Demand for construction labour fell 70% in April
Demand for labour on Britain’s building sites fell by up to 70% in April. However, according to a new report on the industry, many operators are now reporting strong demand to price new projects in other areas as a result of pent-up demand.
The construction sector is often seen as a key indicator for the health of the wider economy. When things are going according to plan, the construction sector will enjoy a boom in new projects, as companies confident in their futures commit to spending on new buildings and facilities. As a result of the last three years of geo-political uncertainty then, it is not surprising that dark clouds seems to have gathered over the sector.
Brexit uncertainty, combined with a wider global economic slowdown, was hitting business confidence, causing a delay in projects, and hitting construction firms hard as a result. At the turn of the year, however, many in the sector felt it had turned a corner – a decisive election seemed to at least indicate what the future held for the country’s EU membership, and demand seemed to be beginning to improve, with consultancy Arcadis even claiming the slowdown in work had already bottomed out, meaning that deflationary pressures should also ease off.
Unfortunately for the construction sector, however, that brief moment of reprieve was not to last – as the global Covid-19 pandemic suddenly shut the majority of the country’s building sites. Amid this, demand for labour on Britain’s building sites fell by up to 70% in April, according to research by the largest payer of subcontractors in the UK construction industry.
Hudson Contract, which provides payroll services to more than 2,200 construction SMEs, and the firm’s latest figures show earnings for subcontractors fell by an average of 18.2% in April as the lock-down shut building sites across the UK. Analysis of payroll data for more than 2,200 construction companies shows a weekly average of £734 for freelancers in April, down from £897 in March, and the lowest level since January 2015. The worst hit areas were Yorkshire and the Humber (-32.1%), the South West (-26.9 %) and Wales (-25.2%).
However, according to Hudson Contract, alarm-bells need not be sounding just yet, as demand for new building projects looks set to gradually bounce back. As of May, more sites are reopening with social distancing measures in place to reduce the spread of Covid-19. These include keeping more than 1.5 metres apart at all times – something which building firms say will lead to reduced output. As a result, they are asking tradespeople their rates by 10-30% to share the costs of reduced output – until it begins to return as the measures further ease, and companies start work to meet backed up client demand.
Ian Anfield, Managing Director, said, “The number of people we paid dropped by up to 70% in the space of three weeks last month. The number is steadily rising again as more sites reopen with many clients telling us they are going back to work on Monday, May 11. Construction output will be lower and costs will be higher as firms figure out ways for people to work safely on site. This is why they are asking tradespeople to cut their rates.”
House builders will apparently be the slowest to resume work, with concerns over the availability of funding in the housing market to complete purchases. However, Anfield added that a number of Hudson Contract clients are reporting strong demand to price new projects in other areas as a result of pent-up demand.
