News & Views

The rising cost of the skills shortage

The Federation of Piling Specialists (FPS) has written many times about the growing problem of the skills shortage in construction and whilst it is a concern shared by government, some of the more recent statements around employment and immigration are raising eyebrows. Not long after the 2015 budget that introduced the Apprenticeship Levy, there came an announcement from Immigration Minister, James Brokenshire, that there will be an ‘immigration skills charge’ too. To quote Mr. Brokenshire – “The purpose of the charge is to encourage UK businesses to fill vacancies using the resident labour market. The overall aim is to reduce the burden of the UK’s immigration system on the country’s taxpayers.”

Considering the range of technical roles required in the construction sector and the acknowledged shortage of STEM candidates amongst the UK employment population, such a statement bears little scrutiny.

Along with almost all of the specialist contracting sector, the piling industry desperately needs highly skilled employees to function well, to take advantage of technological change and to deliver the projected demand from the many infrastructure projects on the horizon. In addressing this need, employers have already committed to the training investment that ensures our workforce is in the best place possible to take advantage of opportunities and evolving skill demands. For specialist contractors – the backbone of direct employment in the infrastructure and construction sector – the quality, diversity and availability of new employees is a constant preoccupation.

Skilled ground engineering employees are already sufficiently rare that they feature on the shortage occupation list (for which there is no exemption proposed within the immigration levy). The small annual numbers of suitable STEM-trained school leavers and graduates exacerbates this skills short fall and the timeline for an enlarged future UK cohort entering the industry is well beyond the introduction threshold for this levy. The shortages are at all levels too and include specialist project managers; design and construction engineers; specialist craftsmen and rig operators, with the only exemption from the levy being suggested for graduates transitioning from study to work.

Most specialist businesses in the infrastructure sector aim for stability in employee numbers across their portfolio of projects and where necessary use international staff, often from within the same organisation, to supplement their core UK workforce and manage short-term peak demand for specific skills. To assume that the UK resident labour market can supply both the number and quality of employees required to replace international staff in the short term, is to deny the existing UK skills shortage and the long lead-time involved in training and developing the specific skills base. This new levy approach thus serves only to inflate payroll costs in an industry that is already under significant cost pressure and suffering from the uncertainty around the CITB and Apprenticeship Levies. In the most direct interpretation, the specialist contracting sector – which has the largest proportion of direct employees – will be asked to pay for a skills shortage which has its root cause elsewhere. It is clear that the levy will not only push up construction selling prices through higher employment costs, but will also inhibit firms from managing resource peaks effectively with international staff and so ultimately reduce overall capacity in the industry at large.

The FPS is taking a proactive approach, having already started to lobby government both directly and indirectly through the various industry bodies regarding the issues and concerns of the piling sector relating directly to skills shortages. These actions are bearing fruit with the FPS having been called to give evidence at a recent All Party Parliamentary Group for Excellence in the Built Environment’s (APPGEBE) evidence gathering into the issue of skills shortages in construction.

As part of the evidence submitted a number of suggestions were presented and include giving European Union (EU) nationals employed in construction to be given immediate secure and permanent right to residence and work. The FPS is also calling for an immediate scrapping of the Immigration Levy, as it will do little but increase payroll costs (particularly administration costs) without changing the fundamental drivers of UK indigenous construction employment.

The meeting was very constructive and I hope we have made some small progress to having our voice heard. Time will tell.

Closer to home, the FPS has its own Apprenticeship Scheme and has produced an educational video promoting the sector and encouraging young people to consider a career in construction. Small steps, but if all construction sectors adopt similar initiatives, and the FPS is doing much to encourage this, then its impact will be more significant.

Present measures do little but to increase the cost of employment for specialist UK businesses, and Government and private customers would be well-served by working with specialist contractors and trade bodies, such as the FPS, to improve continuity and predictability of workload, which is often the biggest single barrier to employment growth and training investment. By updating project procurement practices to reward responsible specialist businesses, long-term direct employment will be promoted resulting in the desired outcome – sustainable growth of the UK ground engineering skill base. For the construction industry, the domestic STEM skills shortage has gained a real focus over the last few years allowing meaningful progress to be made. It is simply too important an issue with which to play immigration politics.