In a recent article commenting on its survey, Markit’s senior economist Tim Moore said that “…heightened uncertainty about the business outlook (construction) appears to have weighed on overall construction demand so far in 2016, with survey respondents citing cautious client spending patterns and a reduced willingness to commit to new projects…”.
As a recruitment company, we recognise that companies are more cautious at present in terms of hiring and I believe Markit’s own survey suggested that the rate of employment growth is close to its slowest rate since June 2013 – so what’s going wrong and are the two inextricably linked?
Over that last year or so, we have certainly seen a move towards the use of more temporary labour, which while good for “our” business, it isn’t necessarily good for the sector, as it reduces the amount of available temporary labour that the sector has always relied on and needs.
Worryingly, it also means that companies workforces are not being enlarged, so little new blood is being brought through and with natural wastage and the ever-present shortage of skilled people, the talent pool is rapidly evaporating.
Despite the many short and medium-term challenges of the sector, few would argue that there is room for optimism and that there are many projects, certainly in infrastructure, all under starter’s orders. These projects will need labour and not just now but in the future; and as for the mega projects – such as HS2 and Crossrail 2 – these will also require a strong pipeline of talent coupled with investment in their training too.
I fully understand why companies are cautious to recruit and invest in people, but I think it is now way past time that those same companies take a longer view. To wait for the market to turn simply means many companies will be playing catch-up and there will be an inevitable scramble for skilled people – permanent and temporary – as well as for plant and for other machinery too and it simply won’t be there. It certainly won’t be there in the quantities the sector will need or at the pace it will demand it! Lead times will inevitably increase and growth at the company and sector level will be restricted as well as at a GDP level.
One could argue that the construction sector’s caution may well be contributing to client’s reluctance to commit to new projects and vice versa, which means at some point someone has to make a move.
To me it makes much more sense to proactively be ready for the work, rather than having to react to it and compete on an open-market for what is already a limited and fast diminishing talent pool of both permanent and temporary people. It would also seem wise to invest now in the people you have through training and up-skilling, but also undertake a full internal staffing and skills audit, to ensure you can not only meet demand now but also in the future and understand fully where your weak areas are. Remember, talent takes time to find and adapt to your business so it is best done with a plan.
Being a little less cautious to recruiting may well be the signal the sector needs to get clients spending. Optimism is infectious and your optimism could mean a win-win-win for everyone!
William Berridge is managing director at Dewey Group