Inflation-busting pay increases and robust recruitment growth characterise this year’s Hays consultants’ salary survey. But employee discontent and ongoing skills shortages could deflate the widespread optimism
For many construction consultants, 2014 was a year of feast after the very protracted famine of the recession. That’s the message of the annual Hays salary survey, carried out in association with Building.
2014 was the third year in a row that pay has increased. But the survey, which covers the whole spectrum of consultants from architects to technical surveyors, shows that growth in average salaries in the last 12 months exceeded the rate of inflation for the first time since the recession began, meaning consultants will finally be starting to feel that little bit richer.
So who are this year’s winners, what are the main problems this throws up for consultancies and how are firms responding to the resurgence in demand for labour?
The headline average rise in 2014 was 5.25%, but this healthy growth disguises some even bigger pay uplifts, particularly in those niche areas where skills shortages exist.
Structural engineers saw their pay rise by an average 12% to £31,417, with associates and seniors both experiencing pay hikes of 10%. Partners or directors in building surveying firms also benefited from the bounty of a rising market, recording average salary increases of 9% to £59,917, with their associate colleagues not far behind on 8%.
Even impoverished architects are getting in on the act, with an 8% average salary increase to £34,875. “The civil and structural guys were always insulated against recession, but when the architects are coming back in salary growth, you know the market is back: it’s a real bellwether of where the construction market is,” says Richard Gelder, director of Hays Construction & Property.
Exactly three-quarters of the consultancies surveyed by Hays reported that their salary bill had increased in the last 12 months. And these increases are likely to continue in the year ahead, with 71% of construction employers planning to increase salaries in the next 12 months, compared with 56% who were planning to do it in last year’s survey.
Gelder says the picture revealed by the survey reflects the upbeat atmosphere in the industry after Christmas. “This time last year we saw the first big increase in January jobs that we had seen probably since the recession. Every January since the recession has been hard.” But the latest set of figures point to a “sustained change in the market”, he believes. “The new world of more demand and work is definitely here.”
Matthew Patterson, director of reward at Atkins UK, says the company conducted its first full pay round in several years, an exercise he expects to see repeated this year. The evidence suggests the above inflation salary increases in the industry are being fuelled by a hiring surge. 2014 was, for example, the first year that architectural practices have recruited significantly since the crash.
And Hays’ survey shows that more than three-quarters (77%) of employers are planning to increase headcount in the coming 12 months. The vast majority of these plan to hire more permanent staff, compared to 58% who said this the previous year.
However, the overhang of five or six years of pay restraint will take time to tackle. In spite of inflation-busting pay increases reported by Hays, the majority of employees (65%) are dissatisfied with their pay. And two-thirds are planning to move jobs within the next 12 month in order to advance their careers. “Greater stability in the market means that people are willing to move jobs,” says Bill Maynard, UK recruitment and resource lead at EC Harris, who estimates that the company has hired 515 new permanent staff this year, an increase of about 20%.
This story is backed up by Paul Newing, WSP’s UK head of HR, who estimates that the practice recruited 700 people last year and expects to see “strong growth again next year”. Patterson says Atkins currently has approximately 1,200 vacancies out of a total UK headcount of 8-9,000.
Demand for skills
The upsurge in demand means that the subject of construction skills shortages has reared its head again. The overwhelming majority (84%) of employers expect to encounter a shortage of suitable candidates over the next 12 months. “Every time we go into one of these peaks we go into the old debate about skills shortages, which is feeding through into some fairly chunky salary increases,” says Hays’ Gelder. “Architecture is slightly better served for people coming through the pipeline, but there’s an absolute crisis in areas like building services and civils,” Gelder adds. Patterson agrees that competition is particularly tight for engineers.
In some pockets of the industry, Gelder reports pay uplifts of up to 20%, although these tend to be where companies have had to assemble a team rapidly after securing a project. “We’re seeing enough of this almost desperation buying to know that it’s a minor trend,” says Gelder.
