Will Redundancies threaten tomorrow’s skilled construction workers?

MMC Magazine Editor Joe Bradbury takes an in-depth look at the issue of redundancy and loss of skills throughout the industry post-Covid crisis. Who is at risk and what must be done? The answers remain elusive and unclear but one thing is certain – construction needs skills and skills mean people.

The scale of the problem

In recent weeks, the sheer scale of the economic impact of the coronavirus pandemic has become apparent. Data from the ONS shows the UK’s economy shrank when the crisis hit and we are now feeling the result of this in myriad ways, such as widescale unemployment.

We may be winning the war on the virus, but even the promised holy grail of a vaccine won’t leave us worry-free. Analysis by the Greater London Authority (GLA) suggests unemployment is likely to rise further in the weeks and months to come, with almost 1.1 million workers in the capital alone working in sectors facing the greatest economic risk, such as tourism and hospitality.

Data published by HM Revenue and Customs and collated by the GLA found 1.07 million Londoners have been furloughed – around 12% of the UK total – with many from roles which could be made permanently redundant if the Government does not take further decisive action to protect the sectors most at risk.

In a recent speech, Mayor Sadiq Khan urged government to “target assistance in devastated sectors to prevent an historic rise in unemployment.

“Ministers were clearly too slow to act on the health consequences of Covid-19. We simply can’t afford for the Government to be too slow to act on the huge economic consequences as well.”

When will unemployment spike?

The Bank of England has also warned that UK unemployment will spike at 2.5m by the end of the year, as firms cut jobs due to the shock of Covid-19. In its latest forecasts, the Bank predicts the jobless rate will almost double to 7.5%, and only fall slowly in 2021.

The bank predicts a ‘material’ jump in unemployment, with more than one million jobs expected to be lost in the second half of this year.

They made this statement in the Guardian: “Employment appears to have fallen since the Covid-19 outbreak, although this has been very significantly mitigated by the extensive take-up of support from temporary government schemes.

“Surveys indicate that many workers have already returned to work from furlough, but considerable uncertainty remains about the prospects for employment after those support schemes unwind.”

The deep impact of lockdown restrictions eased slightly in May as some employees returned from furlough and self-employed workers increased their hours. But the true scale of Britain’s jobs crisis won’t be known until the Government’s Job Retention Scheme is phased out in the months ahead.

What this means for construction

In spite of the madness, the construction industry actually recorded its strongest monthly rise in activity for nearly five years as the sector continued to rebound from the lockdown. The sector, which makes up 6% of the economy, has a long recovery ahead after output fell by 40% in March and April. We have a long way to go before output returns to pre-Covid levels, and construction companies are still shedding jobs at one of the fastest rates since the global financial crisis.

This is a tough one, as when times are tough the first thing companies do is tighten their belt and look to make savings when it comes to staffing. However, this tactic is a snake eating its own tail and only serves to exacerbate issues going forward.

New research published by the Federation of Master Builders (FMB) suggests that rather than trimming down, more construction apprenticeships are actually needed to turbocharge economic recovery and drive us out of this slump. The FMB’s report Trading Up looked at the barriers small to medium-sized (SME) employers face to delivering apprenticeships and upskilling.

Key findings revealed that:

• 68% of builders are either currently training an apprentice or have done so in the past
• 85% train and recruit 16 to 18-year olds
• 40% of completed apprentices will stay working for the SME company who trained them for at least three years.

Brian Berry, Chief Executive of the FMB, said “Putting local builders at the heart of apprenticeship development and training will unlock additional high-quality opportunities for young people and help Britain get back on its feet. We need an army of builders to help deliver the new homes that this country desperately needs. They will also upgrade our existing homes to make them more energy efficient and fit for purpose in the years ahead.”

Preserving apprenticeships is obviously just one important measure that must be taken in order to weather the storm, but it will require a multifaceted approach to attract and retain the workforce we sorely need to rise and meet the challenges we face as an industry. Business by its very nature isn’t risk-free and in order to enjoy the benefits of bustling demand we need a strong workforce. They are the life blood of our sector.

Who is at risk of redundancy?

The cross-industry ‘People Survey’ was carried out by Build UK on behalf of the Construction Leadership Council (CLC) at the start of June 2020, to provide a snapshot of how a reduced workload post coronavirus (COVID-19) may affect the construction workforce. It atincipates that over 40% of construction firms anticipate making redundancies in the coming months.

There is anticipated to be a 7.7% reduction in the number of directly employed workers across the industry by September.

In the longer term, 43% of respondents anticipate making redundancies, with up to 20% of their workforce being affected.

There is also expected to be a 26.7% reduction in the number of self-employed and agency workers across the industry by September.

Housebuilders, specialist contractors and contractors are the most significant users of self-employed and agency workers. Whilst housebuilders and specialist contractors anticipate reducing their numbers by just 4% and 11% respectively, Contractors are looking to reduce self-employed and agency workers by 42%. Other sectors most likely to reduce their numbers are Material Suppliers by 54.5% and Consultants by 45.6%.

Combining these figures shows an anticipated reduction in the construction workforce of 9.9% by September.

In summary

Who can we afford to lose, if anybody? Before we do anything, we must make sure we are asking the right questions. If we roll back the clock (if only!) to pre-Brexit, talk of skills shortages and what are we going to do without the immigrant workforce was on everybody’s lips. Could it be that a great many of the redundancies might be the trainees that the industry brought on board in response to the skills shortage? In other words, are we taking steps to survive now that might send us back to square one skills-wise once things level out again? Can we afford to undo such progress?

Trade media also reported extensively on an ageing workforce; could it be that many of the more mature members of our workforce are now being let go or opting to take redundancy? What will the effect of losing these skilled workers have on our ability to train new talent? Don’t we need them to pass the torch when it comes to trade knowledge? So many questions. So few answers! One thing seems certain; we mustn’t be rash in letting our workforce go too soon.

Only by ensuring that our industry has the skills it requires both now and in the future can we hold any hope of success. Let’s push the conversation in the right direction, away from mere pounds and pence. What is the construction industry without people? Nothing.