Demand for Construction Workers at all Time High

All sectors are feeling the pinch in this candidate-led market, with unemployment at record lows as employers scramble to find enough workers to fill their vacant roles.

But nowhere is this more true than in the construction industry, which, according to the latest report by the Construction Skills Network, could struggle to meet expected growth if an additional quarter of a million workers aren’t employed by 2026.

In this article, we discuss the key findings of the report and reveal its suggestions for how recruiters can increase their teams.

As the shock of the pandemic has begun to lessen, the construction sector has had one of the largest bounce backs of all industries. New orders had recovered to their pre-pandemic level by Q2 2021, and annual construction output went on to increase by a record 12.7% in 2021.

And the trend continues, the ONS recently reported that the construction workforce grew by 1.2% in Q1 this year, rising from 2.16m in 2021 Q4 to 2.18m.

But these numbers aren’t going to be enough to support the growth in the sector, with a Construction Skills Network (CSN) report showing that the industry will need an additional 266,000 by 2026.

Back in January, the Construction Products Association (CPA) forecast that industry output would grow by 4.3% in 2022, and the trend will continue. There will be 2.78 million workers employed in the construction industry by 2026 if projected growth is met.

What is driving the growth in the construction industry?

Despite a variety of factors causing supply chain issues, there seems to be no end to the surging demand for private housing, as major housebuilders report that their output will continue to grow over the next few years.

In addition, the government’s drive to achieve Net Zero, along with technological advancements in eco-friendly building techniques, is pushing a growth in sustainable projects.

There is also no slowing down in the infrastructure sector, with civil engineering projects at a high.

Repair and maintenance contracts will also be needed to support the growing built environment. 

Construction Industry Training Board (CITB) chief executive Tim Balcon said: “Construction is vital in supporting the backbone of the UK economy. These future growth projections are encouraging after the stalling effects of the pandemic. However, this is set against a current backdrop of higher energy costs, material shortages, and associated price inflation that is currently hitting companies across the sector.”

What skills are short and where?

The report states that the largest increases in annual demand will be for carpenters, joiners, and construction managers as well as technical roles such as electronics technicians and estimators, and non-site support staff.

The South-West sees the biggest need for additional staff, with 41,950 new workers required to meet demands, while Greater London and the Southeast will need 26,000 and 23,000, respectively.

Suggestions of how to grow teams

The report admits that recruitment is a challenge. Construction vacancies are at a 20-year high and coupled with the competition for talent from other industries, this will mean that employers will need to rethink their recruitment strategies.

The report suggests that there just aren’t enough fully skilled workers in the pool to cover demand, so attracting young people, and training them from the ground up, will be a key strategy. But this means that the industry needs to work on its image to be able to attract talent, with only 2% of people in a recent survey considering construction as their preferred industry of work. 

Employers are encouraged to attract workers from non-traditional routes, such as adult re-skillers as well as develop domestic talent through Further Education (FE).

Balcon also reminded of the need for increased diversity in this traditionally male-dominated environment, “Training routes into the industry will be a focus for us and we have to attract and retain those that are under-represented – in particular women and those from ethnic minorities. It will be a major task, but the industry needs to evolve and reach its untapped potential for the national economy and our competitiveness on a global scale,” he said.

But employers must also ensure that they are working to retain their skilled workers, by providing competitive rewards packages and putting employee experience at the top of their priority list.

ONS Labour Market Overview

Hours Worked Increase

The Office of National Statistics release a monthly labour market overview, which estimates levels of employment, unemployment, economical activity, and other employment-related statistics for the UK. The latest UK Labour Market Overview shows, among other things, that the number of hours worked is on the increase. 

At a time when latest figures state that UK inflation has hit a 40 year high of 9%, the fact that the number of hours worked has increased might suggest desperation from UK workers. 

But could it be explained by something else? Read on to find out.

The latest UK Labour Market Overview just dropped, and it reveals some interesting insights about the state of our current labour market. It comes just days after the State Opening of Parliament, during which the government declared its intention to “grow and strengthen the economy and ease the cost of living for families.” 

