The official labour market figures suggest that the construction workforce is growing. Surely this can’t be the case?

When I eagerly opened the latest press release on Labour Market Statistics this morning, I was looking for some clues as to how much damage has been done to the construction workforce.

The official figures up to the second quarter had shown the number of workforce jobs in construction holding pretty level at just above 2.2 million.

However, to use the cliché, “imagine my surprise” when the release showed not only that there were about 30,000 more construction jobs than previously thought but also that there had been a surge in workforce jobs in construction of a further 30,000 in the third quarter.

So the official line is that construction jobs are on the up…

Now I don’t believe that and I suspect there are 2 million other people engaged in various forms in the industry that would tend to agree with me.

Certainly the rapidly falling number of construction vacancies published in the same release does suggest the workforce is shrinking not expanding. Vacancies are down 40% on a year ago.

More importantly, my rough guess is that 100,000 or so jobs have been lost from the ranks of those engaged in house building since the start of the year – either directly or within subcontractors.

That means the rest of construction would have had to generate enough new jobs to cover for that loss and then more to boost the overall workforce by 30,000.

With firms collapsing and redundancies announced in construction sectors outside of housing, I just can’t see where these jobs have come from.

It pains me to say this, because I respect the thankless work done by statisticians, but this set of data raises some serious questions over the quality of the numbers and casts further doubt over other construction data.

To understand the problems it is worth looking at how the figures are put together. The estimates for workforce jobs in construction are taken (I am told) solely from the Labour Force Survey. This is a household survey that provides a sample, which is then scaled to get the number you see in front of you.

Household surveys have intrinsic problems, like all surveys. And I was given a figure of 56,000 as the potential variability in the number for construction workforce jobs. That is to say that, at the extremes of statistical possibility, there could have been a drop of about 26,000.

But equally valid is the possibility that there could have been a rise of 86,000. So while there is some solace in this point, it still leaves serious nagging doubts.

To make things worse the LFS – which I among many others believe is extremely valuable – has been suffering from a falling response rate, which is making it potentially even less reliable.

In 1993 the survey had a response rate of 73%, this year it fell to 59%. This points to growing suspicion and/or apathy. My concern is that it is systematically missing significant slices of the workforce. And my suspicion is that the foreign workforce is being under recorded.

I have long felt that the estimates of foreign workers in construction were at odds with what was happening on the ground.

I have no hard evidence to go on and this is just speculation, but I am not alone in harbouring these concerns.

Importantly if this is true and there has been a systematic under recording of the foreign contingent within the construction workforce it may help to explain a few other problems I sense in the construction data.

Firstly, the consequence of understating the level of foreign workers within the construction industry would be to reduce significantly the estimated expansion of the total construction workforce over recent years, as a large part of the growth in jobs has been filled by migrant workers attracted to the UK.

Secondly, if the anecdotal evidence is correct and foreign construction workers are returning home faster than they are arriving then this will mean an understating of the job losses in construction.

This is not unreasonable speculation, given the there has been an strong uplift in demand in Poland for construction workers at a time when the exchange rate pound to zloty has become less favourable to Poles. At the end of last year £1 bought about 5 Zloty by mid summer £1 bought roughly 4 Zloty

There is some evidence to back up the view that foreign construction workers are leaving faster than they are arriving. A recent study by the Institute of Public Policy Research found the 22% of Polish returnees were from construction.

This compares with about 12% of A8 (from the eight ascension countries to the EU) working migrants that are estimated to be working in construction. This suggests that Polish construction workers (which represent the bulk of A8 workers) are almost twice as likely to be returning home as other Polish workers.

So we have a potential situation where jobs might be being lost to the industry, but because they are disproportionately from foreign workers the reduction is understated as it is not being accurately recorded.

That is bad enough when looking at the impact of the economy on construction jobs and the consequent skills, training and resource implications.

But, my understanding is that the employment data is used in the estimate of unrecorded work in the private housing repair maintenance and improvement sector.

I have a sneaking suspicion, and a suspicion it can only be, that the rather unlikely data produced for private housing RMI is a result of the questionable workforce figures. The effect might be to have understated workload in the sector during the boom years while now not picking up the decline that one might have expected, because the workforce job figures are not falling.

Now this all may seem like technical gobbledygook. But, it is critically important to the construction industry.

If as a nation we are to make sensible policy decisions it helps to know if the number of jobs is going up or down in an industry as important as construction.

How annoying to be batted away by a politician armed with a view of construction that suggests the workforce is growing and workloads are holding steady.