Gosh, was it just a year ago that the media were telling us that “Scotland’s construction industry is expected to grow over the next five years.”? This prediction was made on the basis of the CITB forecast at that time, as reportedin Business Insider on 5thFeb 2018. Specifically, the trade body expected a 3.9% increase in public housing each year from 2018-2022 and a 2.9% growth in private housing. Overall, all sectors other than infrastructure, commercial and public non-housing were predicted to grow and crucially, from our perspective at Peace Recruitment, it was estimated that 10,650 new construction workers would be required to meet the demand, although a small drop in overall employment of 0.7 per cent per year was expected over the five-year period. All fine and dandy, but as I shall explain, these figures hide some ongoing problems.
For a start, if we fast forward just over 11 months, Scottish Construction Now published an article(partly a puff for the company writing it but that’s by the way) which looked ahead to what we might expect in 2019. Brexit featured highly, including the suggestion that “Britain (is) set to make big political decisions in 2019” – something which hasn’t happened due to the ineptitude of our politicians to decide anything.
In addition, it was noted that the business uncertainty caused by Brexit is a major issue, albeit it hasn’t as yet cause the economy to stop growing. Investment may have slowed, but that hasn’t stopped firms seeking innovative methods to gain competitive advantage, as for example with the growth in sustainable and environmentally friendly construction and, of course, the ramping up of technology that can replace humans: something we have covered at length in previous blogs.
One of the biggest drivers of this technological change is the indisputable fact that Scotland’s construction and property firms need to replace their ageing workforce. This is particularly true at the level of engineers, supervisors, surveyors and logistics professionals.
Studies by the ONS and others clearly illustrate the extent of the problem, with an estimatein 2011 showing that 20% of construction workers were over 55 at that date. Further studies show that up to 2016, 20% of UK workers were in that age bracket, while in the 25-34 years age group, over 40% were non-UK workers, as shown below.
You don’t have to be a genius to work out that some of the non-UK workers will not hang around post Brexit, so the issue facing the industry is quite clear, viz, how do we fill the talent pipeline and, perhaps more importantly, can we replace the experience and expertise that is leaving for reasons of age? Of the one in five who were 55 years or over in 2011, how many are now retired and enjoying their pipe and slippers (or, more likely, extended breaks in Marbella)? While there is a cohort coming through the ranks it’s not sufficient to make up the shortfall. You can’t manufacture instant experience, which is why there is an increasing premium placed on quality candidates who are prepared to move company and location to further their careers. However, that just moves the problem around. Long term, education and promotion of the attractions of a career in construction are the answers, but in the meantime I foresee that construction firms will (have to) incentivise their more experienced staff to stay on past their expected retiral date. Similarly, for those in the fortunate position of having both age and experience on their side, the opportunities for consultancy work post-retirement may increase dramatically. Savvy recruitment consultancies should, if they are not doing so already, be looking to create a talent pool of “grey gurus” – those engineers, managers, surveyors et al who have an accumulation of experience that more junior managers and engineers simply lack. This could well be a win-win for all concerned – the contractor has a relatively short period of time to make lots of cash to pay for those holidays in Marbella while the employer only has to pay for the staff required for the duration of the contract and doesn’t have the normal burdens of NI, pension etc. (future changes to IR35 regs permitting of course!).
Other ideas will doubtless occur to companies facing the impending departure of their senior management, but irrespective of what the potential solutions might be, they won’t stop the problem occurring in the first place. Consequently, further investment in training/CPD while exposing the up-and-coming ranks of middle managers to as wide a range of scenarios and experiences as possible will also play a part.
The stats above don’t lie. Construction’s demographic time bomb has been hidden in plain view for some time. The question is: what is your firm doing about it? At Peace, we’ve been thinking deeply about this question, because, whether we like it or not, it’s going to affect our business. So, if you’d like to bounce around some ideas and options, give me a call and let’s chat.