EU Migrants in the UK Construction Industry
The UK construction industry employs approximately 3 million people in the UK, making up 10% of UK employment. Significant skills shortages are restricting construction economic growth in the industry that employs 8% of EU workers, however in London this amounts to a staggering 28%.
So, what is the real importance of immigration to the labour market and how can we resolve the UK construction industry’s labour shortages?
The Impact of the Immigrant Workforce
Non-UK workers in the UK construction industry are mainly employed as general labourers (22%) and architects (15%). There is a low percentage of migrant workers in the UK construction industry over the age of 50+ (14%) compared to UK workers of 50+ which is more than double this amount (30%). This data would suggest that migration is concealing the issue of an ageing workforce that the UK that will pose a significant risk for construction.
The government target is to deliver one million new homes by 2022 and this seems unachievable given the labour constraints. The UK was already facing a skills crisis pre-Brexit and with the issue of an workforce aging, (430,000 people are expected to retire between 2010-2020) this would appear to be increasingly impossible.
Labour shortages appear to have increased rapidly since 2013 and a majority of surveyors have stated this is a significant hinderance on output. Skills’ shortages created more pressure on the delivery of projects with the triple constraints of time, cost and quality. A survey by Inside Housing revealed that the biggest skills shortages were for construction project managers (32%) and quantity surveyors (31%), followed by electricians (29%), plumbers (24%), carpenters/joiners (24%) and bricklayers (20%).
What will we do without EU Migrants to fill the gap?
RICS (2016) warns that “30% of construction professionals surveyed believe that hiring non-UK workers was critical to the success of their businesses”. The Construction Industry Training Board (CITB), estimates that to meet current demand more than 36,000 new workers a year will be required.
Both skilled and non-skilled in labour will decline rapidly in the coming years in the UK construction industry. This impending threat of reduced labour movement, coupled with already existent shortage of labour would appear to pose a major risk to the future performance of the UK construction industry.
The potential impact of Brexit
Could departing from the EU be beneficial? It could create a wider range of job opportunities within the UK that would become available and allow a growth of UK suppliers. The value of the pound is likely to go down which could create an upsurge of overseas investment in UK real estate. Brexit will reduce EU competition when tendering for work. But there is also the likelihood that wage rises are likely to occur and restrictions on free movement could pose a problem for the UK construction industry which already faces a labour skills crisis.
Under a soft Brexit (where unrestricted access to the UK is retained) the UK GDP would decline by 3.5% and a hard Brexit (creating visa requirements for EU labour) the construction industry’s contribution would fall by 8.2%.
TowerEight research found 35% of construction workers stated Brexit has created a shortage of EU migrant labour in the UK construction industry that has increased project cost. Mace (2018) forecasts rising material costs and higher wages for construction workers up until 2021.
It is critical that we have flexible access to labour from overseas as without this we would fail to deliver against the commitments for construction, such as housebuilding and infrastructure. The pound’s value has descended as a result of the UK voting to leave the EU. Costs are expected to climb for contractors and UK developers due to their heavy reliance on importing and exporting with a less favorable exchange rate. Until the exit plans are revealed we are left hoping that the Government recognises the dual challenges of an ageing workforce and a lack of skilled labour; both of Britain needs to meet housing targets and deliver the infrastructure required for growth.