Underemployment, hidden unemployment and spare labour capacity mean that the industry can expect more job losses in 2013-16, while any return to modest growth in output – expected in 2015 at the earliest – will not result in the industry creating additional jobs.
These are some of the findings of the latest Construction Skills Network report, compiled annually by research company Experian on behalf of CITB-ConstructionSkills to forecast the industry’s training and recruitment needs.
The gloomy report, which also predicts that the industry in 2017 will be employing 17% fewer than its 2008 peak while output will be 12% below its 2007 peak, was on the agenda at a meeting yesterday (Thursday) at No 11 Downing Street between ministers and representatives of the Construction4Growth campaign, led by CITB-ConstructionSkills.
“The report underpins why Construction4Growth can provide some of the answers [to stimulate the economy]. And it also shows that in an industry where 30% of our turnover comes from government, you can’t escape unscathed from the cuts,” said Judy Lowe, chairman of CSN and deputy chairman of CITB-ConstructionSkills.
The meeting discussed a 10-point plan outlining ways the campaign’s supporters – now numbering 1,400 industry bodies and employers – could work with government to stimulate growth.
The CSN report covers the period 2013-17, and predicts that employment will fall until it reaches a low of 2.36m in 2016 – around the same level construction employed in 2000.
But overall, while output has dropped by around 16% in the five years to 2012, construction employment has dropped less, by around 11%. The reason is underemployment: individuals becoming self-employed but not able to work a full week, or firms holding back from redundancies by creating part-time posts.
Underemployment is at its peak in Northern Ireland, Yorkshire and Humberside and the north-west, where there’s a 15% differential between the fall in output and fall in employment. “It implies there’s a lot of underemployment and spare capacity [in these regions] and therefore more job losses to come. If you’re self-employed and not getting much work, at what point do you become unemployed?” says Lowe.
It will be 2015 at the earliest before output growth accelerates enough to drive any growth in employment. However, this “slack” would have to be taken up before the industry could create additional jobs for new entrants. “We haven’t lost jobs like we did in the 1990s recession, so there won’t be the same upswing in employment [on a return to growth],” says Lowe.
The CSN also calculates an “Annual Recruitment Requirement” for each industry trade and profession. The ARR is based on anticipated levels of workload and takes into account natural “churn”, ie individuals retiring or leaving the industry. The current report puts the industry’s ARR for 2013-17 at 29,050, down from 46,240 predicted 12 months ago (for the period 2012-16). In the boom years, the ARR ran at around 90,000.
A year ago, the predicted ARR for construction managers was 3,380, but this year the ARR has dropped to 3,190. Overall, the report suggests the profession will enter a slight decline, numbering 216,410 in 2017 compared to an estimated 223,800 today and 232,210 in 2011.