It’s worrying that we are losing construction jobs. But equally disturbing is the loss of capacity

It’s worrying that we are losing construction jobs. But equally disturbing is the loss of capacity

The latest ONS labour market figures showing workforce jobs in construction pretty much mirror expectations with a drop of 53,000 from the 2012 Q1 to 2013 Q1.

This is pretty much in line with the employment figures published last month which showed a fall of 41,000 over the same period.

Interestingly the brunt of the more recent losses appears to have been taken by the self-employed, which had been significantly less impacted through most of the recessionary period since 2008.

Overall the workforce jobs figures suggest a loss of 358,000 jobs from peak, compared with the employment data which suggests a deeper fall of 473,000. There are technical differences between the surveys but they suggest a fall of between 15% and 18% in the number of jobs.

They both suggest that until recently the loss of self-employed jobs was pretty light and that it was the directly employed numbers that were hardest hit.

Part of this imbalance between loss of self-employed and employed workers would have been due to the north, where direct employment is more commonplace, suffering more than the south. But it’s reasonable to assume that contractors across the piece looked to balance their workforce more towards the self-employed in the face of greater uncertainty and volatility in the market.

Part of the reason for a sharper drop in the self-employment numbers recently may be that construction jobs in London and the South East have been under more pressure, while in some regions such as the North West there has been an uplift in the number of construction jobs recorded over recent quarters.

There will always be patches of relative good and bad within the mix, but looking at the prospects across the UK overall does not provide much comfort.

There is not surprisingly a strong correlation between the work on offer and the jobs in the system. And the level of correlation in construction seems to suggest that changes in the number of jobs follow six to nine months after changes in the workload.

So with consistent year-on-year falls in construction output in recent quarters we should expect to see the number of construction jobs fall further. Worse still, looking forward the forecasts are for yet more declines in construction.

This does not provide conditions to encouraging new entrants into the industry. A quick trawl of statistics from the nomis website suggests that the proportion of construction workers younger than 25 has fallen from above 15% during the peak to below 11%. Meanwhile the proportion of the workforce older than 50 has risen from below 26% to almost 29%.

The graph shows this more dramatically in terms of the change in numbers within each age group. Clearly for those already concerned about an ageing industry, the recession has made their headaches much worse.

Furthermore when we look at the “reserve army” of potential construction workers claiming unemployment we see a rapid decline.

The volatile nature of the work suggests that there will always be a fair number of people in the claimant count looking for construction work. This figure, taking a fairly represented range of construction-related occupations, can be estimated to have been around 120,000 in the mid 2000s and dropped to below 100,000 during the peak in construction activity when supply was tight.

As the recession bit this number rose to above 250,000. But as people found new jobs outside the industry, emigrated, or retired and as fewer people sought work in construction we have seen this number fall back to the pre-recession norm of 120,000.

What is more we also need to take account of the ebb and flow of workers from Eastern Europe. It is likely that many of migrant workers have left UK construction to go home and there is no certainty that they will be in a hurry to return in such numbers.

This rather leaves the disturbing question of whether a boost to the industry would run up against labour shortages, at least in the short term, created by what looks like being an exceptionally long-running depression in construction activity.

Certainly the figures seem to underscore the need to get the industry on an upward path sooner rather than later if the nation is to preserve its ability to build to meet the needs of the nation.

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