Laurence Brett, head of UK regions at Aecom, believes that the cyclical nature of construction means that there will always be peaks and troughs of demand for skills.
One answer, he suggests, might be to find ways of giving people skills that are sufficiently flexible so that they can work in other industries during downturns and then return to construction when the economic conditions are right. An example, he says, are building services engineers who have skills that can translate to manufacturing. Gelder says BAE has taken on such individuals at its Filton plant, near to Bristol.
In the meantime, many consultancies have increased their graduate training programmes. Patterson says Atkins is expecting to hire a record 350 graduate trainees in the UK, as well as 19 apprentices.
But hiring bright young talent won’t deal with the acute shortage of sufficiently experienced managers. Gelder says: “We are seeing a pattern of people in key roles in organisations being paid quite big increases over and above inflation.”
Ian Baily, a director of Artelia, recognises this picture. “Recruitment is pretty difficult, not in terms of the number of people but the quality.”
He identifies the hardest to recruit demographic are project managers or directors, typically in their late 30s to early 40s. Atkins’ Patterson agrees the individuals in greatest demand are those with managerial experience allied to technical ability. “We are very much in a war for talent: everybody is looking for the same people,” he says.
And the competition for these individuals isn’t just from traditional rivals, like contractors, he adds. The big management consultancies, which have branched out into construction in the wake of the financial crisis, are fishing from the same pool. One way of plugging skills gaps is of course to look for candidates from overseas. But this route has become more difficult in recent years as the government has tightened its visa restrictions, making it harder for firms to recruit from their traditional hunting grounds in old Commonwealth countries, like Australia and South Africa.
The industry is in ongoing talks with the government about loosening the visa restrictions on those with scarce construction skills. However, more immediately, companies are increasingly open-minded about candidates from elsewhere in the EU, who don’t face the same restrictions, believes Gelder. “I would have bet my mortgage a couple of years ago that we would not have looked at candidates from the Continent - now people are cottoning on that there are some quite good people, and all of a sudden they are looking like a very attractive proposition,” he says, adding that consultants are increasingly opening up offices in smaller EU nations such as Hungary, partly in order to ship out work.
And there is of course another source of overseas candidates: the UK nationals who left these shores during the recession in search of overseas opportunities. “It’s more a trickle than a gush, but people are starting to come back because of the opportunities they see over here,” says Gelder.
Pay rises and non-salary benefits
However, while staff may be disgruntled about pay, only 36% asked for a pay rise, Hays found. Gelder suspects many staff have recovered much of the ground that they lost salary-wise during the recession. With salaries having largely corrected, he doesn’t expect to see the same level of pay increases this year. Nevertheless, construction bosses are taking workforce issues a lot more seriously than they may have done during the recession when the only priority was often just getting the job done.
Firms are taking a closer look at what they can offer in terms of non-salary employee benefits, according to Hays, which says that just over half (54%) of the firms it surveyed are offering a pension that is better than they are obliged to provide under the government’s auto-enrolment legislation. Atkins, for example, has just introduced improvements to its pension scheme, offering matching contributions of up to 8% of salary to those staff who are prepared to put in more than 4% themselves.
The chief reason that workforce issues are rising up the boardroom agenda is the wider impact that salary bills will have on profits within businesses where salaries are the biggest cost. Patterson says this is an issue that firms must watch carefully. He says: “We are a listed company so have certain obligations in terms of delivering value to shareholders. Increasing salaries will have an impact on profitability and rates to clients. Given that we are a consultancy, salary increases have quite a significant impact on the performance of the company.”
Aecom’s Brett says: “You are delivering things now that you were selling last year so in the short term it has a minor impact on margins.”
So far, the increase in labour costs is not feeding through into upward pressure on fees though, according to Artelier’s Bailey. But Brett believes consultants are being more selective about what they bid for. “With the amount of opportunities in the market place, it’s making us much more selective about bidding. There’s an element of picking your winners and not bidding where you don’t see the margins.”
