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Brexit and the construction sector

Can the UK Construction Sector overcome the lengthening Skills Gap?

12th Mar, 2019

There is broad construction industry hostility to Brexit; with a majority fearing Brexit will severely increase the labour shortage in the UK construction industry as the supply of labour from the EU decreases.

Small to medium companies are impacted the most severely by skills shortages as it hinders the growth and development of their business. And the Office for National Statistics (ONS) 2012 shows that 98% of construction firms are SME’s in the UK (under 80 staff).

“The training and education system for the sector is not fit for purpose for the UK construction job requirements. The relevance of academic institutions is questionable in meeting skills gaps in the UK purely in terms of getting to the scale required,” said Anjni Varsani,  cost manager at TowerEight.

“Government agencies should act and establish a strong support of construction workers and help achieve greater alignment between demand and supply requirements. Stronger partnering between educational institutes and employers can assist in developing the relevance of courses.”

Research by TowerEight found that a failure to introduce government intervention around training and promoting awareness of the construction industry in schools were found as crucial limitations towards UK construction worker resource. In a survey, TowerEight found that 82% of survey respondents suggest Brexit will create a shortage of labour and the survey indicates there is a very strong reliance on EU migrant labour in both the skilled and unskilled areas.

Women in construction account for just 12.4% of the current construction workforce (ONS, 2017). To overcome labour shortages, the industry needs to attract a wide range of workers from both genders and all ages to develop a high-quality output whilst giving them better training and development opportunities.

Technologies need to be enthusiastically embraced for construction to become more productive through off-site construction and governing new technologies through extensive research and development.  However, the construction industry is too fragmented to push through such radical changes so quickly.

To develop this agenda, an advanced single body should be responsible for construction skills and training, as well as tasked with attracting young people from schools into the sector. This will allow for construction to progress to evolve to meet sectoral demands and provide the training required for a skilled, domestic workforce that is fit for purpose.

CITB and the Apprenticeship Levy already exist but merging the two bodies into one seems a more efficient way moving forward, speed up decision-making and reduce bureaucracy. The Apprenticeship Levy was enforced in April 2017 – it applied to employers with a payroll of more than £3 million then 0.5% of this payroll bill above that threshold was placed by HMRC into a fund for construction apprenticeships. However, only around 2% of all employers in construction will pay this levy due to the large number of small firms in the construction industry.

The current strategy for training will only help to soften the impact of Brexit impact, it will not resolve the fundamental issues of attracting new talent, particularly women and minority groups.

What could be introduced in the UK Construction Sector?

  • The use of collective agreements to regulate the terms and conditions of employees in the workplace in parts of the industry where multi-employer bargaining is strong
  • Setting detailed binding minimum core conditions in parts of the industry where collective bargaining is weak
  • Joint liability across the subcontracting chain to improve enforcement of employment regulations
  • Compulsory construction certification scheme cards for workers on construction sites to reduce scope for undeclared work
  • More extensive controls of employment conditions
  • Resident labour market tests to prioritise UK workers in areas of higher-than-average unemployment

Anjni Varsani, explained: “If combined with the contingency of an ‘emergency brake’ on free movement, these measures will provide an effective way of controlling migration that the public request without causing damage to the industry or increasing exploitation.

“Real change will only come should the industry become more integrated and find innovative ways to collaborate as a sector. A streamlined and proactive programme to boost skills training and attract the best talent from all backgrounds is a priority.  The funding involved would surely produce efficiencies in construction through the adoption of technology that would pay back the initial outlay rapidly.”

“A consistent programme of public sector investment could add surety to the boom/bust cycle that inhibits the adoption of new and investment in training.  Regardless of a soft or hard outcome to Brexit, the sector has significant structural issues that must be overcome if we are to meet housing targets and complete the infrastructure that the country needs for growth.  This requires collaboration, forward-thinking and a dynamism that has been lacking within the sector for decades.”