Is London Ready To Lose 25% Of Its Construction Workforce?

UK construction could lose almost 200,000 workers if the country pulls out of the single market as a result of Brexit, worsening the housing crisis and slowing the economy.

The UK is already experiencing a severe skills shortage, and has been for 30 years, Mace Group finance director Dennis Hone said. About 19% of the workforce, about 406,000 workers, is set to retire in the next five to 10 years, and there are not enough young people to replace them. “We’ve plugged that gap somewhat with labour from the European Union,” Mace said. 

London, particularly, is dependent on EU labour; up to 25% of all construction workers in London are from Poland, Romania and Lithuania.

The profile of construction workers is already changing, even before the impact of Brexit is realised. If an EU worker comes to London to work and send money home, he is not able to send as much back because the pound sterling is weaker. That has made London a less attractive employment destination. 

“It’s a cooler atmosphere and climate for people who want to live and work in England,” Hone said.

Infrastructure giant Balfour Beatty warned that leaving the EU could increase the skills shortage and increase costs. In its Staying On Track report, the company said that 100 of its hires last year came from Greece and Portugal, and the construction giant expected 50 from the same countries this year.

Skilled labour is one of London Mayor Sadiq Khan's priorities. He said in February, “When I speak to businesses — both large and small — one of the biggest issues they raise with me is the skills gap. They tell me that maintaining a skilled workforce is absolutely crucial to their future and the future of the whole economy."

Balfour Beatty called for greater progress tackling the skills gap.  

“If we do not do so, the result will be an increase in construction cost. This will be counterproductive and in itself will inhibit delivery,” the report stated.

The government is saying all the right things to assure the industry that it understands the concerns.

Prime Minister Theresa May has repeatedly said she intends to protect the rights of EU nationals living in the UK. In a July 2016 speech, May said she favoured more Treasury-backed project bonds for new infrastructure projects, and more house building.  

Eight percent of construction workers UK-wide are from the European Union, and if they are forced to leave after Brexit, their departure could imperil major construction and infrastructure plans, including the government’s plan to build 200,000 homes per year.

Hone is dubious that the goal is attainable regardless. The UK has never produced 200,000 homes per year, so an increase in output while cutting back on workers is a non-starter.

The mayor also has concerns.

“London is in the grip of a serious housing crisis — and fixing it is going to be a marathon, not a sprint," Khan said. "While we are working to train up more Londoners to have the skills to work in construction, you can't escape the fact that a 'Hard Brexit' could leave a quarter of the skilled construction workforce in the capital high and dry, which would have a crippling effect on our plans to build the homes Londoners so desperately need.”

“Maybe I’m a cynic, but I don’t see how the government can stimulate homebuilding,” Hone said. He notes that there was nothing earth-shattering in the recent government white paper on housing, and despite earnest initiatives, there has been no exponential growth in homebuilding, he said.

Balfour Beatty Group CEO Leo Quinn argues that the private sector must take the reins.  In a recent publication, he said, “It’s business that creates jobs, requires the skills and delivers the training – and many in our industry are doing just that.” He launched The 5% Club, whose members aspire to have at least 5% of their employees as apprentices, sponsored students or graduate trainees.  

Other suggestions to bridge the skills gap are to recruit more women into construction, and to add skilled construction workers to the UK shortage occupation list, an official list that gives some sectors priority during the visa application process. (Notably, ballerinas are on the list, while heart surgeons are not.)