Recession fears as EU workers leave the UK

There are clear signs that the construction sector is bracing itself for a downturn.

According to the Federation of Master Builders (FMB), an independent, non-profit trade association that represents 8,000 small- to medium-sized building firms, companies are already reducing their headcount of direct employees in favour of subcontractors who are easily removed if the work dries up.

The FMB’s most recent State of Trade survey showed that employment among construction SMEs had dropped for the first time in more than five years.

“Their thinking is that if the worst happens and a recession hits later this year, they need the size of their workforce to be flexible in order for their firm to survive,” said Arthur McArdle, the FMB’s national president. “However, this strategy is not without risk, as if construction bosses are employing more subbies, they might not always be certain of their quality. Rebalancing the workforce may seem like a good idea at the time, but it could lead to reputation-damaging mistakes.”

Another body, the Home Builders Federation (HBF). meanwhile. said however that delays in the planning process and a lack of available land were of more concern at the moment to its members, who account for 80% of all new homes built in England and Wales.

Buyer confidence was cited in March as a major constraint by only 7% of members of the Home Builders Federation (HBF), well down on the 48% who said it was a challenge of a similar scale at the end of last year.

Stockpiling, which has been taking place in other sectors ahead of Brexit, is meanwhile less of an indicator in the building trade. Smaller and medium-sized companies do not have the necessary storage space in the first instance. When shortages have occurred, such as problems in relation to bricks last year, they have been rectified relatively quickly.

Results from a survey of over 10,500 construction workers carried out by recruiter Randstad has revealed that one in three EU nationals have considered leaving the UK because of the Brexit referendum.

The truth is that it’s the potential drop in construction projects, subsequent funding, and availability of jobs that’s the biggest driving force influencing the 39% who are expressing concern. This is followed by uncertainty over trade deals with the EU (19%), new findings suggest.

A no-deal Brexit raises the prospect of delays and cost increases, as employers face difficulties to get vital EU workers to UK building sites, threatening timing of projects. With 7% of construction workers in the UK and over a quarter of London’s construction workforce coming from other EU countries (ONS), plus the £10bn (15%) of building materials coming from the EU, it’s clear that action needs to be taken. The good news is that there is still time to make a difference and retain highly-skilled workers.

As the country gets closer to withdrawing from the EU, it is becoming clearer that employers and employees are sceptical of what the industry will look like later this year in terms of workforce and materials supply. Of all of those surveyed, one fifth admitted that they have considered leaving the country amid Brexit uncertainties.

 

Source: The Guardian / Showhouse.co.uk