Consultancy bosses will hope that this increasingly discriminating attitude will finally lead to a turnaround in fee levels. In the meantime though, it looks like they will have to become ever more savvy about how they recruit and retain staff.
This week’s online poll
Will consultants’ salaries continue to rise rapidly in 2015? Please vote here >>
Top salary increases
|Role||Average||% increase salary|
|Associate structural engineer||£48,375||+10%|
|Senior structural engineer||£38,333||+10%|
|Partner/director building surveyor||£59,917||+9%|
|Associate building surveyor||£46,042||+8%|
|APC quantity surveyor||£25,125||+8%|
|Associate quantity surveyor||£47,917||+8%|
|Graduate structural engineer||£22,292||+7%|
|Graduate quantity surveyor||£21,417||+7%|
|East of England||£50,000||£40,000||£32,000||£23,000|
|Yorkshire and Humber||£48,000||£38,500||£30,000||£22,500|
|Average change 2014-2015||10%||10%||12%||7%|
|Associate (Principal |
|East of England||£45,000||£38,000||£29,000||£22,500|
|Yorkshire and Humber||£41,000||£35,500||£28,000||£22,500|
|Average change 2014-2015||5%||6%||10%||-|
|Partner/director||Associate||Architect||Newly qualified, CAD exp||Architectural assistant, Part II||Architectural assistant, Part I|
|East of England||£53,000||£40,000||£38,000||£29,000||£22,000||£17,000|
|Yorkshire and Humber||£55,000||£43,000||£32,000||£28,000||£20,000||£17,500|
|Average change 2014-2015||3%||3%||8%||3%||3%||2%|
Civil CAD technicians
|CAD manager||Senior CAD team leader||CAD technician|
|East of England||£37,500||£35,000||£26,000|
|Yorkshire and Humber||£36,000||£31,000||£26,000|
|Average change 2014-2015||3%||5%||5%|
|Partner/ director||Associate||Senior surveyor||Newly-qualified surveyor||APC surveyor||Graduate surveyor||Claims and dispute resolution||Project manager|
|East of England||£58,000||£44,000||£38,000||£30,000||£23,000||£22,000||£48,000||£40,000|
|Yorkshire and Humber||£60,000||£48,000||£40,000||£31,000||£26,000||£22,000||£45,000||£43,000|
|Average change 2014-2015||4%||8%||6%||8%||8%||7%||2%||5%|
|Senior interior designer||Interior designer||Junior interior designer|
|East of England||£32,000||£27,500||£17,000|
|Yorkshire and Humber||£28,500||£25,000||£18,000|
|Average change 2014-2015||4%||3%||3%|
Architectural CAD technicians
|Senior CAD technician||CAD technician||Technician|
|East of England||£33,000||£24,000||£26,000|
|Yorkshire and Humber||£29,500||£24,000||£29,000|
|Average change 2014-2015||3%||3%||5%|
|East of England||£36,000||£25,000|
|Yorkshire and Humber||£33,500||£26,000|
|Average change 2014-2015||4%||4%|
|Senior landscape architect||Landscape architect|
|East of England||£34,000||£26,000|
|Yorkshire and Humber||£34,000||£24,000|
|Average change 2014-2015||1%||2%|
|Partner/director||Associate||Senior surveyor||Newly qualified surveyor||Graduate surveyor||Maintenance surveyor|
|East of England||£58,000||£45,000||£40,000||£32,000||£20,000||£29,000|
|Yorkshire and Humber||£56,000||£43,000||£37,000||£31,000||£22,000||£27,000|
|Average change 2014-2015||9%||8%||4%||4%||5%||5%|
This week’s online poll
Will consultants’ salaries continue to rise rapidly in 2015? Please vote here >>
This guide has been compiled using data gathered during 2014 from 96 Hays Construction & Property offices across the UK. The salary data is based on job listings, job offers and candidate registrations. The findings of the benefits survey are based on responses from over 1,000 employers and employees working on construction organisations of all sizes throughout the UK.