We have a system that avoids employment: The lessons to be learnt from City & Guilds research

The skills gap in construction is an issue that has been kicked from pillar to post but, if we really want to reach the housing targets proposed by the government, as an industry, we must work together and act now. We need to have real conversations about employment models, the positive impact of technology, and addressing modern slavery, if we are serious about building the workforce of the future.

It is worth reflecting on recent research from City & Guilds, which highlights what many of us in the industry already know: 76% of construction firms are struggling to recruit skilled workers, and 84% acknowledge that there are critical skills shortages.

Perhaps most striking, nearly a quarter of respondents place the blame on a lack of interest among young people. This is an increasingly common narrative that misses the point – and we must accept responsibility.

>> Also read: Out of the classroom and into construction: I’m looking for a career in the built environment and it isn’t easy

>> Also read: Fragmented and misunderstood: Why our sector risks losing a generation

The problem is not a disinterested generation; it is an industry failing to create the employment structures needed to nurture the future generations. The interest is undoubtedly there.

This year, at Seddon, we received 2,694 applications for just 20 roles in the latest hiring round. There is an appetite, but the space to absorb and develop that talent does not exist.

Thousands of students finish construction-related courses at colleges and universities every year, only to find that there are no apprenticeship or graduate positions available to them.

Our industry must stop hiding behind the excuse of disinterested young people – it is our broken employment model that drives them away.

The problem with ‘job-ready’ hires

City & Guilds found that over a third of construction firms (36%) demand “job-ready” workers. This reflects a short-term mindset driven by the sector’s reliance on flexible labour models (FLM) and self-employment.

But here is the truth: you cannot grow skills in a system that avoids employment. Apprenticeships, training and retention all depend on long-term commitment, something the current gig-style workforce model cannot deliver.

Until the industry stops expecting plug-and-play workers and starts investing in its own pipeline, the skills crisis will only get deeper.

Why direct employment matters

Based on industry trends, the structure of employment in construction has shifted significantly over the past two decades. Twenty years ago, the majority of construction workers were directly employed, whereas today, two-thirds are self-employed.

That shift has eroded training and stability, while also harming workforce health. One in three self-employed construction workers experience elevated anxiety, showing how reliance on insecure employment directly drives poor mental health outcomes.

Direct employment is not without its challenges. It requires firms to carry higher costs and the responsibility of keeping people busy through the inevitable peaks and troughs of project pipelines.

Despite this, Seddon has made the conscious, strategic decision to employ directly, because it is the right thing to do. Direct employment brings benefits that are hard to measure, but impossible to ignore: improved productivity, safer sites and experience learnt from within and stronger working practices.

It also shapes the culture of our supply chain. We deliberately partner with like-minded subcontractors who also directly employ, using labour-only subcontractors, self-employed workers or agency staff only to flex around gaps, not as the norm.

Seddon employs more than 200 skilled boots on the ground, equating to a third of our workforce, and through collaboration with our supply chain, we have been able to place apprentices beyond our own headcount. But, without industry-wide commitment and government policies which level the playing field, firms that invest in employment will always be undercut by those that do not.

As of Q3 2024, there were around 745,000 self-employed workers in the UK construction industry, the highest of any sector. Other industries would never dream of leaving so much of their workforce on self-employed terms with no training investment. Why does construction accept it as normal?

Fixing the apprenticeship levy

One of the barriers to building a strong workforce is the apprenticeship levy. Introduced as an attempt to solve the issue, the levy was supposed to fund training for the next generation. In reality, it is currently missing the mark in what the construction industry needs.

With a 47% apprenticeship dropout rate and rigid standards that do not reflect construction’s specialist nature, the system is shutting out employers.

We need reform: modular apprenticeship standards, funding that supports smaller contractors and supply chain partners and procurement policies that make workforce development a requirement, not an option. Without changes, we will not just miss our housing targets – we will push a generation of motivated young people into other industries.

The government has pledged a £3bn apprenticeship budget, but none of it is directed at the employers who are needed to make change a reality. Instead, it has increased the apprentice minimum hourly rate by 18% in a low-margin sector, which has closed the door even more firmly for apprentices wishing to enter the sector.

The apprenticeship levy has become a Treasury cash-cow, not a training fund. Unless the government reforms it with industry input, it will remain an obstacle, not a solution.

Building a sustainable pipeline

The way forward is clear. To secure a sustainable pipeline of skills, the sector must:

• Shift away from the FLM and embrace direct employment as the foundation for training and stability. The government must step in with short-term incentives, especially for apprenticeships, to kickstart this change.
• Reform the apprenticeship levy. Without industry input, it remains an obstacle.
• Use procurement as a lever, rewarding firms that invest in people, not just those that cut costs.
• Collaborate across supply chains, creating opportunities for apprentices and trainees beyond headcounts.

Companies which invest in people gain workforce stability and stronger futures. But the longer we delay, the more skills we lose – and the harder they will be to recover. If we fail to act together, the industry risks becoming unable to deliver on its promises.

Unless the government and industry leaders reform the structures that strangle training, we will continue exporting talent to other sectors and importing short-term labour, at the expense of quality and growth.

Future-ready workforces are not found; they are built by investing in people. If we do not act now, housing targets will not just slip, they will collapse under the weight of an ageing workforce and a hollow training pipeline.

Nicola Hodkinson is owner and director at Seddon