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Skill shortages are pushing up construction wages

14 Jan 16 Construction industry wages rose by 6% in 2015 as skills shortages continued to get worse.

This is the conclusion of the latest quarterly construction market survey from the Royal Institution of Chartered Surveyors (RICS).

RICS says that construction skills shortages are pushing wages in the sector far above the national average. Skills shortages are also jeopardising government’s plans for housing and infrastructure programmes, the survey suggests.

The UK construction market survey for Q4 2015 shows that 61% of construction professionals have reported sharp wage rises in the sector. Average construction earnings have risen by more than 6% in the year to October 2015 – by comparison, the average UK wage rise over the same period was below 2%.

Labour shortages were reported by 66% of respondents to be the most significant barrier to growth in the last quarter of 2015. Bricklayers and quantity surveyors are both reported to be in particularly short supply, with 62% and 60% of survey respondents having difficulty finding these workers.

Taylor Wimpey surveyor Craig Murray in London said: “We are experiencing real issues with certain building trades in central London and as such we are paying a premium for these services. So much so, as a business we are now looking at alternative building methods to overcome such obstacles in the market.”

Turner & Townsend’s Mark Smith in Birmingham said: “Skills shortage is continuing to put pressure on project delivery which is resulting in increased prices and some lethargy in the supply chain.”

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In Exeter, David Gillard of Jenkins Hansford Partnership said: “Continued shortage of labour and long lead times on certain materials together with financial constraints make for a challenging period in the construction sector.”

RICS future talent director Sally Speed commented: “The construction skills crisis is slowing growth in a sector that is vital to UK plc. Unless government looks to address the problem urgently, some of its key housing and infrastructure programmes could soon face crippling delays and spiralling costs.

“To tackle the problem, government must deliver a new skills strategy that will enable industry, unions, and educators to work together and deliver real solutions. Apprenticeships alone will not be enough. Ministers must look to draw a link between education, future careers and skills. Employers need to take the lead in improving skill levels, providing more vocational pathways to work and actively engaging with our country’s schools and colleges.”

The survey revealed that a net balance of +33% of respondents were still seeing an increase in the number of new projects they were taking on, down from +39% in the third quarter. The private commercial and private housing sectors continue to be the key drivers of construction activity.

RICS chief economist Simon Rubinsohn said: “While workloads are still growing at a relatively healthy pace, labour shortages in the construction sector are causing delays at different stages in the development process and leading to significant problems with project planning. More than 60% of our survey respondents said that these resulting planning delays were an impediment to growth.

“That said, industry wages are becoming increasingly attractive, and I would hope that over time this will encourage skilled workers to return to the sector, as well as drawing school leavers and graduates towards construction industry careers.”

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