And the latest figures from the Labour Market Overview suggest that things have still not recovered from the pandemic, proving that the government’s priorities appear to be in the right place. 

What is the Labour Market Overview?

The Labour Market Overview is released monthly by the ONS and is based on figures from the previous 3 months. This means that this release works on information provided from January 2022 to March 2022.

Some of the data included in the report is gathered from the Labour Force Survey (LFS) which is run by field interviewers each month, and some data, such as average weekly earnings and vacancies, rely on data collected from surveys of employers.

While the report is designed to provide only estimated predictions about the current state of the labour market, it does give useful information about what is going on.

Labour hours grow

One of the key measures in the report is the number of total actual weekly hours worked. 

This increased by 14.8 million hours to 1.04 billion hours in January to March 2022, compared with the previous quarter. This might suggest that, due to the surging cost of living, people are taking on additional work to make ends meet in the forms of overtime or even additional part time roles.

But this is still 10.7 million hours below the pre-pandemic rates. So, this could be a bounce back as people return to work after the pandemic, especially with things still unlikely to have fully settled since the end of the furlough scheme in September.

Falling Unemployment Levels

Unemployment also fell to its lowest level in 47 years, and for the first time since records began, there are officially fewer unemployed people than job vacancies. This reflects recruiters experience of the candidate led market, where demand for candidates is outstripping supply.

But again, this could be down to the pandemic. What has been dubbed “The Great Resignation” continues, as people rethink their priorities in the wake covid, with a reported 500k or more people completely disengaging from the labour market since the pandemic began. 

Bonuses Show Pay Growth, but that’s not the full story

After taking inflation into account, pay including bonuses rose 1.4% from January to March. But excluding bonuses pay fell by 1.2%, showing just how much the average employee is being squeezed. 

Bonus payments are at their highest levels since 2013, as employers look for ways to help workers navigate the higher living costs, but without committing to wage deals which beat inflation. Ultimately, the increase in bonuses is being driven by the lack of candidates, as employers frantically scrabble to attract and hold on to workers knowing that they might find them difficult to replace in this scarce market.

The next release of the Labour Market Overview is due mid-June, which will be based on figures from February-April. It will be interesting to see the impact of issues such as the Russia-Ukraine conflict, growth in worldwide travel as restrictions ease and the end of free covid testing (which could put further strain on an already stressed labour force). 

Elizabeth line will open on Tuesday 24 May

Transport for London has today finally confirmed the Elizabeth line will open on Tuesday 24 May, subject to final safety approvals.

But work is set continue at the delayed Bond Street station, which will not open with the other stations on the day.

TfL said work was progressing at Bond Street and the team were working hard to open the station to customers later this year.

The Elizabeth line was originally planned to open in December 2018 but the project faced numerous setbacks, which saw the cost rise from around £15bn to £19bn.

The new line is set to be crucial to London’s recovery from the pandemic, helping avoid a car-led recovery by providing new journey options, supporting regeneration across the capital, and adding an estimated £42bn to the UK economy.

TfL Image - Elizabeth line Paddington station platform

Andy Byford, Transport for London’s Commissioner, said: “I am delighted that we can now announce a date for the opening of the Elizabeth line in May.

“We are using these final few weeks to continue to build up reliability on the railway and get the Elizabeth line ready to welcome customers. The opening day is set to be a truly historic moment for the capital and the UK, and we look forward to showcasing a simply stunning addition to our network.”

Direct services from Reading, Heathrow and Shenfield are expected to connect with the central section in autumn 2022, with full end to end services commencing no later than May 2023.

The opening of the Elizabeth line has always been planned to take place in stages to ensure the new section stations, signalling and infrastructure can run safely and reliably before it fully links in with services out to the east and west.

VolkerFiztpatrick wins three new Birmingham railway stations

VolkerFiztpatrick wins three new Birmingham railway stations

VolkerFitzpatrick has been appointed by Transport for West Midlands (TfWM) to build three railway stations on the Camp Hill line in south Birmingham.

The £61m scheme will reintroduce passenger train services to Moseley, Kings Heath and Hazelwell for the first time in 80 years.

