How Brexit Will Impact the Construction Industry Workforce

As P.M Theresa May gets closer to striking a Brexit deal, many are still wondering how it’ll impact the UK and industries that depend on foreign labour. The deadline for leaving the EU is only four months away, yet plenty of questions remain unanswered:

Will blue-collar workers be sent home? What about current EU labourers? How will sectors, like the construction industry, cope with the predicted skills shortage?

A Thriving Construction Industry

The UK’s construction industry is healthy and growing with continued housing demands; especially in highly populated areas. To meet this need and help people get on the property ladder, the British Government has set lofty ambitions of delivering an average of 300,000 homes a year by the mid-2020s.

There’s also demand for new office and commercial spaces and many large infrastructure projects, like Hinkley Point C and High Speed 2, are already in the works. Just last year, in 2017, the government released a report which revealed a healthy construction pipeline and forecasted that over the next ten years, public and private investors intend to fund £600bn in infrastructure projects.

It remains unknown how these demands will be met if, as many predict, the UK construction industry faces a severe skills shortage after leaving the EU. With so much uncertainty, it’s not surprising that nearly 66% of construction professionals are worried about the negative impact Brexit will have on the construction sector and 24% are actively preparing for deteriorating market conditions.

Construction Industry Workforce

The UK construction industry relies on foreign labourers with the ONS reporting that 7% of UK construction labourers are EU nationals, with this figure jumping to 28% in places like London. In London, the amount of EU nationals working in construction is 15% higher than all other industries. Losing over a quarter of the workforce, assuming that EU nationals are sent home after Brexit, will undoubtedly have a direct impact on London’s housing shortage.

Brexit’s Impact on the Construction Labour Market

While many factors are still up in the air, exiting the EU is likely to have an impact on the foreign labour market; especially considering that one of the reasons “Leavers” voted for Brexit was to curb UK immigration.

Being part of the EU allows citizens the option to work and live in other countries. However, the UK government may stop, or at least severely restrict, the “freedom of movement, making it either very difficult or impossible for EU nationals to move to the UK.

One of the government’s plans for curbing immigration involves screening all migrants wanting to work in the UK using a “geography-neutral” skills-based assessment, effectively ending all preferential treatment for EU workers. To qualify, workers would need to apply under a tier-two visa and meet specific requirements such as a minimum education level and a salary threshold of £30,000 a year. This process creates significant barriers for recruitment within the construction industry as it would prevent unskilled workers from entering the UK.

Many high-profile construction industry figures have criticised the government's intentions as posing a significant threat to the industry’s continued growth:

“The future of the UK’s construction and engineering sectors relies on the availability of both highly skilled specialists and so-called ‘low skilled’ labour. I believe that the policy should be urgently reviewed and business consulted once again; as without access to the right mix of skills we will be unable to deliver sustainable construction growth after Brexit.” -- Mark Reynolds, chief executive of Mace

“With UK construction already struggling from a chronic skills shortage and Brexit sapping investors’ confidence, British builders need restrictions on European workers like they need a hole in the head.” -- Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths.

So, What Will Happen to Construction Workers?

Within the construction industry, the government’s immigration plans post-Brexit are particularly problematic as the sector needs manual labourers. If the proposed plan goes ahead, these labourers won’t be able to enter the country meaning that the only option will be to recruit British workers.

Industry experts are concerned that there aren’t enough British workers to fill these positions. With construction companies struggling to find suitable employees, labourers will have complete control over the employment market and will be able to demand increased hourly rates and hours. Or, more simply, the demand for labourers will outmatch the supply and overall project costs will skyrocket.

Knock-on Effects

A labour shortage is likely to have a knock-on effect on the industry’s ability to meet government targets. By not meeting these targets, the housing crisis, especially in areas with dense populations like London, might worsen. And, people will find it increasingly harder to get on the property ladder.

On the other hand, if global investors withdraw money from the UK property market, house prices could plummet and investment properties that are currently sitting empty may become available. Like most situations with Brexit, we will simply have to wait and see how the cards fall.

Begin the Hiring Process Today

For now, EU nationals can still live and work in the UK and any EU nationals already working in the UK are likely to be granted permission to stay post-Brexit. As such, we recommend that construction companies plan ahead and begin hiring for projects before the March deadline.

Our construction specialists have access to qualified EU and British candidates. Get in touch with us today to discuss your upcoming and current recruitment needs.