The construction industry is facing a perfect storm that will cause spiralling wage inflation within the next five years.
Bruce Boughton, people development manager with Lovell Partnerships, warned the industry was caught in a recession driven “vicious circle” which would leave it will severe skill shortages.
Boughton’s comments come in the wake of statistics from higher education application body UCAS that reveal applications for construction courses, including architecture, building and planning, have fallen more than 2% despite a 3.5% rise in the overall number of university applications.
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He said: “The primary problem is there isn’t a lot of work at the moment which means there isn’t a lot of recruitment. At the same time, applications for construction courses at universities and colleges are down and we’ve also lost a number of skilled people because of the recession who may not return to the industry. Add to that the fact that we have the retirement of the baby boomers taking place and you can see a huge problem building up for the industry in the coming years. If we don’t address these issues the industry will face skill shortages and a steep rise in wage inflation five or six years from now.”
Tony Ellender, emerging talent development manager for Balfour Beatty Construction Services, said: “The fall in applicants isn’t just about tuition fees. It also stems from the perception young people have of job opportunities in the industry in the current economic climate.”
Ellender agreed the potential for a perfect storm exists, but insisted the industry had the capability to avoid its impact. “If contractors stop recruiting there will certainly be a skills shortage when the economy recovers, but it is in our hands to avoid this,” he said. “We simply need to keep recruiting, to continue bringing people into the lower levels of craft and management of the industry and training them, that is the way to avoid the perfect storm.”
Ellender added: “Broadly speaking our recruitment levels are at about the same level as they were in 2007. Obviously we operate over a broad range of activities and some areas are busier than others, but we’ve kept recruiting and that’s what the industry needs to do.”
Many companies have increased the number of school leavers they employ on training schemes which can lead to a degree qualification through part-time study and work.
Boughton said: “It’s clear that full-time employment and part-time study is increasingly attractive to many young people and employers. But in the long term I think employers will look at the graduate market again. Around a third of our craft apprentices go onto management training and then take degrees but employers need balance in recruiting talent. Companies will find it difficult to sustain paying for part-time study so it’s always going to be attractive for employers to take on someone who has already taken responsibility for paying for his or her qualification.”
Ellender agreed that the number of school leavers looking to enter the work market via company training schemes would increase, but warned that firms were likely to put a cap on entrants as the cost of part-time study fees increases.
“The work and part time study route has always been popular in construction and a lot of other sectors, such as banking and financial services, are adopting it as tuition fees for full time study escalate. But the training and part-time study route is not immune from tuition fee increases, it’s getting more expensive too.”
However, Darren James, of the University of the South Bank said construction courses there were bucking the trend with applicants up by 3%.
