Some blame Brexit, but British nationals appear to be leaving the UK construction industry at just the same rate as foreign-born workers.
CITB’s annual migration report*, out today, shows that the proportion of UK construction workers born overseas barely changed between 2019 and 2020, falling from 13.5% to 13.4%.
This appears to debunk the idea that Brexit is to blame for construction’s labour shortages.
The number of non-UK born workers in the UK construction industry fell from 305,000 people in 2019 to 280,000 in 2020. However, this is broadly in line with employment trends throughout the industry over the same period, when the overall number of workers in construction fell by 175,000.
The CITB report is based on a review of the Office for National Statistics (ONS) 2020 labour force survey. It shows that there is still substantial regional variation when it comes to the migrant construction workforce in the UK. In 2020, half of workers in London were born outside the UK. The proportion was next highest in the east of England (16%) and southeast England (13%).
With widespread reports of recruitment difficulties, construction employers are clearly not doing enough to bring on new recruits. They are not training enough homegrown talent and nor are they coping with the new points-based immigration system. The result is spiralling wage inflation. A construction employer in London quoted in the report said: “I’m probably paying 30% more [in wages] than I was 12-18 months ago. Even just for an unskilled labourer… The more people that don’t come back, the smaller that pool gets, and it just drives the costs up.”
The report says: “ONS data shows year-on-year wage rises, including bonuses and arrears, peaked at +15% nationwide in May 2021 and continued to record an above average 6% in September 2021 against a whole economy reading of 4%, supporting anecdotal evidence that labour shortages are driving up prices.
“These increasing wage pressures and the rising cost of raw materials are hampering employers’ ability to recruit and train a skilled workforce, just as the construction industry is being asked to be the catalyst for a post-Covid resurgence in productivity.
“In May 2021 CITB found that the number of apprentices employed per 1,000 firms fell by a third at the height of the pandemic (June 2020) from 487 to 332. Furthermore, industry training providers interviewed by CITB over the last 12 months repeatedly said that their main concern for the immediate future was low demand from employers for training.
“This means this latest migration report shows that the pressures associated with the end of EU freedom of movement are coinciding with others on skills and materials that will lead to higher costs and potential project delays in the immediate future.”
CITB director of policy Steve Radley said: “The transition out of the EU and into a new immigration system was always going to be difficult and the pandemic and interrupted supplies of materials has intensified skills and cost pressures. We know that developing homegrown talent will be at the heart of addressing these skills challenges and that government is taking action to grow apprenticeships and to get more college students into construction jobs.
“Employer investment in key skill areas such as apprenticeships is recovering and should improve further in 2022. But for many, their struggle to deliver on the current workloads is hampering their ability to free up time to invest in training just when it’s most needed.”
Build UK chief executive Suzannah Nichol said: “As construction looks to lead the economic recovery, the government is rightly investing in training and reskilling the UK workforce whilst the industry develops better routes for new entrants. We welcomed the recent commitments in the autumn budget to improve skills and recruit talent, but these will all take time to come to fruition and we are being asked to build now, not in 12 months.
“To ensure the industry can continue to deliver the ambitious programme of infrastructure investment and development, it is vital that we have a points-based immigration system that can respond rapidly to changing pressures, with a clear path for the industry to raise these with government.”
James Butcher, head of policy and research at the National Federation of Building (NFB), said: “This is a really tough time for construction businesses. Our members are regularly reporting that they are struggling to find the workforce they need to meet demand on site and the latest vacancy rate statistics indicate the situation is acute. The report findings confirm what many in the industry feared – a significant and sudden drop in the number of migrant workers in the construction workforce which, coupled with the lower apprenticeship starts and difficulties securing FE [further education] conversions, mean the short-term pressures are significant and there is no easy way out.”
Federation of Master Builders chief executive Brian Berry said: “The fall in the number of construction migrant workers over the last three years is not surprising and helps to explain why many small construction companies have had to turn down jobs because of the lack of available workers. At a time of rising demand in the construction sector it is imperative that more home-grown talent is developed. Unfortunately, this is not an easy fix which is why the building industry will continue to experience an on-going skills problem over many years.”
Alasdair Reisner, chief executive of the Civil Engineering Contractors Association, said: “Our members continue to experience very challenging conditions for recruitment and retention of workers. The likely outcome of this will be that those areas that have historically had higher levels of migrant labour, and generally higher salaries, such as London and the southeast, will now pull resource from the rest of the country, exacerbating skills difficulties nationwide."