The skills crisis
Despite increased levels of uncertainty, Brexit appears to have been the trigger for further employment growth across the UK economy, with businesses preferring to hire people rather than invest in plant and equipment to deliver long-term productivity gains.
As a result of skills shortages, earnings growth for construction employees has averaged 4.2% over the past year, up from 2.1% in 2017. Earnings inflation for the self-employed, who make up 41% of the entire construction workforce, could be higher still. Overall in the UK, nearly 100,000 jobs were created in the three months to March 2019.
Yet given growing concern as to whether EU migrants will continue to want to work in the UK, combined with the accelerated retirement of older workers from 2024 onwards, labour pressures are expected to intensify. An anticipation of tighter labour markets from 2022-23 means construction input costs are predicted to rise by 1% per annum, reaching 4% by 2022.
The supply chain will need to look at other options for increasing productivity. Off-site manufacturing currently delivers around 8% of industry output, but with the introduction of a government mandate, this could increase significantly. Adopting new technologies to improve processes will help to eliminate waste and duplication, while a renewed focus on training and re-training – particularly with the introduction of T-levels in 2020 – will further help to support a much-needed flow of talent.
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