According to the Federation of Master Builders (FMB), which has identified the trend, the reduction in direct employment is in response to market uncertainty.
FMB chief executive Brian Berry said: “Years of Brexit uncertainty have resulted in construction bosses starting to change how they employ their workforce. To ensure their firms are ready for any economic shock-waves later this year, employers are reducing their number of direct employees and relying more on subcontractors who are easier to shed if work dries up.”
The shifting pattern of employment was uncovered in the FMB’s state of trade survey for the second quarter of 2019. It found that there was a decrease in employment levels among member firms for the first time in more than five years, with 21% of employers reporting a reduced workforce.
Approximately 19% of businesses recorded an increase in staffing levels, up from 17% in the Q1 survey, while those stating falls in employment also grew to 21%, up from 16%. At 61%, most firms indicated no change to the workforce.
After a difficult start to 2019, workloads for construction SMEs grew slightly compared with the previous quarter; the proportion of firms reporting rising workloads was up from 22% three months ago to 27% this time.
But future expectations have weakened slightly. The proportion forecasting higher workloads over the coming has dipped from 41% in Q1 2019 to 37% in Q2.
Brian Berry said: “The construction industry has always used a significant proportion of subbies but the fact that direct employment is decreasing, points to Brexit nerves among construction bosses. This is the reality on the ground of what happens when years of uncertainty are inflicted on the construction industry. Furthermore, apprenticeship training has taken a hit as construction bosses are reluctant to take on young people when they can’t be sure of future projects going ahead.”
He added: “Worse still, the fear is that using more subbies can lead to a drop in the quality of our builds. Direct employees, who are well-known to their firm, are much more likely to follow the ethos of their company and build to the right standard. If construction bosses are trying to protect their businesses by employing more subbies, they might not always know how good these subbies are. Rebalancing the workforce may seem like a good idea at the time, but it could lead to reputation-damaging mistakes. If a downturn is on the horizon, reputation is everything and construction employers can scrutinise the quality of their workforce far more easily when they’re on the books.”