Work in construction: Rewards and awards

Not even construction’s best paid executives can hope to earn a sum approaching the £200m salary of Denise Coates, Britain’s most successful businesswoman ever.

The eye-watering pay packet – more than 40 times the average salary of FTSE 100 chief executives – is thanks to the phenomenal success of online bookmaker Bet365, which Coates founded 17 years ago. The firm took bets of £47bn in the last year alone; compare that with the £4.2bn turnover of the UK’s biggest contractor Balfour Beatty and with the £3.8m that its boss Leo Quinn could be in line for this year, and construction starts to look like small beer.

Yet a world away from the stratospheric remunerations of the super rich, the more down-to-earth salaries of contractors’ non-executive staff are looking a lot healthier than many would have predicted almost 17 months after the EU referendum. Our annual salary survey, carried out by recruitment firm Hays, shows that key roles such as estimators, senior site managers and contract managers have enjoyed above-inflation pay rises of 4%, while health and safety directors in London earn the most overall, bagging £95,000 a year.

Of course these increases are nothing like the 7.4% pay hikes seen just two years ago, but this year’s average 3% rise, the same as the previous year, at least shows a steadiness and compares favourably with the 1.8% salary growth across all industries. The concern, however, is that the apparent stability masks a huge amount of underlying uncertainty in the sector.

The concern is that the apparent stability masks a huge amount of underlying uncertainty in the sector

Gauging the health of construction is not straightforward when various sentiment surveys that indicate good activity levels are contradicted by hard data, the latest downbeat snapshot being from the ONS. This shows that output fell 0.9% in Q3, confirming that construction is technically in recession. In Market Forecast this week Aecom paints the overall picture of declining output accompanied by rising prices, and notes clients are increasingly unwilling to commit to project starts.

The gathering clouds on the horizon cannot fail to affect how employees feel about job security, and the consequence, according to our survey, is that they are now much more cautious about switching jobs. It’s no surprise, then, that the number of respondents expecting to move jobs in the next six months has dropped 10  percentage points on last year’s figure of 44%, while job security, after pay, is cited as the most important factor when considering a new role.

Caution is all the more understandable when big name contractors appear to be hitting the skids – the plight of Carillion, as well as job losses at Interserve and Sir Robert McAlpine, have unsettled the sector, while cladding specialist Lakesmere entering administration has sent shockwaves through the supply chain. Few saw this collapse coming – how could a group that in 2016 reported £3.6m in operating profit be calling in the administrators just 18 months later? It’s enough to make anyone ask how stable a new employer would be, and perhaps decide to stick with what they know.

The irony is that the chronic skills shortages, made worse by EU nationals leaving following last June’s referendum, mean that construction still feels very busy and many roles are in demand. So for those who take the risk and decide to jump ship, the rewards seem worth it. The flip side for employers is that it is proving harder to attract the talent they need: 61% in our survey said recruitment is having a negative effect on productivity.

The irony is that chronic skills shortages mean that construction still feels very busy

Brexit, of course, is the primary destabilising factor in all this. Business leaders demand economic calm but the waters are choppy for as far as the eye can see. This week, tensions over Brexit threatened to knock the government off course (again) as MPs lined up to attack its EU Withdrawal Bill, with the Brexit secretary David Davis attempting to head off trouble by promising a vote on the final deal – that is if he secures a deal at all. Meanwhile, ahead of next week’s Budget the industry’s calls for investment in infrastructure are becoming desperate. This magazine has sought to draw attention to the particular needs of the construction industry under a Brexit deal, and its vital role in the post-Brexit economy. There is precious little evidence that the government is listening or is even able to lift its head above the navel-gazing of political calculation and the preoccupations of its own survival.

None of this makes business planning any easier. Contractors have, for the most part, managed to outrun the uncertainty created by the Brexit vote, but events appear to be catching up with them. If ever the industry needed a confidence boost in the form of an injection of capital investment it is now. Over to you, Mr Hammond.

Chloë McCulloch, deputy editor