Labour shortages key concern for construction post-Brexit
At a careers fair for sixth-formers I attended recently, an unhelpful teacher described working in the built environment as being a bit like being an elevator attendant - with an equal number of rises and falls on a daily basis. He exaggerated, but he had a point.
Post Brexit and Trump, we are in a strange and uncertain period. Sentiment has shifted from the initial shock of witnessing both events to settling into a short-term pattern of recovery.
The value of housebuilders dropped by more than 30% at the end of June last year, for instance, but now I read they are back at pre-Brexit levels.
This is not to say there has been no impact at all. We saw tender prices rise by around 5% at the end of last year and building materials cost inflation continues to pick up pace, increasing by an average of 2.5% from the end of 2016 to the start of 2017.
The reduction in the rate of sterling is now beginning to feed through into the supply chain in terms of imported material prices and this is inevitably going to push up the cost of construction, which could either deter developers from building or cause them to postpone or perhaps just shrug it off. We are, though, undeniably seeing property values dropping by way of ‘post-Brexit realignment’.
However, the core issue for construction is not going away any time soon - that being the shortage of skilled labour. This is exacerbated by a lack of certainty over the immigration status of non-UK citizens from the EU.
There has also been a lift in the property markets of Spain and Poland - and with the value of sterling dropping, a wage packet in GB pounds is now not nearly as attractive when converted into euros. So some of this vital skilled labour force has already packed up and gone home.
No more hand-picked labourers
A Polish bricklayer is not too worried by the ramifications of Article 50 negotiations and may even ignore a worrying perceived upturn in anti-immigrant rhetoric, but when his wage packet drops in value by 20%, the prospect of returning to Warsaw beats risking a scowl while getting to work in Southwark.
Balfour Beatty has recently highlighted the potential impact of a ‘hard Brexit’ on skills in the rail industry. It revealed that more than 10% of its workforce hold non-British EU passports and warned that uncertainty around the free movement of labour in the EU could increase the industry’s recruitment and staffing difficulties as it may no longer be able to hand-pick highly skilled engineers from other EU countries.
Some are even examining the possibility of bringing skills in-house again. French contractor Vinci has recently talked of in-house training programmes for bricklayers.
The contractor market in which Balfour and Vinci operates has long been used to the rollercoaster nature of our industry and has been working hard to future-proof against this. This market now wants a balanced portfolio of public and privately funded work that does not leave it so exposed to the vagaries of the market.
However, with a shortfall of more than 400,000 craftspeople heading towards us over the mid-term through natural wastage and retirement, it is not who funds the project that is the only concern, but who is going to build it.
The latest Construction Skills Network report from the Construction Industry Training Board predicts growth of 1.7% over the next five years, with 179,000 jobs to be created. Frankly, we could all have done without the EU workers currently employed in the UK being used as political chess pieces in the Brexit negotiations.