Cuts threaten construction sector with skill shortages time-bomb

By GARETH MACKIE AND DOMINIC JEFF
Published on 16/01/2013 00:00

CUTS in public spending and the ongoing eurozone crisis will lead to thousands of fresh job losses across Scotland’s construction sector over the next four years, according to a report that warns of a “demographic time-bomb” facing the industry.

In today’s annual report, the Construction Skills Network (CSN) estimated that employment in the sector north of the Border would fall by 1 per cent a year on average between 2013 and 2017.

That is despite the fact that output is set to eke growth over the period, following a drop of 13 per cent in 2012.

Michael Levack, executive director of trade body the Scottish Building Federation, said the report illustrated the challenges Scotland’s construction industry still faces in building a sustainable recovery.

“Particularly concerning are predictions that employment in the industry will continue to fall over the next four years, despite having already lost tens of thousands of jobs over the past five years,” he said. “This ongoing reduction in industry capacity risks creating severe price inflation as demand begins to recover.”

Graeme Ogilvy, Scotland director at industry training body CITB-ConstructionSkills, said there were grounds for some optimism.

He said: “Despite the downturn, the sector still took on around 13 per cent more apprentice entrants in Scotland than in 2011.

“This is a promising development which needs to continue if the industry is to be in a position to tackle the demographic time-bomb which will leave skills shortages as an ageing workforce retires.”

Despite the predicted decline in employment, output in Scotland’s construction sector should outpace the UK as a whole between now and 2017.

Housing renovation and maintenance will provide the biggest increase in work, rising by 3.7 per cent up to 2017, with work in the private housing sector expected to rise by 3.5 per cent.

Overall, output is projected to grow by 1.1 per cent, slightly higher than the UK total of 0.8 per cent.

Across the UK, recruitment is forecast to run at under 30,000 a year until 2017, mainly to fill vacancies arising from workers leaving.

In Scotland, the recruitment rate is forecast to plunge 58 per cent, with the number of jobs created dropping from 4,800 a year to 2,800. Only Greater London and the east of England will see employment levels grow, according to the research.

There are around 150,000 unemployed construction workers, potentially costing the economy £2.1 billion a year in benefits and lost tax revenue, the report added.

The number of people working in the construction sector across the UK is already at its lowest level since 2000, at some 2.36 million.

It is set to fall by a further 60,000 by 2016 because of a downturn in public sector housing work, CSN warned. It said about 60,000 construction jobs were lost last year and warned that the industry was facing another decade of “pain”.

The decline of the sector was a strong factor contributing the UK’s recession last year and the latest data suggests it may yet tip the economy into a “triple dip”. The latest official figures, published last week, showed output was down 9.8 per cent in November compared to the year before.