At a glance
- An apprenticeship levy could create 3 million new apprentices says the Chancellor, but will it help the current skills crisis?
- An increasing demand for new buildings is putting pressure on the construction industry’s skilled workers
- As thousands expect to retire in the next decade, the industry needs to increase its worker base
- Brokers need to be aware of issues facing the construction industry and provide guidance to customers
Busy order books make for happy reading, but the increase in demand for new buildings is putting pressure on construction firms, who are struggling to find the skilled tradesmen needed to fulfil contracts.
In his summer 2015 Budget, the Chancellor proposed an apprenticeship levy on large firms, which he says will help create 3 million more apprentices. But is this in time to help the construction industry with its current workforce problems?
In the next ten years, up to 400,000 members of the current construction workforce is expected to retire, according to industry estimates. This, added to the number of the workers who left the construction sector during the recession, has created a skills shortage that is deepening as the economy recovers and project volumes increase.
Research from the Royal Institute of Chartered Surveyors (RICS) highlights just how tough it is to find skilled workers. In its UK Construction Market Survey for Q3 2014, RICS states: “Across the whole of the UK, the main factors which were found to be limiting building activity were a shortage of labour, followed by concerns over finance and shortage of materials… In particular, demand for bricklayers grew significantly on the previous quarter, with a net balance of 71% of respondents now saying that they are in great demand (compared to 59% in Q2 2014).”
The construction industry’s growing skills shortage is causing a number of issues for firms:
• A reliance on skilled migrant workers can increase costs and introduce potential language barriers
• A high percentage of inexperienced workers may lead to more onsite accidents and defects
• New sub-contractors should be vetted thoroughly, including checks on mandatory insurances and employee experience
This increasing skills shortfall creates a number of problems for construction companies. The first is trying to find the requisite tradesmen. “You have to pay more to retain staff, which increases your labour costs, and in turn your tender costs should go up,” explains Andy Penny, Construction Underwriting Manager at Zurich Insurance.
“The issue that some construction companies have at the moment is that they tendered for jobs 12 or 18 months ago, that they are only starting now. They cannot get the skill set, or the materials for that matter, at the costs that were around 18 months ago, simply because of supply and demand.”
The second issue for firms is trying to put in place the right blend of experienced tradesmen, sub-contractors and trainees, Andy adds. This has put a greater focus on the recruitment process that firms use to ensure they always have the right level of skills and experience to work to the standards required.
Many firms have turned to migrant workers to fill their need for experienced tradesmen. This can generate language issues, while people from different countries will also do things in different ways. Training is therefore essential to ensure there are no problems with communication or the methods used, legal requirements are maintained, and that a set way of working is agreed.
Where apprentices and inexperienced workers are onsite, the appropriate training, support and supervision needs to be in place, to make sure they can work effectively and develop their skill base for the future.
In addition, many firms have had to turn to new sub-contractors because established partners are already booked up. To ensure these new relationships are successful, Zurich recommends that contractors should review as many testimonials as possible, vet the level of insurance cover their new partners have, and examine the make-up of their workforce.
Increase in supervision
All of this creates an increase in the amount of supervision required, but getting it right is important if firms want to avoid a rise in accident and defect rates. No firm wants any worker to be injured onsite or to see defect claims become an issue. Nor do they want insurance premiums to rise or their reputation to be damaged.
You have to pay more to retain staff, which increases your labour costs, and in turn your tender costs should go up
Andy Penny, Construction Underwriting Manager at Zurich Insurance
This is why industry initiatives like the Construction Skills Certification Scheme (CSCS) are so helpful. “CSCS skills’ cards are important, as it tells you that the holders have the requisite health and safety training,” says Andy.
“They understand what can go wrong on site, and they are not going to endanger themselves or their colleagues.”
At a time when brokers’ construction clients are juggling an upturn in demand with the recruitment difficulties created by the ongoing skills shortage, offering them guidance on the risks attached to differing recruitment strategies will add value to the relationship.
For more information please speak to your local Zurich contact.