Rebuilding the Construction Industry’s Labour Force
Throughout North America, the impact of the skilled labour shortage in the construction industry has continued to plague the sector since the Great Recession in the mid-2000s, when approximately 2 million construction workers were laid off.
Since those challenging times, the construction industry overall has not been able to make up for the loss of personnel needed for construction projects. According to the National Association of Homebuilders, there are approximately 200 000 construction jobs that have not been filled due to the labour shortage. The contrast in the relationship between the availability of construction jobs versus the availability of a skilled workforce is a continuing problem in 2017 and beyond.
The long-term downturn in the construction industry in major economies such as the United States, Canada, the United Kingdom, and Australia has led to a situation in which many specialty trade workers have switched industries and a number of professional workers have switched countries entirely. While the construction industry is poised for growth in 2017, these economies are still facing the issue of skill shortages. Because of these shortages, multiple sectors of these economies have been majorly affected.
Throughout North America, architecture and engineering firms as well as general contractors face problems hiring workers with more than 10 years of work experience. Skill shortages are prevalent with carpenters, millwrights and electrical technicians, and the sector is also facing issues with an aging workforce. Until 2010, the U.S. construction market was primarily made up of two generations: traditionalists (employees and retirees born between 1922 and 1943) and baby boomers (comprising employees and retirees born between 1946 and 1964). Since 2012, the workforce has increased to four generations: Traditionalists, Baby Boomers, Generation X and Millennials. This diversification of labour across generations is a challenge because of differences in work ethic, attitude, outlook and behaviour. The traditionalists and baby boomers are the industry’s major source of experience and skills, but this situation is changing with time as many of them retire.
A survey conducted by the Associated General Contractors of America (AGC) in 2013 found that 74 percent of the total respondents believe there is a crunch in skill trades, and 53 percent said they were unable to hire construction professionals such as supervisors, estimators and engineers. Of the skilled trades, contractors ranked labourers, carpenters, equipment operators, cement masons and pipefitters/welders as the top fields facing shortages. The oil and gas sector attracted most of the equipment operators from the construction sector in the U.S. during the economic downturn. The other skills mentioned were also lost as these workers largely transitioned to different trades or industries.
In Canada, major projects are being placed on hold while the search for qualified, skilled labour is prioritized. The charming provincial capital city of Victoria, B.C. is undergoing a major building boom with 1000 downtown residential units under construction, along with two large-scale office projects. However, the city had to delay breaking ground on a major project – the first leg of a bike path network worth more than $2 million – and extend the deadline for its tender call in hope of attracting more bids, which will result in an extension of the construction time.
Demand for skilled workers is so great, many construction companies in the province are starting to look outside B.C.’s borders, particularly targeting oil workers who have been laid off in neighbouring Alberta. However, seeking skilled workers in another field can be difficult because there simply is not enough time to train these workers to meet the increasing demand for construction projects.
The issue of labour shortages is multifaceted and has come about due to a number of factors. One reason for the downturn in labour is related to outright fear of returning to the sector after the fallout from the Great Recession. With the massive layoffs of longtime workers, the construction industry was forced to start all over again because many of the skilled workers who were let go were often older and nearing retirement age. Many younger people entering the overall workforce were avoiding construction as a career path due to the volatile and cyclical nature of the industry in the past.
A decline in immigration in the U.S. has also been a contributing factor. According to a Real Estate Consulting report from John Burns, the U.S. construction industry has lost 570,000 Mexican-born workers since 2007. The report found a significant portion of the workers who returned to Mexico during the housing crisis have not come back to the U.S. due to heightened immigration controls and more job opportunities in Mexico.
Additionally, fewer younger workers are entering the construction workforce – and make no mistake, this trend has been a long time in the making – due to the lack of emphasis given to trade and vocational schools in North America. With many of these young adults guided toward the university route, many of them never considered learning a trade. Compounding the lack of interest in and knowledge of trade schools, there are fewer apprenticeships and internships available for those who want to be a part of the construction industry. Apprenticeship programs allow the employer to test new employees before hiring them full-time and allow the apprentice to gain valuable hands-on experience. Without apprenticeship programs, employers are hiring workers before their skills are evaluated – which poses safety concerns – and fewer young recruits to the workforce are able to gain hands-on experience before working in the field. The lack of apprenticeships has also led to a less-skilled overall workforce. More construction firms offering apprenticeships will make the industry attractive to young workers to fill those positions and give them a head start on their skill sets so they can grow to become highly skilled over the course of their career.
Rising costs have also become a factor. With the costs of construction projects increasing for both project owners and contractors, there is more money at stake. Project owners must pay more to get construction projects completed on time, and firms have to increase compensation and benefits to attract talent. According to a survey conducted by AGC, 52 percent of participants said that they had increased their base compensation for all workers, while 28 percent have improved benefits to stay competitive in the market for talent acquisition.
However, all is not lost in the sector. The most recent employment data from the U.S. Labor Department shows that the United States’ high volume of open construction positions has fallen over the course of the past year, which is a sign that the ongoing construction labour shortage could be easing. The number of open construction jobs fell to 154 000 on a seasonally-adjusted basis in May 2017, down from 238 000 jobs last June – a cyclical high. Additionally, job openings as a percentage of total employment fell to 2.2 percent in May, down from 2.8 percent the previous month.
In B.C., the ramp-up of major projects from proposed transportation, oil pipeline and Liquefied Natural Gas (LNG) projects along with roadwork will bolster the province’s construction workforce by 24 percent, or almost 17 000 workers, over the next five years, according to the latest labour market forecast released by BuildForce Canada, a national industry-led organization that represents all sectors of Canada’s construction industry. The organization also predicts that transportation, pipeline, and LNG and mining investments are the primary driver behind B.C.’s construction job growth from now to the peak in 2021. Industrial, commercial and institutional (ICI) building also continues on an upward trend, while new housing is expected to cycle down this year, following a period of extended expansion.
What is being done to remedy the issue of skilled labour shortages? Ideas include construction firms partnering with local high schools and colleges to promote the industry as a career path, along with investing in training programs to create a highly-skilled workforce by training new employee, providing refresher training courses for current employees, and offering mentorships that allow senior workers to pass their knowledge on to the younger generation before they retire.
Adding more apprenticeships is another solution. In 2010, global engineering and construction company Mott MacDonald (mottmac.com) set up an arrangement to establish a group of six large engineering consultancy practices, providing an advanced apprenticeship program for civil engineering. This apprenticeship was targeted toward the transport department for engineering in London. This group has expanded and gained momentum, growing from 40 candidates in 2010 to 240 candidates from 10 colleges in 2013. The plan highlights the success of the partnership of contractors, colleges and professionals to offer advanced training and attract younger people into the construction sector.
With the promise of new construction jobs continuing to grow, the time to take steps to combat the skilled labour shortage is now. Taking the steps to reposition the construction industry as a viable and appealing career option for new entrants in the workforce will make a massive difference for the construction industry in the long run.