Construction boom facing a labour bust

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There is a boom in the construction industry the world over with the worldwide construction market expected to grow by 85 percent to nearly $15.5 trillion in 2030 according to PwC, which is both good and bad news for the sector.  The good news is that the industry is expected to face a consistent and robust growth, and the bad news is that the already stressed labour intensive industry is facing a personnel shortage that might not be mitigated soon.

The construction building sector is facing the highest shortage of construction workers since the global financial crisis of 2008, when it is believed nearly 2 million workers were rendered jobless, according to Reuters.

The industry is set to witness nearly $1 trillion dollars in spending this year. Be that it may, sadly many construction firms are turning down jobs due to a paucity of labor force and skilled manpower. Home buying is facing an upsurge but due to lack of labour the construction industry is finding it difficult to keep up.

“Homebuilders are experiencing such high demand, perhaps they’re just feeling really tight, labor-wise, because they simply can’t build them fast enough.” said Frank Shaw, an economist with Fannie Mae. According to the Association of Home Builders, 82 percent of its members believe the cost and availability of labor are their biggest issues.

The United States and Europe are facing an acute shortage with some industry insiders putting the figure at 50 to 60 percent. Australia’s latest Skills Shortage Report (August 2017) says that the country is facing a shortfall of trained workers  in the construction industry from architects and surveyors to construction labourers. New Zealand is another country facing  a similar situation. According to estimates, it needs 30,000 additional building workers by 2019.

Despite the potential for high wages, high demand and an opportunity for self employment and entrepreneurship, not many youngsters are joining the trade. The reason being a mindset where youngsters are turning to college education for better prospects and white collar job status. Technology has overtaken the global economy and most youngsters want to become tech professionals. Added to that is the general decline in vocational courses in schools, and training programs offering such courses at the higher levels. Many construction and building organisations are trying to get more students to enter the industry, but it is still very much an uphill task

“I blame the Vocational Education and Training sector,” says Tim Mead, chief executive of Mead Con on the North-West Coast, “The VET sector needs to work with industry but they’re going off at a tangent. And unfortunately there’s massive disincentive at high school to go into TAFE. Everyone says ‘why be a plasterer or a carpenter? Why wouldn’t you go to university?’”

Also a lack of well-trained mid-level supervisors is hindering the industry.

Baby boomers are now retiring later adding to the pension and healthcare costs in the construction industry, which in turn has affected skill upgradation with no subsidised courses on offer. The average age of a construction worker is 42, according to a Teletrac Navman report. An older workforce requires a higher salary with incumbent benefits. This has led to fewer skill upgradation courses and workshops on offer by employers.

Funding and training for apprenticeships and skill upgradations have been drying up due to withdrawal of employer help, government incentives and a sharp increase in wages for apprentices.

Given the acute shortage of human resources in the industry, the players need to come up with some smart thinking. There is a need to re-engage at the student level with new vocational courses like the Certificate IV in building and construction, incentives and fresh funding for apprenticeship certificates. Students should be informed of the opportunities available and the paths open to them.

Education, training programmes and proper information disbursement amongst the student community will help in changing perceptions of the industry.

Michigan State University Human Resources and Labor Relations professor Dale Belman wrote in an article for the Economic Policy Institute. “Training highly skilled craft workers requires multi-year programs that combine classroom training and on-the-job experience … With the large-scale shift to nonunion employment, the apprenticeship system has declined.”

Investment in technology is another path to redress the shortage. Adoption of time and project management software to make the process more streamlined is needed. Technology will help in better exchange of information between contractors and sub-contractors about labour, equipment and material availability.

Labour productivity needs to improve as nearly 60 percent of work time is  wasted on equipment management and scheduling issues. Technology can help in monitoring equipment use and maintenance with telematics. Data analytics can improve human and machine fatigue by working out optimal outputs.

Construction firms need to be pro-active and invest in training of its employees. Refresher training courses and mentorship programmes need to be introduced to allow senior workers to pass their experience and know-how to the younger recruits.

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