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Wed July 28 2021

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London wage inflation attributed to Brexit factor

15 Jun A shortage of EU workers is driving up labour costs in London, according to a leading construction payroll services firm.

Latest payroll data from Hudson Contract shows that average earnings on London construction sites increased by 4.5% during May to £885 per week.

Hudson Contract supplies more than 2,500 companies across England and Wales with site workers on its books. Managing director Ian Anfield said that wage inflation in the capital was down to a reduction in migrant EU labour.

“We are starting to see the impact of people leaving the UK ahead of the EU settlement scheme deadline on 30th June and not being replaced by incomers,” he said. “First and foremost, this is affecting London which has the highest concentration of foreign construction workers and the most transient labour market.

“The Brexit effect on labour supply is slower the further away you go from the capital and many EU workers have settled in the north of England. In central London, the prime housing market is growing for the first time since the start of the pandemic, a sure sign of the high spirits felt across the entire sector.”

The West Midlands also saw a significant rise in weekly earnings for subcontractors, increasing by 3.5% to £920 during May. The region tends to have a larger supply of local tradespeople who have traditionally commanded higher earnings.

The cost increase mirrors an acute shortage of building materials in the West Midlands as a result of significant house-building activity and major infrastructure projects in Birmingham including new stations for high-speed rail and facilities for the Commonwealth Games in 2022.

Ian Anfield added: “There is shedloads of construction work about and growing pressure on the availability of both labour and materials. We expect some respite for construction companies with the closure of the government’s self-employment income support scheme in September which should encourage claimants back onto sites.”

Region May 2021 Average Month on Month % Change Year on Year % Change
North East £671 -8.6% -7.8%
North West £827 -4.1% 4.0%
Yorkshire and the Humber £821 0.5% 9.0%
East Midlands £954 1.7% 17.2%
West Midlands £920 3.5% 1.4%
Wales £887 2.8% 8.7%
East of England £949 -0.3% 8.3%
London £885 4.5% 2.8%
South East £923 0.7% 5.4%
South West £863 1.9% 10.1%

Last month, mechanical & electrical tradespeople saw the strongest growth in earnings, up 5.7% per cent to £1,068 per week. They were followed by joinery and plumbing contractors, whose earnings increased by 4.5% to £1,011 and £967 respectively.

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MPU

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