The Intelligence

The Intelligence

With REC senior researcher, Mark Harrison 

 

On 25 October, the ONS published its latest GDP growth estimates for Q3 2017. The economy overall continues to grow slowly, with the latest figures estimating a 0.4% increase in GDP over the quarter. However, when looking at individual sectors, the construction sector contracted by 0.7% in Q3 after a 0.5% contraction in Q2, meaning it is technically in recession.

The ‘technical’ part of this definition is important to note here for two reasons. First of all, as the ONS notes, the construction industry in Q3 2017 remains well above its pre-downturn peak. Secondly, the output of the construction industry is affected by the government’s commitment to big infrastructure projects as well as the house building and repair market. HS2, a potential new terminal at Heathrow and both the main political parties intending to increase housebuilding means there are reasons to hope that growth may return to the sector soon.

Having said this, a range of data suggests that the construction sector is facing a skills shortage even though it has been contracting. The REC’s latest ‘JobsOutlook’ data showed construction employers to be the second most likely to anticipate skills shortages when trying to recruit permanent staff. 

In a Q2 2017 survey of its members, the Royal Institute of Chartered Surveyors (RICS) found that skills shortages were constraining the growth of 55% of respondents, with a particularly acute shortage of quantity surveyors and bricklayers.

If immigration is overly restricted once the UK leaves the EU, construction is an area that could be significantly impacted, particularly in London. The REC’s June report ‘Building the Post-Brexit Immigration System’ found that 8% of construction workers in the UK were from the EU, rising to 33% in London. In its June 2017 report ‘Migration and Construction’, the Construction Industry Training Board found that, amongst those construction firms that use non-UK workers, a lack of skilled UK applicants was a partial reason to do this for 57% of respondents and the key reason for 35% of respondents. 


The economy overall continues to grow slowly, with the latest figures estimating a 0.4% increase in GDP over the quarter.

Construction Industry Training Board found that, amongst those construction firms that use non-UK workers, a lack of skilled UK applicants was a partial reason to do this for 57% of respondents and the key reason for 35% of respondents. 


RICS notes that skills shortages are increasing in 2017, having eased throughout 2016. This change may be in part due to EU workers deciding to leave the UK after the vote to leave the EU (as we have found in our ‘Ready, Willing, and Able?’ report into EU workers in the UK).

With new infrastructure and housebuilding projects on the horizon, an evidence-based approach to immigration is needed to ensure the exclusion of non-British workers doesn’t exacerbate the construction skills shortage further. Domestically, partnerships between FE providers and industry to develop and implement the new construction ‘T-level’ vocational qualification has the potential to reinvigorate the pipeline of British workers entering construction.

The economy overall continues to grow slowly, with the latest figures estimating a 0.4% increase in GDP over the quarter. Construction Industry Training Board found that, amongst those construction firms that use non-UK workers, a lack of skilled UK applicants was a partial reason to do this for 57% of respondents and the key reason for 35% of respondents. 

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