Construction sector in buoyant mood as workloads grow, but worries mount over skills shortage and rising wage costs

The latest Construction Market Survey from the RICS show many in the sector reporting difficulty sourcing skilled workers in Wales.

Construction businesses are busier but are finding it increasingly hard to find skilled workers

The building sector has begun 2016 in a positive mood with most businesses reporting increased workloads, according to the latest Construction Market Survey from the RICS.

However, many in the sector are also concerned that shortages of construction skills are pushing up wages in the sector in Wales, with surveyors reporting scarcities of skills among a variety of construction professions and trades and pointing to strongly rising input costs, including wages.

Almost half (44%) of respondents reported difficulty sourcing skilled workers in Wales during Q4, with shortages in quantity surveyors and the bricklaying trade particularly evident. A balance of 64% of surveyors said that total input costs rose in the quarter.

Read more: Shortage of bricklayers affecting construction firms as they struggle to meet rising levels of work. This is similar to the picture across the UK, where 61% of construction professionals have reported sharp wage rises. Average UK construction earnings have risen by more than 6% in the year to October – a marked increase on the average UK wage rise over the same period of under 2%.

In terms of workloads, growth was most evident within the infrastructure (a net balance of 30%) and private commercial (a net balance of 36%) sectors, according to Welsh surveyors. Private housing workloads also grew (a net balance of 28%).

Infrastructure and private commercial have seen the largest growth in new work

Overall, a net balance of 24% of respondents reported an increase in workloads across Wales during Q4 2015, with over half of respondents (54%) expecting further growth throughout the next 12 months.

Read more: Businesses worried about impact of National Living Wage, migrant caps and skills shortages, CBI survey finds

RICS Wales director Ben Collins said: “With regard to construction, 2015 ended much as it began, with workloads growing, and surveyors optimistic about the outlook.

"However, skills shortages remain a challenge for the industry, as do input costs. It is encouraging to note though that the balance of surveyors expects profit margins to improve in the next 12 months.”

Workloads have also grown in the private housing sector. Rui Vieira/PA Wire

RICS Wales spokesman Tony Filice added: “Rising demand, sales and prices in the residential sector are being reflected in increased confidence in the construction sector in Wales, with 54% of chartered surveyors expecting increased workloads during 2016. It is important that skills shortages don’t impact on the ability of the construction sector to deliver the new homes that Wales needs.”

Looking at the overall UK picture, RICS chief economist Simon Rubinsohn said: “While workloads are still growing at a relatively healthy pace, labour shortages in the construction sector are causing delays at different stages in the development process and leading to significant problems with project planning. More than 60% of our survey respondents said that these resulting planning delays were an impediment to growth.

“That said, industry wages are becoming increasingly attractive, and I would hope that over time this will encourage skilled workers to return to the sector, as well as drawing school leavers and graduates towards construction industry careers.”