Karl Horton, Chief Data Officer at the Building Cost Information Service (BCIS), comments on what needs to be done to address the skills shortage within the UK construction sector following recent concerns over stalling national infrastructure projects:
“This is a widespread and increasingly prevalent issue that we can see clearly in the data. In 1Q2024, the UK construction workforce was 90% of the size it was in 4Q2019, though there are many factors at play beyond the pandemic. Ultimately, fewer workers place upward pressure on wages and labour costs.
“Annual inflation in the BCIS Labour Cost Index was 8.3% in 1Q2024, the highest level for more than 20 years. The Hays/BCIS Site Wage Cost Indices, which track movement in the market for agency labour, showed an overall annual increase of 7% in 1Q2024. In comparison with the previous quarter, increases were seen primarily in skilled roles.
“The current shortages and rising costs are set against subdued market demand, largely due to prolonged high borrowing costs. Recently, output in construction has been contracting while the wider economy has returned to growth. With increased demand, the shortages will be felt even more acutely and we’re nowhere near hitting the levels of labour needed to deliver the infrastructure improvements or meet the housing requirements that have been targeted.
“The next government faces a monumental task in supporting construction back to growth. This needs to include a long-term strategy, not subject to political cycles, to expand the industry’s workforce. The industry must also invest in training the next generation of workers and be patient with these initiatives as it’s an issue that won’t be resolved overnight.”