What effect would a Brexit have on the construction industry?

on 08 June, 2016

As the Brexit debate hots up, the construction industry is nailing its colours firmly to the mast – with both the Construction Industry Training Board (CITB) and the Chartered Institute of Building (CIOB) stating that overseas workers are vital to the UK’s long-term economic wellbeing.

While construction firms up and down the country mull over the employment aspects of staying or going, it’s also worth bearing in mind the potential impact the UK’s departure from the EU would have on importing and exporting materials and services from a regulatory point of view.

It also provides a chance to look at how we would need to reframe our thinking if it became more complex or costly to employ staff from overseas. Would we adapt to these changes by increasing our focus on alternative ways to build the homes we so desperately need?

Reports issued in the last few months from the CITB and the CIOB state that the UK simply does not have enough home grown skilled workers to cope with the volume of construction growth anticipated over the coming years.

The CITB predicts that 230,000 construction jobs will be created in the UK between now and 2020. Figures from its Construction Skills Network report show that of the 44,000 new jobs a year predicted before 2020, 2,870 will be for bricklayers, 4,320 for carpenters and interiors fitters, and 2,510 for building envelope specialists.

While the CITB is pushing to increase the construction skills base with a £7.5m investment in training and the launch of a new website called Go Construct (www.goconstruct.org), in the short and medium term the skilled workforce needs to come from elsewhere.

The CIOB, in its 2015 report ‘An analysis on migration in the construction sector,’ describes the three options available to meet the CITB’s employment forecast. “Import from a ready supply of foreign talent, invest in training and development of UK citizens, or redesign the construction process,” are their suggestions.

In response to what the CIOB describes as ‘simple’ options, I believe that all three of these seem a sensible combination – the first two are self explanatory, while the final one provides an exciting way forward, and one which is already seeing momentum build. And that’s moving away from brick and block and focusing more on off-site construction. The fact that these are quicker to construct, thus requiring fewer man hours, and have a greater percentage of elements which require less highly skilled workers, could ease some of the burden of having fewer staff on the ground.

The latest official figures suggest that across the UK, nearly 12% of the 2.1m construction workers come from abroad – mainly from the EU. The CIOB says the huge contracting element of construction means the workforce is constantly in flux moving from site to site, presenting unique labour supply issues.

While it says local labour markets can provide a fairly steady level of underlying construction activity within reasonable travel-to-work distances, the workforce needed for major or highly-specialised projects is seldom met by local tradespeople - necessitating the employment of a highly flexible, sometimes itinerant, workforce.

The report goes on to say: “Some migration into and out of the country is both inevitable and desirable for contractors as it helps to dampen the volatility in the labour market. While construction will need to recruit migrant workers to cope with the upswing in work, the opportunity is there to train many more UK youngsters. The workforce issue isn’t the only factor construction companies need to consider when dwelling on Britain’s future within – or without the EU. Product and testing standards are currently the same within all member states. A departure from the EU could hamper export opportunities for British manufacturers."

Actis is just one of those companies who may well feel the effect of a Brexit. We are a pan European company and benefits from product and testing standards, which are the same in all member states, reducing our research and development costs and encouraging innovation that can benefit all EU countries. We import and export throughout the union, and do not have to pay import duties for the chance to trade competitively across Europe.

A Brexit would mean any investment within the UK would be reduced as the UK could not be used as a manufacturing base to supply into Europe. Instead, any investment in manufacturing would be made in Europe where there is a market of over 500m potential customers. Then costs of importing products into the UK would increase.

Matthew King is UK and Ireland director at Actis.

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