Economic recoveries pose challenges as well as benefits – and a downside of this recovery is a skills shortage. In fact, construction is already being hit as builders and developers report a lack of skilled workers.
In short, it’s all very well having an upturn, but you must be able to make the most of it when it comes.
For the property industry, the issue has become not so much whether activity will increase – it is generally agreed that it will – but whether enough of the right people are available to take advantage of it.
This problem was underlined by a RICS construction survey, published in January, in which 36% of respondents claimed that labour shortages were impeding construction.
Skills shortages are increasing across all trades and professions, from bricklayers and carpenters to quantity surveyors and other professionals. Project and development manager roles are among those said to be short of qualified candidates. The RICS says that “a higher percentage of respondents are now reporting problems sourcing relevant skills than at any time since mid-2006”.
Oddly, it is not just people that are in short supply. The supply of building materials has not yet caught up with the recovery, with RICS reporting that bricks and concrete blocks are harder to come by than they should be. This is a concern, given that 74% of chartered surveyors are expecting work to increase rather than decrease this year.
Alan Muse, the RICS’s director of built environment, says: “With the economy having turned a corner in recent months, it would seem that the construction industry has followed suit and activity is up right across the country.”
The Bank of England is aware of potential problems associated with this revival, having said at the end of last year that capacity restraints were beginning to bite; the Bank’s regional agents reported increasing evidence of both skills shortages and problems with the supply of raw materials.
Correcting the skills shortage
The materials shortage may be easier to correct than the skills shortage, however.
The dearth of specialist workers, manual or professional, is no surprise. Many surveyors have been made redundant during the past five years and the construction industry has lost 400,000 jobs over the recession. Of those construction workers who remain, one in two are within 10 years of retirement. Also, many who could not get work during the recession have moved on to other things and may not want to come back.
But wouldn’t this shortage have already been addressed by an increase in apprenticeships as the economy approached recovery? The answer is no.
A parliamentary cross-party report into youth unemployment and construction published in February concluded that construction needs 180,000 more workers to build bridges, roads, homes and other infrastructure projects by 2018. The worrying thing, it added, was that the industry has started training only 13,700 apprentices in 2012-13, down by 39% from 22,400 just two years earlier.
Nick Raynsford, former Labour construction minister and co-chair of the committee, has described the number of apprentices as inadequate.
Correcting this is not impossible but may take time. In March the Construction Industry Training Board (CITB) said it was setting up a commission to develop a long-term apprenticeship strategy. The CITB will suggest ways in which the industry can increase significantly the number of apprentices while keeping the “gold standard” training that is “valued by the firms employing them”.
James Wates, chairman of the CITB, said: “We face a perfect storm. Construction is set to lose 400,000 workers to retirement in the next five years and, over the same period, we are set to create 182,000 jobs.”
So there is not just a shortage now, but also a potential shortage over the next few years. Looked at another way, it represents, in addition to risk, opportunities for those who have stuck with their trade or professional speciality through the recession and for anyone who wants to train for a job that is likely to be in demand.
The private sector has not been idle either. Several of the big employers have been taking their own steps to combat future specialist shortages. Land Securities, for example, set up a strategy two years ago to help solve the skills shortage “based on need and demand”.
Construction partners
Debbie Akehurst, LandSec’s head of corporate responsibility, says that this involved working with “construction partners” as well as with councils – notably Tower Hamlets and the City of Westminster – to run suitable courses on the construction curriculum.
“If we have not got skills in construction, then we can’t build the buildings we want to build,” she says.
The benefits to LandSec, as well as to those getting the training, are already measurable. Akehurst says that 235 construction staff who were previously ?out of work are already working on ?LandSec sites.
In some areas, however, the skills shortage may come up against the cuts culture, meaning that fewer people will be asked to do the same job in different areas.
For developers, this can mean that planning applications take longer simply because local authorities do not have the staff to process applications quickly.
A spokesman for the Royal Town Planning Institute says: “Private sector developers are saying that local authorities are taking longer over planning applications because they haven’t got the people to process them.”
One reason for the delays, he says, may be that the trend to stop ring-fencing local authority funding means councils are choosing to spend money in areas other than planning.
He adds: “Previously they would have had to allocate a certain part of their total budget to planning, but now they can choose to do otherwise. It’s not really surprising that many to choose to spend money on housing and social services rather than planning.”
In short, councils and developers will need to reconcile the need to keep costs under control with the need to invest in a skilled workforce.
