Labour costs still on the rise, say contractors

Labour costs are still on the rise, according to Build UK’s latest survey of contractors covering the first quarter of 2016.

The state of trade survey found that, whilst output rose only slightly, 39% of respondents to the survey reported an increase in building costs with 43% saying labour costs had increased compared to the previous quarter and nearly two thirds reporting higher labour costs than a year ago.

Respondents to the survey also reported difficulty in recruiting supervisors, managerial, professional and technical staff along with bricklayers and cladders. The main reasons stated for were the low number of applicants with required skills (53%), a lack of required experience (53%) and a lack of qualifications (48%).

Even so, contractors remained positive overall about future prospects with 27% expecting workloads to rise during the next quarter and 52% expecting workloads to increase over the next year. Respondents to the survey identified the industrial and commercial sector as particular growth areas. Contractors also reported a strengthening in enquiries during the first quarter.

However, the survey also saw a rise in the number of contractors who expected work volumes to decline to 26%, up from 9% last quarter.

Suzannah Nichol, chief executive at Build UK, said: “There continue to be mixed messages in terms of growth, however, industry intelligence shows increasing levels of activity over the last quarter. Employers are experiencing both rising material and labour costs as they head towards maximum capacity and this continues to highlight difficulties in recruiting appropriate skills at all levels.

“Build UK is leading the way on the war for talent with its members opening their projects up to the public during Open Doors week in June 2016 to attract the brightest talent to projects at both a local and national level,” she added.