8 INDUSTRY NEWS
RICS survey highlights continued skills crisis
While activity remains steady in construction and infrastructure, Brexit-related uncertainties are weighing on investment decisions and the lack of sufficiently skilled workers is expected to be a concern in future, according to the latest RICS survey.
A total of 62 per cent of respondents to the RICS UK Construction and Infrastructure Market Survey cited the intensification of labour shortages as an impediment to growth. This contrasts with an average of 40 per cent when data collection first began in 2012.
Only 42 per cent of felt that Government funded programmes to bolster the workforce were moderately effective, with one-third unsure. They also believed the quality of the talent pipeline was insufficient as well, with less than half (45 per cent) of employers who currently hire apprentices viewing them as a long-term solution to their hiring needs. Despite uncertainties, 45 per cent of respondents expected headline activity to
continue to rise rather than fall over the year ahead. Nevertheless, this was down from the four quarters immediately preceding the EU referendum, which averaged 62 per cent, reflecting a somewhat less optimistic outlook. Meanwhile, 30 per cent more contributors expected employment to rise rather than fall (broadly unchanged from Q2).
While a shortage of workers was hampering activity and profit margins, financial constraints posed the most significant challenge, although the share of contributors expressing this view has dropped to 69 per cent from 79 per cent in Q2. Access to bank finance and credit remains by far the most frequently cited issue, followed by cash flow and liquidity. This was likely to have reflected a more cautious stance by banks given cyclical market conditions and Brexit considerations.
Higher input costs and a shortage of labour continue to restrict growth in profit margins, with a net balance of only +12 per
cent of respondents expecting a rise in margins over the coming year. This is likely to have impacted tender pricing as well, with 62 per cent and 56 per cent more respondents in the building and civil engineering areas, respectively, envisaging greater price pressures. Jeffrey Matsu, senior economist at the RICS commented on the figures: “While activity in the sector has moderated, growth and growth expectations remain in positive territory. “Uncertainties due to Brexit continue to weigh on companies’ investment and hiring decisions, and banks appear to be adopting a more cautious stance to providing finance. “Meanwhile, challenges related to an inadequate supply of skilled labour are as pronounced as ever.”
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