Labour costs ‘break records’ as vacancies soar

Posted on 17 August 2021

​Labour costs ‘break records’ as vacancies soar

Wates Little London Primary Leeds 4

Recruiters have reported “record-breaking” increases in labour costs as new data shows vacancies hitting fresh highs.

Between May and July, there were 38,000 vacancies in the construction industry, according to new data from the Office for National Statistics, setting a 20-year record high, and surpassing the previous high of 34,000 recorded just two months prior.

Darin Burrows, director at construction recruitment agency City Site Solutions, said the current environment was the hardest to find available workers he had experienced since the late 90s. “I remember being in my office in 1999 with 100 jobs on the board unfilled,” he said. “We’re back to those days.”

A recent fall in construction output was partially blamed on a combination of labour and material shortages slowing progress on jobs.

Burrows suggested the supply of workers had fallen due to Brexit – with some EU-born employees having left – and the pandemic. He added that supply typically falls in the summer months as well as workers taking holidays, with those from abroad tending to go for a month or longer to visit family.

Clients were now paying increasingly higher rates to secure skilled labour in order to keep projects on track, he said, which was pushing up rates. Hourly pay for carpenters, for example, had risen from around £22-£23 per hour a year ago to as much as £32 per hour now, Burrows said.

“We’re breaking new records of pay and charge every day,” Burrows added, highlighting one client that had agreed this morning to pay around £300 per day in order to secure a carpenter.

Not all jobs are seeing such inflation, however. Burrows said clients remain reluctant to pay much more for un-skilled workers, such as labourers, with costs still around £9.50-£12 per hour. He warned that this could increase as shortages continue.

New data from the ONS also released today showed that average weekly earnings for construction were up just over 14 per cent in June compared to 12 months ago. It is the largest annual increase of any sector, but this jump is partly due to the steep fall in earnings in the second quarter of last year when the pandemic struck and construction activity slowed. Compared to pre-pandemic earnings as of February 2020, average weekly income is up 3.4 per cent, which is the second lowest increase of any sector, apart from manufacturing.

A recent survey by the Federation of Master Builders found that four out of five SME builders had raised their prices to compensate for rising labour and material costs.

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