Training is key to survival, construction firms told

Construction bosses are being urged to maintain a commitment to staff training to preserve the industry’s workforce during a recession, as new figures from the Construction Skills Network (CSN) paint a picture of the skills needs and growth rates for the 2009 and 2013 period.

The forecasts reveal two distinct phases for the industry: one of recession (through 2009 and into 2011) and one of gradual recovery (from 2011 to 2013). The year on year data indicates there will be a 3% contraction in 2009, followed by nil growth in output nationally in 2010, followed by a gradual return to low-level growth of 1% in 2011, 2% in 2012 and 3% in 2013. These figures result in an average annual output growth over the next five years of 0.5%.

Government investment in public sector projects such as Crossrail, Scotland’s 10-year transport plan and major station redevelopments including Reading, Birmingham New Street, and Nottingham, is supporting the market in the earlier years of the forecast period, with any growth from 2011 reflecting general market recovery as credit conditions ease.

Taking account of the contraction in construction activity in the early part of the forecasting cycle, the model shows that the Annual Recruitment Requirement, averaged over the five year period, has declined to 37,000 workers. This represents a reduction of 5,000 new workers per year from the last CSN forecast, which was conducted to assess the impact of the economic downturn on the sector in Autumn 2008.

This means overall workforce numbers at the end of the cycle are likely to return to 2008 levels of around 2.6 million, maintaining the industry’s position as the UK’s largest employer and prompting calls for businesses to ensure that workers possess the requisite skills for when demand for work picks up.

Mark Farrar, chief executive of Sector Skills Council, ConstructionSkills, said: “This year will be an especially challenging one for the construction industry, and some sectors such as private housing and commercial will be impacted further by the adverse economic climate. In response, ConstructionSkills is working on a number of measures to support affected employers.

“However, after a forecasted contraction of 3% in 2009, followed by no growth in 2010, we expect an incremental recovery culminating in a growth rate of 3% by 2013, largely due to public sector spending and potential market recovery from 2011. The importance of firms ensuring that their employees are well trained and capable of delivering high quality work – both now and when the industry returns to growth – should not diminish.”

The latest CSN data also reveals significant variations in regional performances. Average annual growth in Northern Ireland’s sector, bolstered by investment in public services such as major road improvements, education and new hospitals, is anticipated to be around 1.6%, almost double that of the other best-performing UK regions. The industry in the South West of England, by comparison, which does not benefit from public sector spending on projects such as the ‘Building Schools for the Future’ programme, is expected to contract by 0.2% per year.

Figures for Greater London indicate that there will be an annual drop in commercial property activity of around 2.3% on current levels, reflective of less demand for industrial, office and leisure facilities on a wider scale. The capital is, however, a key beneficiary of public sector spending with Crossrail going ahead and some existing railway stations due for large-scale redevelopment. As a result, London’s industry is expected to grow by an average of 0.8% per year between 2009 and 2013.

Sandra Lilley, manager of the Construction Skills Network, said: “This is the first time that we have seen such variations in the CSN figures for the regions and nations. The results clearly show that that while activity is not expected to decline across all sectors of the construction industry, this has varying effects across the country and significant challenging times are ahead.

“Despite this, we do need a flow of young people to enter the industry, particularly in the areas of higher skills need such as the professionals arena to help us cope with an ageing workforce and fewer young people entering the industry. Critically though, the industry must focus its efforts on retaining and reskilling workers currently in employment. A recession is not a time to decrease training levels, and if that happens, the long term skills deficit will be severe. These are issues we still face from the recession in the 1990s.”

ConstructionSkills has also called on Government to help the industry deliver its training requirements, and is now working closely with officials to implement recent announcements which give more power to public sector bodies to insist on apprentice employment as part of the procurement process.

In last year’s Pre Budget Report, Alistair Darling gave the public sector the ability to act as a ‘best practice’ construction client and only award contracts to businesses that use apprentices as part of their workforce. This policy is now being turned into action, which will help provide much-needed skills to the industry.

Working with the Department of Innovation, Universities and Skills, ConstructionSkills has put in place a ‘matching service’ to help find placements for those apprentices facing redundancy. The service is already assisting over 1,200 young people whose apprenticeships are at risk, and it sends a clear message that the more the public and private sectors can work together, the stronger the industry can become in these challenging times.

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Media only: For business case studies, images or to arrange interviews, please contact David Pidgeon (0300 456 5403 david.pidgeon@cskills.org)

Notes to Editors

About the Construction Skills Network

The Construction Skills Network, coordinated by ConstructionSkills, is a partnership between the Sector Skills Council, the Government, construction companies, education and training providers, regional agencies and customers. It was established to provide a single, clear understanding of the industry's current skills position.

About ConstructionSkills

ConstructionSkills is the Sector Skills Council (SSC) for the construction industry. It is a partnership between CITB-ConstructionSkills, CIC and CITB Northern Ireland. It is UK-wide and represents the whole industry from professional consultancies to major contractors and SMEs.

Established as an SSC in 2003, ConstructionSkills is working to deliver a safe, professional and fully qualified construction workforce. All three partners are committed to working together to deliver industry-led skills and training solutions through the Sector Skills Agreement for construction. We work to negotiate the best partnership and funding deals for the construction industry to help raise standards and we develop the skills products and services employers need.

The construction sector is central to the UK economy, generating over 8% of UK GDP and with a turnover of more than £210bn a year.