compared to historical levels.

Skills shortages and a declining construction workforce are familiar issues. Worryingly, recent online research by Deconstruction, reported by the CIOB, highlighted the industry’s growing image problem, with 69% of UK adults saying they would not consider a career in construction.

Over 40% of those surveyed (43%) perceived construction as one of the least likely industries to require education to a higher level, compared with other industries such as healthcare and finance. Just under three in 10 (29%) perceived construction as rewarding and would be unlikely to recommend construction as a career path to a young person.

As well as attracting, training and retaining workers, the construction industry also needs to improve productivity to make better use of the resources available.

The Construction Leadership Council (CLC) recently launched a report exploring the potential for the UK construction industry to transform its productivity, identifying three headline improvement areas: better preparation, better building and better business.

According to the report, over 500,000 UK-born construction workers are expected to retire in the next 10–15 years — a significant loss of capacity and skills. Annually, the industry targets 30,000 apprentices to join the sector. It will be necessary for those nearing typical retirement age to mentor those entering the industry.

As the construction industry evolves, there will be a mix of skills and roles required. The report highlights new skillsets around digital and net zero and the importance of understanding data needs. The government recently launched Bridge AI, offering funding and support to help businesses in high-potential growth sectors, like construction, to harness the power of AI.

In September, Innovate UK launched a £32 million fund for innovative products that improve productivity through the use of AI and machine learning. Applications can be made by businesses of any size, academic institutions, charities and the public sector, or as a research and development collaboration.

Hopes are that the digitalisation of the industry will help to attract new entrants and change perceptions that it is ‘unsafe’ and ‘dirty’.