Labour costs ‘to soar by 8.3% this year’ due to skills shortage

Severe labour and skills shortages are putting major infrastructure jobs at risk, according to a consultant’s report. 

A report by Currie & Brown claims that an additional 225,000 construction workers will be needed by 2027 to meet demand and said the shortfall is pushing costs up. 

While headline inflation for construction materials is beginning to ease, the skills shortage is predicted to drive an 8.3% increase in labour costs over this year and could extend lead times by up to 50%. 

The report said the combination of labour-driven and material cost inflation could add £900m to the cost of the UK’s infrastructure pipeline in 2023 – the equivalent of a major new hospital. 

Nick Gray, Currie & Brown’s chief operating officer in the UK and Europe, said the skills shortage should serve as “a wake-up call” for the industry. 

“Avoiding a cliff edge that threatens the delivery of key projects such as the Transpennine Route Upgrade Programme, works at the Port of Liverpool, and the National Hospitals Programme will demand a collaborative effort on training from players across the industry,” he said. “It will also need robust project management and continuous, close control of cost and risk.” 

The consultant’s report advised project teams to engage early with contractors to ring-fence skilled labour and expand their pool of supply partners as well as utilising advanced technologies such as AI.