Design work has started and work on site will begin from November with the stations expected to be completed next autumn.

Malcolm Holmes, director of rail with TfWM, said: “This is a major milestone towards seeing passenger trains restored on the Camp Hill line, with the contractor in place and construction crews gearing up to get on site.

“This means, that after several years of planning and development, we are now entering the final phase and it will not be too long before these stations are complete and open to the travelling public.”

Mike Evans, operations director for VolkerFitzpatrick, said: “Our team are excited to be part of these ambitious plans to create an improved transport network, that will support the region’s ambition to be net zero carbon by 2041.”


Report on Jobs February Round Up

The Report on Jobs is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.

The main findings for February are:

Softer, but still rapid increase in hiring activity

UK recruitment consultancies recorded a further robust increase in hiring activity during February amid reports of rising workloads at clients and greater confidence in the outlook. That said, permanent placement growth eased to an 11-month low and temp billings also expanded at a softer pace, with recruiters frequently stating that candidate shortages had limited their ability to fill roles.

Candidate supply falls at quickest rate for three months

The total availability of candidates fell at the sharpest rate since last November in February, driven by steeper falls in both permanent and temp staff supply. Lower candidate numbers were generally attributed to ongoing tight labour market conditions and robust demand for staff. There were also reports that the pool of candidates was limited due to lingering pandemic-related uncertainty and fewer foreign applicants.

Vacancy growth accelerates for first time since last July

Overall vacancies expanded at the quickest rate for three months in February. This marked the first acceleration of growth since last July, and was driven by sharper rises in demand for both permanent and temporary staff.

Pay pressures sharpen in February

Recruiters continued to see intense competition for workers in February, leading to further steep increases in rates of starting pay for both permanent and short-term staff. Notably, permanent starters’ salaries rose at the second-sharpest pace since data collection began in October 1997.

Fresh Concept HS2 Euston station design revealed

HS2 has revealed fresh concept designs for the Euston terminus based on a less complex, more efficient, 10-platform station that can now be built in a single stage.

Arched station roof swapped for easier to build geometric design

Arched station roof swapped for easier to build geometric design

Mace Dragados JV, HS2’s station construction partner, has worked with the design consortium of Arup, WSP and Grimshaw Architects to refine and value engineer the design to reduce costs.

Original concept HS2 Euston station design.

The original arched station roof has been swapped for an easier-to-build geometric roof design that allows natural light to flood into the 300m long station concourse below.

Elements of the new roof design can be prefabricated off-site, and installed using modular construction techniques, reducing costs, carbon emissions and local disruption.

The HS2 station will be set across three levels, with 10 subsurface platforms that are 450m long.

The 300m long ground-level concourse will open out onto new public spaces at the north and south entrances.

The station hall – 20% larger than Trafalgar Square – will become the largest station concourse in the UK.

Retail and station facilities will be available on the ground and first floor, underneath the top-lit station roof.

Construction of the HS2 station will also support 3,000 jobs at peak and will offer hundreds of contract opportunities through the supply chain.

MDJV recently began a multi-year procurement of packages worth £500m for work on the HS2 station and the London Underground at Euston and Euston Square which will provide improved connections for passengers.

Taking account of the recommendations of the independent Oakervee review, the design integrates the HS2 station with the existing Network Rail station and emerging plans for over site development, led by Lendlease.

Lendlease, the Government’s appointed Master Development Partner at Euston, has started an 18-month long public consultation to seek the views of the local community about what would be of value to them in the development.

Levelling Up pledge for London style transport across UK by 2030

Transport links across the UK will be “significantly closer to the standards of London”, with improved services, simpler fares and integrated ticketing by 2030, the Government has pledged in its new Levelling Up White Paper.

The strategy, launched today by Levelling Up secretary Michael Gove, will support the setting up of mayoral combined authorities (MCAs) across England and is offering a “simplified, long-term funding settlement”.

Negotiations are due to start with the West Midlands and Greater Manchester combined authorities to enable “deeper devolution deals”. The boundaries of the new MCAs will be “recast where necessary” to ensure “there is greater economic coherence”. The Government says it will invite nine areas to agree new County Deals and will seek to agree further MCA deals.

