Record-Breaking Labour Costs Surge as Vacancies Soar in Construction Industry

Posted on 17 August 2021

According to recent data, the labour market is facing unprecedented challenges as labour costs reach historic highs and job vacancies in the construction industry continue to surge. The Office for National Statistics reports a remarkable 20-year peak with 38,000 job openings recorded between May and July, surpassing the previous high of 34,000 just two months earlier. City Site Solutions, a prominent construction recruitment agency, describes the current labour market as the most arduous since the late 90s, with director Darin Burrows recalling a time when his office displayed 100 unfilled job listings. The labour shortage is attributed to various factors, including the departure of EU-born workers due to Brexit and the ongoing impact of the pandemic. Additionally, the summer months exacerbate the situation as workers, particularly those from abroad, often take extended vacations to visit their families for a month or longer.

In order to secure skilled labour and ensure the smooth progress of projects, clients are now compelled to offer significantly higher wages. For instance, carpenters have witnessed a substantial increase in their hourly pay, soaring from approximately £22-£23 per hour a year ago to as much as £32 per hour at present. Burrows highlights the continuous breaking of new records in terms of pay and charges, citing an example where a client recently agreed to pay around £300 per day to secure the services of a carpenter. However, it's worth noting that this inflationary trend is not uniform across all job categories. Clients remain reluctant to increase wages for unskilled workers such as labourers, with their rates still ranging from £9.50-£12 per hour. Burrows warns that this situation may change as labour shortages persist and the demand for unskilled workers intensifies.

Additional data from the Office for National Statistics reveals that average weekly earnings in the construction sector have witnessed a remarkable increase of just over 14% in June compared to the same period last year. This surge represents the largest annual increase across all sectors. However, it's important to consider that this substantial rise is partly attributed to the sharp decline in earnings during the second quarter of the previous year when the pandemic struck and construction activity experienced a slowdown. When compared to pre-pandemic earnings in February 2020, the average weekly income has only risen by 3.4%, making it the second lowest increase among all sectors, excluding manufacturing. To cope with the escalating costs of labour and materials, a recent survey conducted by the Federation of Master Builders reveals that four out of five small and medium-sized enterprise builders have resorted to raising their prices. This adjustment aims to compensate for the growing financial strain caused by the surge in labour costs.

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