A headline in the Daily Mail on 2nd July declares: British builders hiring staff at fastest rate in nearly two decades to keep up with booming demand. The story goes on to report that while new commercial and housebuilding output continues to rise, skilled labour is proving elusive.
An economist was quoted saying, “It’s all guns blazing at the moment, but growth is coming at a price. Specifically, construction companies had to pay their subcontractors higher rates amid record skill shortages.’”
A Hudson Contract client in Central London area tells me he has seen labour rates rise over 40% in the last six months – and even with the higher earnings on offer, he is unable to recruit further skilled labour.
“Rising costs have overtaken tender values submitted last year,” our client explains. “I am having to turn away work to the value of £1million per week, because I simply can’t get the labour.”
Our client adds that when he is able to identify skilled tradespeople, they have no interest whatsoever in working as employees. “They know they can command premium rates as self-employed and that is what they do,” he says. “HMRC’s push to get everyone on the books simply isn’t going to work. And even if it did, it would dramatically slow down construction output – and employed rates of pay would need to double.”
Anecdotal evidence suggests those working on measured rates in the City are now able to earn up to £2,000 a week, whereas those in direct employment are on about £650.
“Firms would have to pay 100% bonus for blokes who are standing still half the time,” our client wryly observed, and I don’t doubt this because I know he is very much hands-on and vastly experienced.
Those in Government should be take note of his parting shot: “Construction needs the flexibility to staff-up quickly to meet booming demand. Freelance builders are an essential solution, and because they are in short supply, they command premium prices in exchange for their skills, they experience, and their enterprise. The recovery is still fragile, and it wouldn’t take much for more firms to go bust, and construction to slow down again…”
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