The UK construction industry has long been a crucial driver of economic growth and development.
However, it faces a series of significant challenges, with one of the most pressing issues being the so-called ‘missing million’ – a labour shortage that threatens its stability and future unless action is taken to address it.
According to the UK Trade Skills Index 2023, the construction and trades industry needs 937,000 new recruits over the next decade – 31,000 in Scotland – including 244,000 qualified apprentices.
One of the factors exacerbating this labour shortage is the aging workforce. The report highlights that more than 35% of the industry’s workforce is aged over 50, and this demographic trend poses a real challenge for maintaining the industry’s vitality.
An exodus of EU workers following Brexit, has further depleted the labour pool available to the industry.
The country’s long awaited economic recovery – expected to begin in 2024 – will drive demand for construction and trades services, making the need for skilled workers even more critical.
However, the report predicts a 36% fall in new houses being built this year – the largest drop since 2008 – and a 10.5% fall in house prices for the same year, meaning the Government is unlikely to meet its target of building 300,000 new homes annually by the mid-2020s.
The report also underlines the significance of decarbonisation and transitioning homes to net-zero emissions. This shift in focus will drive growth in the home improvement and repair market, expected to increase by 1.5% per year from 2023 to 2027 and 1.9% from 2028 to 2032.
The construction industry needs to ensure it has the skilled workforce to meet the demand for sustainable construction practices.
One of the most concerning trends is the sharp rise in skills shortages across the construction industry, which has grown from 29% in Q1 2021 to 55% in Q4 2021, persisting throughout 2022. Plumbers, bricklayers, carpenters, and electricians are among the trades experiencing the most significant shortages that are having a substantial impact on the industry’s ability to complete projects and meet the growing demand.
One of the root causes of the skills shortage is the decline in the number of completed construction apprenticeships. Since 2017/18, the number of completed construction apprenticeships has fallen by around 11% annually.
Although there was a temporary spike in apprenticeship starts when government incentives were in place, it is expected to decrease again following their removal. In 2020/2021, almost half of the apprenticeship levy went unspent, amounting to approximately £1.3 billion, which could have been used to address the skills gap.
It’s essential to address the factors contributing to the skills shortage. Brexit, for instance, led to a significant loss of EU workers from the UK construction workforce. A lack of digital skills could be a contributing factor, as technology continues to play an increasingly important role in the industry. The cost of living crisis and an aging workforce have further compounded the problem.
The construction and trades industry in the UK needs to adapt to these challenges and look for solutions to bridge the skills gap. One of the primary strategies is to focus on recruiting and training young talent. To meet demand and avoid the skills gap from worsening, the report recommends increasing the number of completed construction apprenticeships by around 25,000 per year, a 34% increase above current levels.
The report highlights that the key areas driving construction activity in the UK are private housing, infrastructure, and repair and maintenance. The five most in-demand professions for 2023 are electricians, carpenters, plumbers, painters, and bricklayers. For young people considering a career, construction offers ample opportunities for employment and a path to help address the industry’s workforce challenges.
North of the border, there are similar challenges in recruiting the workforce needed to meet project requirements, rooted in various factors, including the overall economic landscape, workforce trends, and the specific needs of the construction sector.
Several significant infrastructure projects are already underway, including the construction of the new River Clyde Bridge, improvements to the A83 at Rest & Be Thankful, and dual carriageway upgrades to the A9.
There are offshore wind developments like Moray West, Scottish Water’s £5 billion capital investment plans, and a £200 million investment in Scottish Gas Networks mains replacement. There is also a £25 million project to develop a hydrogen demonstration network in Fife.
In the private housing sector, the redevelopment of a key site on Leith Walk, in Edinburgh, started in July 2022, with the first phase involving the construction of 110 build-to-rent apartments set to be completed by spring 2024.
In East Ayrshire, the local council has approved a Strategic Housing Investment Plan totaling £154 million, aiming to deliver up to 1,200 affordable homes for East Ayrshire Council and registered social landlord partners. Additionally, a development in Bridgehousehill in Kilmarnock has begun, with plans to build 101 new affordable homes.
In the education sector, Fife College’s new Dunfermline campus construction began in July. It is located on a purpose-built low-carbon site and is part of the Dunfermline Learning Campus project, which involves relocating Fife College’s Dunfermline Campus, St Columba’s RC High School, and Woodmill High School to a new purpose-built campus at a cost of £220 million.
Meanwhile NHS Ayrshire & Arran has selected Kier to deliver a £16 million new mental health inpatient facility at Ayrshire Central Hospital in Irvine. This facility will be a medium secure adolescent inpatient service for young people aged 12-18 and the first of its kind in Scotland.
To be able to complete these projects, it is estimated the Scottish construction industry will need to recruit approximately 3,910 new workers per year – around 1.7% of the 2022 workforce.
Occupations with the highest recruitment requirements include labourers, electrical trades, and other construction professionals and technical staff.
So how can this be done? Construction companies can attract skilled workers from other sectors within the construction industry, redistributing existing talent to help meet immediate project requirements.
The industry can also tap into new sources of talent by recruiting and training new entrants, including recent school graduates, those from further education, higher education, or even migrants. Apprenticeship programs are a valuable tool for bringing in fresh talent.
Retaining existing workers is also essential to address the workforce challenges. Companies should focus on providing attractive career development paths, competitive compensation, and a supportive work environment to retain skilled employees.
The construction industry can invest in technology and innovation to boost productivity, reducing the demand for a massive workforce. Automation, digital tools, and new construction methods can help streamline operations and reduce the need for additional labour.
Apprenticeships are crucial for bringing in new talent, providing them with the necessary skills, and developing a strong pipeline of workers. The construction industry in Scotland, as in the rest of the UK, should continue to invest in apprenticeship programs to train the workforce of the future.
The Scottish Government can play its part by offering incentives and support to construction companies to encourage them to invest in training and development programs. This support can take the form of grants, tax incentives, or policy initiatives aimed at promoting the growth of the construction workforce.
The challenges faced by the Scottish construction industry are not unique and are mirrored in the broader UK construction industry. While the workforce levels might remain relatively static, the demand for skilled labour is constant.
Government support and industry collaboration are crucial to ensuring the construction sector has the skilled workforce it needs to meet the demands of a growing and evolving industry.
