A shortage of EU workers is driving up labour costs in London, according to our latest analysis of pay trends in the construction industry.
New payroll data shows average earnings in London increased by 4.5 per cent during May to £885 per week.
We have unique insights into construction – Hudson Contract is the largest payer of self-employed tradespeople in the sector, with more than 2,500 construction company clients across England and Wales.
Ian Anfield, managing director, said: “We are starting to see the impact of people leaving the UK ahead of the EU Settlement Scheme deadline on June 30 and not being replaced by incomers.
“First and foremost, this is affecting London which has the highest concentration of foreign construction workers and the most transient labour market.
“The Brexit effect on labour supply is slower the further away you go from the capital and many EU workers have settled in the North of England.
“In central London, the prime housing market is growing for the first time since the start of the pandemic, a sure sign of the high spirits felt across the entire sector.”
The West Midlands also saw a significant rise in weekly earnings for subcontractors, increasing by 3.5 per cent to £920 during May.
The region tends to have a larger supply of domestic tradespeople who have traditionally commanded higher earnings.
The cost increase mirrors an acute shortage of building materials in the West Midlands as a result of significant housebuilding activity and major infrastructure projects in Birmingham including new stations for high-speed rail and facilities for the Commonwealth Games in 2022.
Mr Anfield added: “There is shedloads of construction work about and growing pressure on the availability of both labour and materials.
“We expect some respite for construction companies with the closure of the government’s Self-Employment Income Support Scheme in September which should encourage claimants back onto sites.”
MAY 2021 AVERAGE WEEKLY EARNINGS OF FREELANCE TRADESPEOPLE: £884
|Region||May 2021 Average||Month on Month % Change||Year on Year % Change|
|Yorkshire & Humber||£821||0.5%||9.0%|
|East of England||£949||-0.3%||8.3%|
To view our interactive pay trends map click here
Last month, mechanical and engineering tradespeople had the strongest growth in earnings which rose 5.7 per cent to £1,068 per week.
They were followed by joinery and plumbing contractors, whose earnings increased by 4.5 per cent to £1,011 and £967 respectively.
Hudson delivers the most accurate indication of subcontractor pay trends across the construction industry, publishing the average pay for a spectrum of 17 different trades split across 10 regions in England and Wales.
It supplies statistics to the Bank of England to keep policymakers updated with real-time insights on demand for skilled labour.