Central missions

The White Paper sets 12 central missions by 2030 including plans to: close gaps in transport and connectivity; close the gap between the UK’s highest and lowest performing cities; improve educational attainment among children leaving primary school; narrow the gap in healthy life expectancy between the best and worst performing areas of the UK; and provide access to 5G broadband for the “large majority” of households.

Labour said the plans contained no new money and little fresh thinking. But Gove argued that the strategy was not aimed at providing new funding but ensuring that money already pledged was spent effectively.

Chancellor Rishi Sunak had already presented a “huge cheque” in his Spending Review (in October 2021) which would now be spent, Gove told Sky News.

“We’re making sure in Wolverhampton, in Sheffield and in other areas that we put our money where our mouth is,” he said. “And that we make sure that money which in the past was spent too much in London and the south-east is now spent in the north and the Midlands where it’s needed.”

Since 2019 the Government has started the process of spreading opportunity around the country, “alongside mitigating the worst effects of the pandemic”, according to the White Paper.

It highlights: a five-year consolidated transport settlements amounting to £5.7bn in eight city regions outside London; £5bn of funding for buses and active travel over this Parliament; and £96bn for the Integrated Rail Plan “delivering faster, more frequent and more reliable journeys across the North of England and the Midlands”.

UK Shared Prosperity Fund

The strategy refers to the £2.6bn UK Shared Prosperity Fund, due to be launched in the spring. The will focus on three main areas for investment: improving communities and place; people and skills; and supporting local business.

“We will slash away the bureaucracy of the old EU regional funds,” says the White Paper. “Instead, local leaders will be empowered to direct funding towards their own, locally identified priorities, whether that be promoting new outdoor markets, reducing litter, graffiti and anti-social behaviour, reviving high streets, supporting local businesses or introducing skills provision to match local labour market need and support those furthest from the labour market.”

The UK Shared Prosperity Fund will regenerate 20 towns and cities “by assembling and remediating brownfield land and working with the private sector to bring about transformational developments combining housing, retail and business in sustainable, walkable, beautiful new neighbourhoods”. 

Michael Gove said: “The United Kingdom is an unparalleled success story with one of the world’s biggest and most dynamic economies.

“But not everyone shares equally in the UK’s success. Great cities like Glasgow, Belfast, Swansea and Manchester, and proud towns from Aberystwyth to Armagh, to Bangor and Yeovil, have huge potential but contain inequalities which hold too many back.

“Our ambitious plan to unite and level up the whole UK seeks to end that historic injustice and call time on the postcode lottery. We will only succeed if all layers of government – UK, devolved, and local – work together.”

Where missions fall in devolved policy areas, the UK Government will seek to work collaboratively with the devolved governments, he said.

Mayors react to White Paper

Andy Street, the Conservative mayor for the West Midlands, said the White Paper would “finally address the imbalance of opportunities across the UK”.

He said: “Prior to the pandemic we already had the fastest growing economy outside of London, with record homes being built, record numbers in work, and record investment in public transport.

“But with Covid knocking us for six we needed the White Paper to help get us back on track, and that is exactly what it will do.”

Street said he would be seeking talks with the Government for a fresh “devolution deal” for the region.

Tracy Brabin, Labour mayor of West Yorkshire, welcomed the White Paper but said the North would be left “struggling” if the strategy was not supported with extra funding.

She said: “The devil is going to be in the detail. It is like a love letter to Levelling Up: lots of ambition, lots of hope, but unless you actually have the money and the resources you are going to be struggling.”

The mayor of South Yorkshire, Labour’s Dan Jarvis, said the White Paper was a “step in the right direction” but added that the strategy did not “provide the investment needed to deliver the transformational change all of us in the North want to see”.

Meanwhile, Andy Burnham, Labour mayor for Greater Manchester, said the North risked being left with “second-best” trains for 200 years under the Government’s £96bn rail plan.

While Greater Manchester  would do better than most in the North, the rail plan would not “maximise the levelling-up benefits”, he warned.

