Skills shortage ‘could jeopardise’ fastest construction SME growth since 2007

Gordon Nelson
Gordon Nelson

A boom in the Scottish construction industry is being threatened by the industry’s ongoing skills crisis, according to the latest survey of small and medium-sized (SME) firms.

The latest State of Trade Survey from the Federation of Master Builders (FMB) found that Scottish SME construction companies are enjoying their fastest growth in workloads and inquiry levels since late 2007 but fear they will be unable to cope with the surge in work if they cannot employ the right people for the job.

The sample of 2,000 small and medium-sized enterprise member firms relating to the period between April and June 2015 shows a weighted net balance of 14 per cent of construction companies north of the border enjoyed expansion based on a composite measure of current and expected workloads and inquiries.

This balance is arrived at by subtracting the percentage reporting a fall from that posting a rise, after weighting responses according to the size of company. This reading for the April to June period was up by 10 percentage points on the balance for the preceding three months, and the strongest since the fourth quarter of 2007.

It was, however, adrift of a balance of 21 per cent for the UK as a whole.

Gordon Nelson, FMB Scotland director, said: “Following the longest and deepest economic downturn in living memory, it’s very encouraging to learn that construction workloads are increasing and that small firms in Scotland have real confidence that this will continue.

“The results for the second quarter of this year mark the highest for eight years and it feels as though our industry is finally turning a corner.

“While such positive news is both welcome and long overdue, small construction firms are worried that the skills shortage impacting on the construction industry will mean they cannot cope with the increased workloads they are expecting.

“Additionally, there is the real danger that if professional builders, like the ones we represent, are unable to meet the demand for new work, rogue traders may swoop in and hoover up these opportunities.

“This places consumers at risk of poor workmanship and the resulting additional costs and delays in finding a professional builder to rectify and complete the work.

“It’s welcome news that the number of people on modern apprenticeships in Scotland has increased by almost 60 per cent since 2007.

“However, we need to do even more to boost the number of construction apprenticeships – I’m confident that if industry works closely with the Scottish Government then we can aim to beat the new target of 30,000 apprenticeships by 2020. The sooner we address the skills crisis the better.”

The number of respondents to the survey indicating lower workloads fell to 15 per cent, down from 20 per cent in the first three months of the year.

Brian Berry
Brian Berry

Brian Berry, chief executive of the FMB, said: “Almost half of construction SMEs are struggling to recruit adequate numbers of bricklayers, with others finding it increasingly hard to hire carpenters and joiners, site managers and supervisors.

“Our members are reporting that their workloads are likely to rise over the coming three months, which means the shortage of skilled workers will only become more acute. It also begs the question, how much stronger would the pace of growth in the UK construction industry be if we had an ample supply of skilled tradespeople?

“In the Summer Budget the Chancellor said the UK government would introduce a levy on large employers to fund three million high-quality apprenticeships. The Budget Statement said that ‘the levy will support all post-16 apprenticeships in England’ and if this also includes the construction industry, the assumption is that the CITB levy will not continue.

“However, we are still unclear regarding the details surrounding this new alternative cross-industry levy. If the levy on large employers is only used to fund apprenticeship training by large employers, how will apprenticeship training by small firms be dealt with?

“Given that two-thirds of all construction apprentices are trained by micro firms, it’s vital we have a system that drives high levels of apprenticeship training through companies of every size. We are keen to work closely with the government over the coming weeks – the stakes couldn’t be higher so we must get this right.”

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