Skills shortages continue to hamper growth in the construction industry

Growth in the construction sector continues to be stymied by the skills shortage which is also driving up wages across the industry, according to the latest RICS UK Construction Market Survey.

Construction skills shortages are pushing wages in the sector far above the national average and could be putting at risk some of the government’s biggest housing and infrastructure programmes, the RICS survey reveals. 

The construction skills shortage led to a 6% hike in industry wages in 2015, a marked increase on the average UK wage rise over the same period of under 2%. 61% of property professionals reported that sector wages are continuing to rise with 66% of construction professionals citing skills shortages as the biggest barrier to growth in the UK construction sector. Bricklayers and quantity surveyors are reported to be in particularly short supply, with 62% and 60% of survey respondents having difficulty finding these workers.

Reflecting industry concerns about funding expressed in recent Infrastructure Intelligence articles previewing 2016, net lending to the sector fell by a further £274m in the three months to November. 64% of respondents highlighted continuing issues around financial constraints, but despite these concerns, 45% said that they expected profit margins to rise over the coming year. 

The survey revealed that a net balance of 33% of respondents were still seeing an increase in the number of new projects they were taking on down from 39% in the third quarter. The private commercial and private housing sectors continue to be the key drivers of construction activity.

RICS claims that the skills crisis is slowing growth in a sector that is vital to UK plc. “Unless government looks to address the problem urgently, some of its key housing and infrastructure programmes could soon face crippling delays and spiralling costs,” they say.

Commenting on the report, Simon Rubinsohn, RICS chief economist said: “While workloads are still growing at a relatively healthy pace, labour shortages in the construction sector are causing delays at different stages in the development process and leading to significant problems with project planning. More than 60% of our survey respondents said that these resulting planning delays were an impediment to growth. That said, industry wages are becoming increasingly attractive, and I would hope that over time this will encourage skilled workers to return to the sector, as well as drawing school leavers and graduates towards construction industry careers.”

Government must deliver a new skills strategy, say RICS, to enable industry, unions, and educators to work together and deliver real solutions. “Apprenticeships alone will not be enough. Ministers must look to draw a link between education, future careers and skills. Employers need to take the lead in improving skill levels, providing more vocational pathways to work and actively engaging with our country’s schools and colleges,” the report says.