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Skills shortages in Construction continue to bite

The job market is over-heating in the construction sector with skills shortages causing pressure, driving up costs and holding back growth.

One of the most noticeable effects of the skills shortage is that competition for skilled people has resulted in a race to the bottom of who can pay the most to subcontractors and new employees and with deeper pockets, larger construction companies will be at an advantage.

Smaller developers will find that they can’t compete with the larger companies and struggle take on more work as their margins shrink due to labour costs.

On an individual level, companies would do well to remember that salary isn’t everything to attracting talent. In our experience, whether it is a tradesperson or management, people often place work environment and none financial benefits over a large salary.

On an industry level, tackling this problem will require small and large companies across the entire sector to come together with the government in association with the education sector to ensure that the next generation of skilled construction personnel is being trained.

The recession cut the industry to the bone, resulting in a drastic reduction in training and a significant proportion of the workforce leaving the industry.

In recent years the industry has made significant regulatory steps forward. The industry is safer but bar for entry has been raised to not just newcomers but also any people that wish to re-join the industry to take advantage of the present growth.

Those returning to the industry will even see that the skills, qualifications and capability required has changed dramatically even from a few short years ago.

This has led to a situation where skilled foreign workers are relied upon to plug in the gaps: a short term solution to a long term problem.

So what does this mean for construction companies right now?

The pay scales for tradespeople has dramatically increased in line with the demand for them.

This rise in labour costs in the face of drastically increased demand for construction results in the perfect storm.

Larger, publicly listed construction companies have additional challenges. They will be under pressure to expand fast enough to take advantage of industry growth. Given the lack of manpower available to them these companies are struggling to meet the demands of shareholders and analysts are only too aware that it is a universal problem that no one company can deal with.

In the short term shoring up profitable and long standing relationships with subcontractors by providing favourable conditions may help to weather this storm.

This problem will only grow, with industry statistics showing that more than 400,000 construction workers will reach retirement age in the next five to ten years and it is all too clear we lack the people to replace them.

There is vocal concern about the shortage of tradesmen and women but the cries are being drowned out by rhetoric advocating growth and investment.

It is vital that we pay attention to the process that leads to success and invest in our future through training and developing the workforce required to satisfy our ambition.

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