The Constructions Skilled Labour Shortage: Why and How do we Solve This?

While the global energy crisis and the rising cost of materials are now undermining construction industry growth, they’re also exacerbating the longstanding skilled labour shortage in the UK.

This issue is also impacting both construction and wider society, with the government continually failing to build the 340,000 new properties (including 145,000 affordable homes) required each year in the UK.

According to a detailed survey commissioned by builder insurance specialists Gallagher, the impact of a skills shortage is being felt throughout the construction industry. But what exactly does this look like, and how can it be solved over time?

Is There a Skills Shortage? And if So, Why?

The failure to build the requisite number of new homes each year (just 37,146 new houses were completed in the financial year ending March 31^st 2022) is indicative of the skills shortage, although it should be noted that this particularly low number was in part due to the impact of Covid-19.

However, the survey carried out by Arthur J Gallagher also revealed the extent of the skills shortage crisis.

More specifically, some 57% of construction firms confirmed that they were short-staffed at the time of asking, with a particularly prominent shortage noted among plumbers and electricians.

This has resulted in 12% of respondents turning down new business recently, while a further 11% have gone further by actively diminishing the range of skilled services that they offer to the public.

From a wider financial perspective, it should be noted that a fundamental lack of skilled workers is costing construction firms £32,000 per annum. This trend is evident in firms of all sizes, so while the sheer size of this sum highlights the extent of the skills shortage across the board.

But what’s behind this skills shortage? Well, one of the biggest factors in the existing imbalance between supply and demand, is an ageing workforce and a significant drop in construction-related apprenticeship schemes creating a shortage in available employees.

In 2021, industry leaders revealed that the demand for such apprenticeships had declined by 40%, at a time when the demand for the private sector and social housing remains noticeably high. With people also retiring from the sector at a significant rate, we can see that the skills shortage is a perfect storm that comprises all of these different components.

With finances also squeezed by rising material costs and increased commercial energy bills, the cost of salaries is also becoming a concern for firms (especially demand rises at a disproportionate rate to supply).

The Bottom Line – How to Resolve the Crisis

Some 17% of construction firms have reacted to this crisis by investing more cash in their recruitment drives, while a further 10.7% have looked to recruit workers from rival companies or other parts of the countries.

However, this simply moves the problem from one location to another, meaning that there will always be some businesses that are struggling to compete for work.

A more effective and long-term solution lies in increased technology adoption. This has been a major issue for construction firms of late (large thanks to finances), meaning that companies have missed out on opportunities to streamline their business models, drive cost efficiencies and better utilise their employees.

Arguably, if firms were able to increase their investment or move more cash into their tech stacks, they may be able to resolve the skills shortage more effectively.