The Integrated Rail Plan, published in November 2021, scrapped plans for the Birmingham to Leeds leg of the HS2 high-speed rail line and did not include a full high-speed east-west line linking Manchester to Leeds.

 “These are once-in-200-years decisions for the country and particularly for the north of England,” said Burnham. “If we get second best then the north will have second best for 200 years or more.”

The Treasury had failed to carry out a Levelling Up analysis of the economic benefits that would come from the rail plan, Burnham argued. The question about the spending, he said, should be “does it maximise the levelling-up benefits – and I don’t believe it does”.

Levelling Up White Paper: 12 missions by 2030

  • Local public transport connectivity across the country will be significantly closer to the standards of London, with improved services, simpler fares and integrated ticketing.
  • Pay, employment and productivity will have risen in every area of the UK, with each containing a globally competitive city, and the gap between the top performing and other areas closing.
  • Domestic public investment in R&D outside the Greater South East will increase by at least 40%, and over the Spending Review period by at least one third. This additional government funding will seek to leverage at least twice as much private sector investment over the long term to stimulate innovation and productivity growth.
  • UK will have nationwide gigabit-capable broadband and 4G coverage, with 5G coverage for the majority of the population.
  • Number of primary school children achieving the expected standard in reading, writing and maths will have significantly increased. In England, this will mean 90% of children will achieve the expected standard, and the percentage of children meeting the expected standard in the worst performing areas will have increased by over a third.
  • Number of people successfully completing high-quality skills training will have significantly increased in every area of the UK. In England, this will lead to 200,000 more people successfully completing high-quality skills training annually, driven by 80,000 more people completing courses in the lowest skilled areas.
  • Gap in Healthy Life Expectancy (HLE) between local areas where it is highest and lowest will have narrowed, and by 2035 HLE will rise by five years.
  • Wellbeing will have improved in every area of the UK, with the gap between top performing and other areas closing.
  • Pride in place, such as people’s satisfaction with their town centre and engagement in local culture and community, will have risen in every area of the UK, with the gap between top performing and other areas closing.
  • Renters will have a secure path to ownership with the number of first-time buyers increasing in all areas; and the Government aims for the number of non-decent rented homes to have fallen by 50%, with the biggest improvements in the lowest performing areas.
  • Homicide, serious violence and neighbourhood crime will have fallen, focused on the worst affected areas.
  • Every part of England that wants one will have a devolution deal with powers at or approaching the highest level of devolution and a simplified, long-term funding settlement.

New work surges as materials shortages ease

Construction output has once again bounced back above the pre-pandemic high-water mark after a strong surge in new work during November.

A 5.7% hike in new work lifted overall construction output by 3.5%, despite a small decline in repair and maintenance workloads.

Monthly construction output recovery

The surge lifted overall activity above the February pre-pandemic high for the second time after the initial rebound recovery started to be dragged down by a slowing of workloads 12-months ago due to bad weather and then material shortages.

Total work is now running 1.3% above the February 2020 high.

The Office for National Statistics attributed the latest upbeat contractor workload returns to strong demand for work, in combination with supply chain bottlenecks for certain products easing and the unseasonal mild and dry weather.

Infrastructure new work and private housing new work were the largest contributors to the monthly rise in November, increasing by 11.4%  and 5.5% respectively.

Private housing repair and maintenance was the only sector to fall.

Trend three-month totals showed growth had taken hold across most sectors with only commercial and public housing new work lagging behind in the broad industry recovery.

Renewable energy projects along with road and rail developments are contributing significantly to the large increase in this type of work over the last 18 months.

Private housing repair and maintenance was the only sector to have fallen, decreasing by 2.4%.

Mark Robinson, group chief executive at public procurement body Scape, one of the UK’s leading public sector procurement authorities, said: “Further growth in the autumn, set against the context of the long-term inflation and labour supply challenges that characterised much of last year, clearly demonstrates the industry’s resilience.

“But, the impact of Omicron in exacerbating ongoing staff shortages means that the sector is likely to endure further disruption over the coming months.”

“Public sector construction will continue to make up a significant volume of the industry’s output.

