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The UK construction industry’s extreme skills shortage

Construction Firms Urged to Mind the Skills Gap

Oct 2019

The UK construction industry’s extreme skills shortage could result in a number of scenarios requiring an insurance broker’s input, if Brexit becomes the ‘Brexodus’ predicted.

Around 165,000 construction jobs are currently filled by EU construction workers who have filled vital skills gaps in a sector generally unattractive to younger people. 22% of the construction workforce is aged over 50; 15% have already celebrated their 60th birthday.

Vacancies for bricklayers, plumbers, carpenters and electricians often go unfilled, whilst the move to create a new workforce fuelled by apprenticeships has largely failed.

With a declining pool of skilled tradespeople, there is wage inflation at the worst possible time. Between May and July 2019, average weekly earnings in the construction sector grew by 6.2% year on year, even outstripping the rate of the financial services sector. In a sector renowned for tight margins, and already fearing import tariffs on the 25% of all materials that have to be brought in from abroad , hikes in wages are the last thing required.

However, it is a simple case of supply and demand and the skills gap has existed for decades. What compounds the concern, however, is the slowdown in construction output – down 1.3% in the three months to June 2019 - and the fact the construction sector had the largest number of new company insolvencies (3100) in the 12 months to March 31 2019.

The hardest hit construction companies are likely to be London-based, where 28% of construction workers are EU nationals, as opposed to 7% in the rest of the UK.

Many SME firms operating in the construction sector will need to upskill existing staff and ensure they have a broad range of skills, particularly if Government new-build home targets (1 million by 2020) are to be achieved. Pressures on delivery deadlines and quality of work will be huge and firms will need to embrace apprenticeship schemes, mentoring and multi-skill training programmes. This will all take both time and money.

In the wake of the Carillion collapse, many construction firms should be examining the current picture and talking to a broker about Trade Credit Insurance, to protect their company finances, should a customer’s business fail, leaving invoices unpaid. Whilst it is difficult to find, or secure affordable Professional Indemnity and Liability cover at present, the best advice is for construction businesses to also start talking to their broker about these covers several months earlier than normal, way ahead of renewal, so that a solid presentation of risk can be provided to insurers.

Having ‘fresh blood’ on-site, if recruits can be found to fill skills gaps, will require robust due diligence when it comes to training and health and safety compliance. Firms must check that those they employ have the credentials they claim and that training, in all key areas, has both been delivered by any previous employers and up-to-date. A recent case caught out a business that did not conduct such checks and was fined following an incident.

Finding a broker to assist and offer risk management advice is easy, if you use our ‘Find a Local Broker’ tool. Whilst a broker cannot fill your skills gap, they can keep you protected from the risk scenarios that may surround it. Use them as a sounding board and keep your business safe, no matter what construction trends throw at it.