Our industry is finding it increasingly difficult to recruit people with the right skills, yet there is no sense of urgency when it comes to training and development. Why not?

Simon Rawlinson

Vince Cable was well advised to use his platform at the Government Construction Summit to focus on the construction industry’s growing skills challenge - highlighting that the problem is likely to get worse before it gets better. The number of apprenticeships commenced in 2013/14 reached 13,610, compared to around 20,000 in 2006/07 and more are needed. The Construction Industry Training Board’s (CITB) estimate of the replacement workforce needed by 2018 - 182,000 - is probably an underestimate, as the industry is forecast to grow rapidly over the next few years.

The CITB’s target highlights the fact that the construction industry is ageing rapidly, and that it employs a disproportionately small number of under-24s - no more than 12% of the labour force.  This problem is not unique to the UK - according to the US Bureau of Labour Statistics, nine out of the top 10 fastest growing jobs markets in the US are not in app programming or social media, but will be in construction - with growth driven largely by the ageing workforce.

But there is little evidence that constructors in the UK have a sense of urgency with respect to skills development. Recent surveys by City & Guilds have found that over 40% of businesses don’t employ apprentices, and over 50% have no plans to take on more. Clearly it is simpler and less risky to recruit experienced operatives - potentially from overseas.

Thankfully, despite the lack of opportunity, demand for placements is increasing - the National Apprentice Service records that there were 60,000 applications for the 5,200 apprenticeship posts they advertised for the construction and built environment sectors in 2013 - up by 20%. The problem is the number of placements - in their case, just 5,280 - grew only half as much.

The implications of this skills gap can already be seen - CITB recently polled the industry, and found that 40% of its respondents were finding it difficult to recruit people with the right skills. However, our industry is also still dealing with the legacy of the downturn, with both Balfour Beatty and ISG currently implementing consolidation programmes. Is the industry really in a position to transform and invest in its future?

Vince Cable pointed to the fragmented structure of the industry as a principal cause of the failure to invest in skills. Only 1,200 of the UK’s quarter million construction enterprises employ more than 80 people and one in four of the workforce are self-employed. We all know that this structure has evolved over the past 30 years in response to a highly cyclical workload and a project-focused business model, which in turn has been driven by low margins and limited investment in new skills and capabilities. With new work not expected to recover from a 16% squeeze before 2016, is it sensible to rely on industry reform to drive the skills agenda?

The research that EC Harris undertook on the construction supply chains in 2013 emphasised just how fragmented the industry is. A typical £15m-£20m project had 50 to 70 second-tier suppliers, most of which had their own tier of subcontractors. Contractors that were closest to the coalface had even more convoluted supply chains.

So the skills challenge is as much a clients’ problem as a contractors’, and requires action by a wider range of stakeholders in education and wider society too - to create demand at scale and provide more certainty, not just in a continuing pipeline of work - but also with respect to the skills that trainees need. Some of the recommendations of the recent parliamentary enquiry, No more lost generations: creating construction jobs for young people, point out how cross-industry approaches could help to promote necessary change. First, planning authorities and clients have a role in creating demand for skills investment - directly by setting minimum numbers of apprentices on projects, and indirectly by sustaining consistent programmes of work. Second, industry and training bodies need to collaborate to develop consistent training

Training the next generation will be a critical challenge for our industry, but we mustn’t forget the need to maintain and develop the skills of the 2 million already in employment

requirements that deliver the right skills, using methods that are appropriate for SMEs. And finally, work is required on making best use of the existing funding mechanisms - recognising that society benefits from skills development as much as the employer and the employee.

Training the next generation of constructors will be a critical challenge for our industry, but we mustn’t forget the need to maintain and develop the skills of the 2 million already in employment. As the pace of change accelerates and new roles and tasks emerge, our people won’t always be able to rely on existing skillsets. Investment in skills is becoming a career-long commitment - a commitment that a short-term, low-margin, cyclical industry will find difficult to live up to. So for as long as client purchase decisions can have an impact on how construction is organised, then the contractors’ skills problem will be the industry’s shared challenge.

Simon Rawlinson is head of strategic research and insight at EC Harris