Dan Prutton

June 15, 2020

Posted by FMC Network

Construction Employment Market and the Almost Overnight Slump

It's been 12 years since the last recession.


A recession that was so deep, we're still feeling the effects on the construction industry today.

The struggle for jobs was real and close to a fifth of UK Construction workers left the industry entirely, with many, never to return.

This is the same reason that if you've been working in construction over the past 6-7 years, you'll know directly how in-demand your skills are - probably most emphasised from the sheer volume of approaches you've had regarding your career from recruiters like me. It's been busy from a recruitment front and you lot are bloody hard to get hold of.

This is what we establish as a 'skill-short', or 'talent-short' market. When the talent pool for a specific role/industry is smaller than the amount of jobs. It means that quite often, skilled employees are the ones that hold most of the cards when it comes to the recruitment or hiring process.

Unless you've been living under a rock or have been locked away in a bunker for the past 3 months - you'll have noticed there's been a sharp, tectonic sized shift in the employment market due to the pandemic.

Yesterday, Construction Enquirer published news of the anticipated 11% workforce cuts across the construction industry. As I sit here, it's hard to believe that just three months ago I was commenting on the largest spike in construction output for 4 years. It was a promising prospect and long overdue from the year of political uncertainty we'd had hindering the market. Personally, I'd seen a huge spike in demand for skills across the industry. Large-scale project wins, a return to a majority government and numerous public spending announcements were all contributing to a huge boost in confidence for the sector.

This year was set to be a promising time to be in construction and if you work in the sector, you'll have known it. Simple supply and demand economics had meant that your stocks were high, and rising. Prior to the pandemic, the most recent yearly figures had shown that Construction wages were seeing growth of 5.2% - 50% higher than the rest of the employment market. It's no doubt really that 2020 was going to grow even more competitive with Brexit and HS2 having a knock-on effect on the industry.

From a grass-roots perspective, I'd had numerous conversations with construction employers about the struggle for staff. In some cases, a number of businesses had been disrupting the market by paying over-the-odds just to get staff through the door.

One MD commented;

Frankly, I just can't understand how 'X-business' is managing to pay 10-15% above everybody else whilst still being able to achieve a desirable margin. Don't even bother sending me people from there, I just can't compete with their salary expectations.

And from another;

We just can't get the staff, Dan. If anything, we're having to turn projects away rather than stretch us even further than we already are. We'll take on more projects when we have the resource.

Barely a few months ago, these were the kinds of conversations that I was having - multiple times a week.

Now, it looks like we could be strapping in for a turbulent time ahead.

This image is from The Construction Enquirer's publication on 17th June regarding potential job losses across construction employment sectors.

Credit: Construction Enquirer

As I sit here furloughed, I struggle to make sense of it all in honesty.

As has been the case throughout the whole of this episode - the pace of it has meant that the next months, weeks and even days are simply impossible to predict.

What is clear is that the shift from a skill-short, to a job-short market has well and truly been set in place. The employment market is going to be fierce competition with employers often having multiple options for the limited roles they are recruiting for. If you're unfortunate enough to have found yourself in a position of unemployment or want to prepare yourself in the best way possible, we (The FMC Network & Executive Network Group) can help you with an abundance of completely free services such as (and not limited to):

  • CV consultation & review
  • LinkedIn consultation & how to market yourself
  • Market intel & leads for potential jobs
  • Introduction to contacts in the industry

Whilst it is practically impossible to predict what will happen to any degree of certainty - I think we can find some encouraging signs from the last decade and what's currently happening in the industry.

Over the past couple of years, the 'Carillion-effect' seems to have improved things for the better. Albeit, even if some businesses have had to suffer in the short-term as a result. See, when Carillion went under, the magnitude of that event meant that construction businesses came under huge scrutinisation to make sure they had their books in check. Even more so for those that worked on public sector works. You only have to look at what's happened at Interserve and Kier in the aftermath of Carillion to understand the shift in attitude toward cash, prompt payments & debt in the industry.

In January 2019, Construction Manager published;

"The Cabinet Office promised late last year to bar contractors who fail to demonstrate prompt payment to their suppliers from public work by autumn 2019." 

Because of these changes, payment practice in construction for any given contractor is easily accessible and as a result, more heavily scrutinised information.

To conclude these points - whilst there's still a long way to go, the industry that we are in today is one that has improved on the bad cash & debt practices that had long held a negative effect on construction as a whole. I would like to think that overall this will help the industry weather the storm of the impending economic rut.

In addition, we are also facing a very different prospect to the one the world faced in 2008 - there isn't the systematic problem of subprime debt there was back then. This was a huge factor at play in making The Great Recession so drawn-out. It is only really in the past 3-4 years that the construction industry has regained the 250,000 people lost in those tough years.

Moreover, whilst it's a far-cry from being a winning bet - encouragingly, there is a growing confidence from multiple sources that the downturn would be less-severe than originally anticipated.

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All-in-all, whilst I am the first one to be a sceptic and can be guilty of focusing on the negatives, the above gives me confidence that things will bounce back quicker than I'd originally thought.

If you do find yourself in a period of unemployment, just remember - the industry will bounce back as it always has and always will. We may be in different situations to what we are now but still situations that will help us prosper. As a construction worker, your skills will be in vast demand and your stocks will rise before we know it. The challenges for employers and I will once again be, attracting you to the job vacancies and trying to keep you there.

If you do want to get in touch regarding anything to do with employment/the current market, contact me or anyone from our business The FMC Network & Executive Network Group on LinkedIn or 0121 450 5000 and we will put you in touch with the most relevant consultant for you.

So, what do you make of it all? What are your predictions for how the rest of 2020 will pan out? Let me know in the comments