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Building firms report upswing in confidence as pay rates rise

27 Apr 16 Small and medium sized building firms expect their costs to continue to rise, with skills shortages continuing to drive up pay rates.

Bricklayers are now earning up to £60k a year
Bricklayers are now earning up to £60k a year

Over the coming six months, output prices, wages and salaries and material costs are all projected to increase, according to a survey of members by the Federation of Master Builders (FMB). But so is workload.

FMB’s state of trade survey for Q1 2016 revealed growing workloads and an upswing in confidence for future business.

The proportion of businesses with negative expectations went down from 19% to 12% while those predicting higher workloads went up from 22% to 38%.

Commenting on the results FMB chief executive said: “More than half of small construction firms are predicting that wages and salaries will increase over the coming six months. Given that brickies are already able to command wages of up to £60,000 per year in London and around £45,000 a year in the North of England, it’s clear that the skills squeeze is starting to push up costs for construction SMEs. A whopping 55% of small building firms are currently reporting difficulties hiring bricklayers, which makes these tradespeople the most in-demand of all construction workers. This particular skills shortage is of course linked to the steady growth in private house building.”

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Mr Berry continued: “The results for the first three months of this year show consistent growth among small construction firms in almost all parts of the UK. What’s more, despite evidence of the EU referendum causing some uncertainty within the business community, more than two-thirds of firms expect their workloads to increase over the coming three months. These results are heartening but skills shortages, and the knock-on effect on wages and salaries, remains a major cause for concern.”

He concluded: “We need tens of thousands of new and returning construction workers to pick up the slack, or this growth among construction SMEs could so easily unravel. The government is hoping to address the skills shortages through the new apprenticeship levy, which is due to come into force in exactly one year.

“However, I have spoken to many small construction bosses who have major concerns about the impact that the new funding arrangements, which will come into effect alongside the levy, will have on their ability to hire an apprentice. The government must work closely with the construction industry to ensure its new system is as easy to use as possible, or else we could see apprenticeship training by small firms nose dive at exactly the wrong time.”

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