Field management software provider Re-flow has launched its new State of the Construction Industry Research Report 2023, which explores the recent problems challenging the industry – from the war in Ukraine to the cost of living crisis
State of the Construction Industry
It’s no secret that the construction industry in the UK has been facing many challenges over the past several years, leaving many businesses and workers in precarious situations as a result.
The brief boom that followed the COVID-19 pandemic was a short-lived moment of respite for many within the industry, facing mounting issues that quickly followed.
The war in Ukraine has had a profound global impact, most significantly in terms of crucial energy needs and supply chains that form the foundation of any construction project.
Domestically, these issues have been exacerbated by a continuing lull in the workforce, decreasing workloads and inquiries, as well as a looming recession on the horizon, leaving the sector facing another uncertain year.
25% of businesses reported a decrease in their workloads
According to recent data from the Federation of Master Builders (FMB), 25% of businesses
reporting a decrease in their workloads. This means that construction projects are being
delayed, cancelled, or there is simply a shortage of work, naturally leading to a reduction
in revenue for many businesses.
Furthermore, 41% of construction businesses reported a decrease in work inquiries, clear evidence of a significant slowdown in new project opportunities. This has resulted in a knock-on effect on employment, with 19% of construction businesses reporting a decrease in their workforce, and 66% reporting stagnation.
Jobs within the industry are being lost, and the lack of stability is bound to have a knock-on effect on the already dwindling number of skilled workers entering the workforce.
The lack of clear guidance from the government on major issues has made companies wary
of investing in additional manpower, as they are uncertain about future prospects.
There is uncertainty surrounding many wider political and economic events that are bound to affect the sector – Brexit, the cost of living crisis, a potential recession and the war in the Ukraine, though the extent of these effects still remains to be seen.
As a result, businesses are cautious about making significant investments, with the trend likely to continue until circumstances become more stable.
Core trades such as carpentry, joinery, bricklaying, and general labourers are facing a shortage of skilled workers
Moreover, the industry is facing a shortage of skilled workers, particularly in core trades such as carpentry, joinery, bricklaying, and general labourers.
In fact, 39% of construction businesses are struggling to recruit carpenters and joiners, 35% report struggling to recruit bricklayers, and 30% struggle to recruit general labourers. 64% of businesses report that the lack of these key trades has led to job delays, while 12% report having to cancel jobs completely.
When 1 in 10 businesses are forced to lose out on work, which grows increasingly valuable in the current climate, the gravity of these issues becomes painfully evident.
This shortage of skilled workers is being exacerbated by the aging workforce in the industry, where 47% of British construction workers are over the age of 45, and the average age of the construction workforce currently stands at 50-56, according to data from the Office for National Statistics (ONS).
This means that as older workers retire, there will be fewer experienced workers to replace them, leading to further skills shortages.
To make matters worse, the construction industry is facing a perception problem. According to a recent study by Savanta ComRes and WSP, only 5% of young individuals in education are actively considering a future career in the sector.
A staggering 37% of young individuals have ruled out a career in construction altogether, which could have significant long-term implications for the industry. Without a fresh pipeline of talent, the industry may struggle to meet demand and maintain high levels of quality in the future, meaning current workforce problems are likely to only worsen in the years to come.
89% of respondents reported an increase in material costs
Over the past few years, the costs of materials and wages in the industry have been steadily increasing. According to a recent survey of construction businesses in the UK by the FMB, 89% of respondents reported an increase in material costs. This is only further consolidated by the statistics surrounding material prices themselves.
Material costs have increased significantly
Since 2015, material costs have increased by a staggering 54.4%, with a 25% increase occurring in 2022 alone.
Several factors are contributing to this trend. Among these are high inflation rates – the
highest the UK has seen in 40 years – which have been affecting the economy as a whole.
Additionally, the construction boom following the COVID-19 pandemic has caused a large
surge in demand for materials – materials which have been limited by supply chain and
shipping issues, exacerbated by the global ramifications of the war in Ukraine and the slow
adjustments to international trade as the UK completes its exit from the European Union.
Furthermore, certain materials are particularly affected by these trends. Energy-intensive materials, such as steel and aluminium, are expected to remain expensive in 2023 and beyond, in large part due to global energy issues brought on by the war.
In addition, aggregates, bricks, timber, cement, and concrete are also among the materials experiencing significant price increases. Without reliable access to these crucial materials, construction projects are suffering nationwide. 51% of businesses have reported job delays, while 6% have been forced to cancel projects altogether as a result.
The costs of labour are also rising in the construction industry. 61% of surveyed businesses
reported an increase in wages and salaries, which, in addition to rising material prices and
overheads, has caused 70% of construction businesses to increase the prices they charge for their work. This increase is due to several factors, including the aforementioned shortage of skilled labour, as well as substantial recent increases in the cost of living.
Looking ahead, the construction industry anticipates further increases in both material costs and wages. As the economy continues to reel from the many crises it currently faces on the road to eventual recovery, these trends are likely to continue. This sentiment is echoed by businesses within the industry, of which 85% report expecting material costs to continue increasing, and 53% expecting the same for wages. Construction businesses will need to carefully manage their costs and pricing to remain competitive and profitable in this challenging environment.
There were 59,000 non-fatal injuries in the industry between 2020 and 2022
Despite efforts to improve safety standards, the construction industry in the UK continues
to experience a significant number of non-fatal injuries and illnesses. According to data from the Health and Safety Executive (HSE), there was a yearly average of 59,000 non-fatal injuries to workers in the construction industry between 2020 and 2022.
When compared against sectors with similar working activities, construction outperforms some of its peers, such as transportation and manufacturing, with approximately 600 more work-related illnesses and injuries per 100,000 workers.
Musculoskeletal disorders are a particularly common issue in the construction industry,
accounting for around 41% of all reported work-related illnesses in the sector. However, efforts to make the construction environment safer to work in have proven fruitful year on year, with the number of fatal injuries in the industry dropping below the annual average measured over the past five years once more.
To maintain this course of improvement and further address safety concerns, early this year, the Health and Safety Executive introduced a new safety regime aimed at reducing the number of injuries and illnesses in the industry.
The new regulations will focus on “high-risk” buildings, fire safety, and other areas. While this can be expected to prevent poor compliance and cut corners on sites, businesses must be aware that they’re being put under increased scrutiny to manage, measure, and enforce their HSE processes effectively.
The construction industry in the UK is facing many challenges, more so than anything seen
in the past few decades. Among these is a decrease in workload and employment, growing
shortages of core trades, increasing material costs and wages, as well as increased scrutiny
surrounding health and safety and environmental regulations.
The industry needs to address these challenges and find ways to attract young people to the sector, while retaining their existing workforce and ensuring safe working practices. In the current economic landscape, juggling the various processes and considerations will be no small feat, and businesses will be forced to modernise and adapt their operations to remain profitable and continue growing sustainably until the sector begins to stabilise.
Book a free demo and qualify for a free trial here.
