Construction work begins to lose 'dirty hands' image as wage growth once again beats national average
Wages in the construction industry have risen sharply in 2003/04 following an 18 month lull, according to a survey by the RICS.

The institution's economic brief also notes that the total number of workers in the construction sector rose to more than 2 million in the fourth quarter of 2003 for the first time in 12 years. This means that construction employs about 7% of the UK's workforce, the highest since 1994.

According to the RICS, the increase in wages has been driven by a skills shortage in a market where demand has remained strong. The brief shows that labour costs began to grow sharply in the early months of 2003, which extrapolates to an annual figure of 4.7%.

"The effect of the skills shortages has been marked, with earnings in construction consistently running ahead of that of the economy for much of the past five years."

The briefing notes that the gap between growth in construction wages and the national average had narrowed over the past 18 months because slower economic growth has led to some loosening in the labour market.

The RICS says the poor perception of construction trades has traditionally hampered recruitment, but that rising wages have helped to overcome the "dirty hands" image.

It adds that the influx of immigrant labour has slowed the growth in wages by "helping to plug gaps in employment".

Although the briefing shows that labour numbers are historically high, it warns that there is still a danger of a serious skills shortage. It says that Kate Barker's report on housing for the government indicated that 70,000 additional skilled workers were required to meet the government's housebuilding targets.

It says: "According to the Construction Industry Training Board employment model, the overall labour requirement between now and 2007 is just over [an additional] 83,000 a year."

The briefing notes that this figure is based on the assumption that the annual growth in the construction sector will be 2.1%. If growth rises to 3.1% another 21,000 workers will be required.