Wednesday - 19 November 2008
Analysis 

Sector Analysis: Construction & Property

Published: 25 June 2008   

Economic uncertainty is causing a crash in the residential construction market but a number of large infrastructure projects continues to boost commercial recruitment

The major house builders have experienced a fall in profits in line with a drop in demand for property, forcing job cuts and leaving some residential developments abandoned. The Observer newspaper reported more than 100,000 jobs may be lost in the sector, as house building hits its lowest level since 1945.

Emma Watts, manager of construction recruiter Contract Scotland, told Recruiter that the change happened at the beginning of the year. “The housing sector was exceptionally buoyant, but in March new developments were put off or cancelled,” she said.

Watts added that staff were starting to move back into the commercial sector where there are more opportunities.

Commercial construction is booming because of several large infrastructure projects, including Crossrail, the London 2012 Olympics and the Thameslink project. In Scotland, a series of highway improvements will create jobs, including the new Forth Road Bridge — one of Scotland’s largest construction projects.

“The government is still spending money on new schools, hospitals and roads. There’s still quite a bit happening,” Emma Penny, editor of construction industry news website www.contractjournal.com, told Recruiter. “We were needing something like 86,000 new people a year to join the industry, to meet the commitments we have.”

Craig Bines, sales and marketing director at construction job board www.justconstruction.net, told Recruiter commercial development would reduce the impact of the residential construction crisis. “The big projects have had enough of a boost to outweigh the losses — it’s swings and roundabouts,” he said. Job postings for residential construction on the website have dropped from 20% to 5% of total advertising over the last year.

Tom Greenhaugh, head of construction at industrial recruiter Andersen Banks, agreed: “People are going to lose out, but the big projects are going to create more flexibility in the market.”

He said the problem was skill shortages, rather than a lack of placements. “The main problem I’m having as a recruiter is skill shortages in middle management and senior positions.” He added the situation was being made worse by opportunities available overseas and uncertainty about the future.

Mark Bull, managing director, Hill McGlynn, is facing similar difficulties: “There are early signs of ever more restriction on the supply of candidates on the permanent side. Candidates are looking to stay where they are, rather than look for a new job. There’s a confidence issue.”

In response to skill shortages the sector has developed training programmes, increased salaries and started to source candidates from different sectors.

“Construction is traditionally a sector which recruits from within. I have seen more and more people looking outside the sector,” said
Greenhaugh.

Penny believes the solution lies in training: “Companies are putting a lot of money into training, to ensure they have the next generation coming up through the business. They have really good graduate schemes.”

Bull has noticed the trend, too, telling Recruiter that construction companies “have gone below thegraduate level and started to work with schools to promote the industry as a whole”.

Reed.co.uk’s salary index, which tracks online advertising, shows the average salary for workers in the construction sector has risen steadily over the last year, from £35,000 to £38,000. Penny says: “Salaries have gone up a lot, because of the skills shortages.”

Watts warned the trend of increasing salaries could falter. “Contractors’ salaries are still quite strong, but we are not seeing the big increases which happened three years ago.”

Reed’s index shows the number of vacancies advertised online for permanent positions in the UK has remained around the 10,000 mark during the last year, after a peak of 14,000 in November. Temporary positions have varied more widely, but remain around 400.

Sourced from reed.co.uk’s salary index

christopher.goodfellow@centaur.co.uk

Sector Analysis: Construction and Property


 

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