“With the overhaul of the government’s procurement standards gathering pace, those looking to capitalise will need to invest heavily in their ability to deliver enhanced social value and meet the net-zero ambitions of clients in the sector.”

Construction output shows fastest rise in four months

Construction buyers reported the fastest rise in output  in four months in November with commercial work leading the way.

The bellwether IHS Markit/CIPS UK Construction PMI Total Activity Index hit 55.5 in November – up from 54.6 in October.

There were also signs that the worst phase of supplier delays may have passed, with the portion of survey respondents citing longer delivery times falling to 47% in November compared with a peak of 77% in June.

A steeper rise in commercial construction (index at 56.5) helped offset a sight showdown in house building growth (54.7, down from 55.4).

Civil engineering was the weakest-performing area in November (53.9), although the latest rise in activity was the largest since August.

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: “UK construction enjoyed a rebound in November with the fastest level of output growth for four months as supply chain managers increased their purchasing activity to meet a strong pipeline of new building projects.

“Adding to this positivity was signs of recovery in supply chain performance with just 47% of construction firms reporting longer waiting times, which is the smallest number for eight months.

“Even with this glimmer of hope that the pressure on deliveries was easing, purchasing remained at higher level to counteract disruptions from ongoing driver shortages and port delays as supply chain managers bought more than their immediate need.

“Job hiring growth was still maintained in November but was the weakest since March. Builder optimism was somewhat flat as the costs of building still remained high
and firms struggled to stay competitive.”

Tim Moore, Director at IHS Markit, which compiles the survey said: “Input price inflation remains extremely strong by any measure, but it has started to trend downwards after hitting multi-decade peaks this summer.

“The latest rise in purchasing costs was the slowest since April, helped by a gradual turnaround in supply chain disruption and  a slight slowdown in input buying.”

Employment figures holding steady following end of furlough scheme

80% of industries reporting record job vacancies

According to the latest labour market stats from the ONS, October saw 29.3 million employees, up by 160,000 on the revised September statistics. However, it was noted that it’s possible these figures may change while furloughed staff, who were made redundant, work out their notice period. But responses to the ONS survey suggest that redundancy numbers are likely to be a small share of those still on furlough when the scheme came to an end.

The Labour Force Survey estimates that for July to September 2021 the employment rate increased 0.4 percentage points on the quarter, to 75.4%. ONS reported that the increase in employment was because of a record high net flow from unemployment to employment. Total job-to-job moves also increased to a record high, largely driven by resignations rather than dismissals, during the same period. The rise is also driven by an increase in part-time work and an increase in the number of people on zero-hour contracts, driven by young people.

The unemployment rate decreased 0.5 percentage points to 4.3% while the inactivity rate remained unchanged at 21.1%.

But we have yet to see the full effects of the end of the furlough scheme and the relevance of zero-hour contracts in these figures. David Head, Director at TALiNT Partners commented: “Zero-hour contracts, if implemented ethically between employer and employee, are perfect because they allow flexibility in the workforce and allow businesses to expand and contract whenever necessary. However, having vast numbers of people on zero-hour contracts will inevitably mask the true numbers of the unemployed.”

The latest figures show that the number of job vacancies in August to October 2021 continued to rise to a new record of 1,172,000. This is an increase of 388,000 from pre-pandemic numbers of January to March 2020 level, with 15 of the 18 industry sectors showing record highs.

During the quarter, annual growth in average total pay (including bonuses) was 5.8% and regular pay (excluding bonuses) was 4.9%. Annual growth in average employee pay has been affected by temporary factors that have inflated the headline growth rate. These factors are now waning and will have a smaller impact on growth rates, according to the report.

James Reed, Chairman of REED commented on the continued increase of job vacancies: “This ongoing rise in job vacancies is a positive sign of the economy’s continued revival. Rapid job creation means there are plenty of opportunities to go around, and not just for those recently off furlough, but also for others who have faced long or short-term unemployment as well as those already in work who are seeking a new challenge.

“After experiencing a cautious labour market during the pandemic when job opportunities were restricted and workers were less incentivised to move, there has never been a better time to look for a new role than now.”