It is commonly recognized that the construction industry today is failing to attract and retain a workforce capable of meeting the complexities and demands of today’s economic environment.
The construction industry suffers from a severe human capital shortage, ranging from field labour to management. The immediate consequences of this shortage can be seen in troubled projects, struggling businesses, and rising insurance claims.
As contractors attempt to hedge the additional risk they are assuming by committing to project delivery in an uncertain labour environment, we will soon see this affect the upfront cost of construction and schedule. Long-term effects may even adversely impact the viability of our industry for future generations.
Since the 1970s, the construction industry has faced a skilled labour shortage. This issue had become more serious as the construction industry expanded. This problem will cause many other issues to arise, either directly or indirectly.
It is needed to minimize the negative impacts caused by the skilled labour shortage problem since it is the root of other issues. Due to labour shortages, construction projects become more expensive and take longer to complete.
Construction companies can use temporary tradespeople to supplement their critical workforce needs to combat labour shortages.
Reason Behind The Construction Labor Shortage
Following are some factors of labour shortage in construction:
1. The current labour shortage is a perfect storm of low supply caused by recession-related downsizing, experienced workers retiring, a lack of interest from future generations, and high demand caused by the current construction boom, which spans multiple market sectors simultaneously.
Many construction projects were suspended, postponed, or abandoned entirely during the current economic recession, resulting in widespread layoffs.
To make a living, these workers had to find new jobs/professions, and as a result, many left constructions and have never returned.
Now that the market has recovered, these workers are already established in new jobs and are unlikely to change careers to re-enter the construction workforce.
Furthermore, even if we could rehire that workforce, they are now ten years older, posing physical challenges for field labour and relevancy/competency issues on the management side.
2. According to data from the NAHB’s 2018 Current Population Survey, a growing proportion of construction workers are over 55. Such professionals, for example, accounted for 16.8 percent of construction workers in 2010 but 21.7 percent in 2018.
As construction workers retire, their legitimate decision to leave the workforce increases the labour shortage. However, it is not only their physical absence that deteriorates the situation.
Construction professionals, who may have decades of experience, can offer valuable advice to those who have recently entered the workforce. Even if they are not expected to serve as mentors in an official capacity, they do so.
Officials from the government set up a computerized system to allow professionals to register their qualifications and experience. People give one of four identification cards based on the information they entered.
The purpose is to provide a visual representation of abilities. Employees with more to offer may expect better pay and working conditions and thus wish to stay in the industry longer.
3. Another issue contributing to the construction labour shortage is a lack of workers with the necessary training. For every five construction workers ready to retire, only one new worker has the formal training required to take their place.
Besides this, a nationwide survey of construction contractors conducted in 2019 discovered that 80 percent of them were having difficulty filling hourly craft positions, which comprise most of the sector’s roles.
Furthermore, 73% expected similar or worsening challenges in the coming year. 45 percent of those polled mentioned a lack of a high-quality local channel for finding new workers.
Businesses reacted in a variety of ways. According to the findings, two-thirds of companies used rising base pay rates. Offering incentives and bonuses to people who possessed the necessary skills was another popular approach.
Some construction firms prefer to priorities internal training. According to the data, half of those poll conducted provided skill-building programmers, and 46% launched or expanded internal training options.
5. Although construction has been designated a critical service, the pandemic has significantly impacted the industry. According to a recent survey conducted by AGC and Autodesk, 60% of companies reported postponing or canceling a scheduled project, a significant increase from the 32% reported in June.
Though construction has resumed and construction employment growth has begun (construction unemployment rose to 7.6 percent in July, up from 8.9 percent in July), the construction workforce is still down by 294,000 from the previous year.
On the other hand, the numbers tell the storey of two distinct market sectors. Residential and non-residential construction is growing rapidly, adding fewer than 35,000 jobs in the last month, while heavy and civil engineering and specialty trade contractors have lost over 21,000 jobs.
Furthermore, the current state of uncertainty in the construction industry has caused many workers to be hesitant to return to work and seek alternative employment.
Investing in new technology to assist your current workforce in increasing collaboration, improving communication, and streamlining efficiencies is not only a good idea; it is a requirement.
According to the 2020 AGC survey, 32% of contractors invest in cutting-edge technology such as construction software and drone surveying workflows to optimize labour.
How will you compete with companies that use the latest technology to streamline their processes (and lower their bids) if your worksite is behind schedule and over budget due to a reduced workforce?
Construction software creates a centralized, easily accessible source of truth for all who require it. Internal and external communication becomes faster and easier. Surveyors, supervisors, project managers, and supervisors can accomplish more in less time when they have less on their plates.
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