Retain and retrain workers amid rising construction costs, report warns 

Construction firms should focus on retention and retraining as workforce challenges persist across the industry, according to a new report. 

Turner & Townsend said construction costs will remain high, against a backdrop of rising wage growth caused by intense competition for a small pool of qualified workers.

The firm’s latest UK Construction Market Intelligence (UKMI) report shows construction’s share of the UK labour force is currently at a record low, with sector employment down 3.4% year on year. 

The data shows that tender price inflation in the industry is not set to fall, despite construction materials price inflation having eased from previous record highs.

Wage rises are outweighing the otherwise disinflationary factors the sector is currently experiencing, the report indicates. 

New work – an indicator of demand – fell 2.4% for the quarter, according to the Office for National Statistics. Key material prices are also falling, with the Department for Business and Trade reporting a 3.1% quarterly decline for structural steel, and a 2.4% fall for sawn wood. 

However, newly announced American tariffs on materials like steel may see this trend start to reverse.

Martin Sudweeks, UK managing director of cost management at Turner & Townsend, said: “One only has to look at the slate of current and upcoming announcements to see how central the construction sector is to the UK’s economic and social goals – from the recent Planning and Infrastructure Bill to the hotly anticipated industrial and infrastructure strategies. However, multiple headwinds will challenge our ability to deliver against these ambitions.  

“All eyes are set particularly closely on US tariffs. But while there remains significant uncertainty around how these tariffs will evolve and the resulting impacts across the globe, we need to ensure we are not taking our focus off those issues which are within our power to solve – our people problem being one of the most critical.”

In response to this uncertainty, Turner & Townsend has urged construction firms to focus on consolidating and improving existing skills, while laying the groundwork for future talent.  

According to the UKMI report, this should include providing existing workers with new skills for the future, and retraining employees in specialisms that better match current demand, such as digital skills and expertise in modern methods of construction.  

The consultant also said more must be done to improve retention, including recognising career progression, inclusion, and psychological safety to ensure talent remains in the construction sector.

Sudweeks added: “Half a decade on from the disruption of the Covid-19 pandemic, year-on-year employment is still shrinking. We need to radically rethink how we attract talent – looking to a wider set of disciplines, backgrounds and skills that will deliver the modern, digitally-enabled, creative construction workforce of the future.”