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What do the government's latest Brexit plans mean to the UK construction industry?

 

After months of speculation following the decision to leave the European Union, the Prime Minister has finally revealed her hand. 

 

 

In a speech in January, Theresa May outlined the plans for the UK to leave the single market and renegotiate individual trade deals with the 27 member countries. This effectively means that freedom of movement of workers to the UK will also end. 


One way or another, this decision will affect industry, so we looked at how the construction sector in particular expects to fare in the future. 

 

Prime Minister's plans for Brexit

Mrs May's speech expanded on a 12-point plan which set out the position the UK will take when Article 50 is activated in the coming months. 

As mentioned, it is inevitable that changes will affect recruitment in construction either in the short or long-term, as the industry adapts to the changes in the next couple of years.

Instead, we seek the greatest possible access to it (the market) through a new, comprehensive, bold and ambitious Free Trade Agreement.

Changes include:

Control of own laws

The Prime Minister reiterated the view that we will "bring an end to the jurisdiction of the European Court of Justice in Britain." The consequences of this on workers' rights remain to be seen but undoubtedly, with control moving back to the UK, some of the laws will change. To that end ...

Promise to protect workers' rights

The Prime Minister said this is key to ensuring fairness and plans to protect and maintain workers' rights, while also guaranteeing these keep pace with EU labour laws. 

Construction organisations will currently have staff who are EU nationals. However, Mrs May also said she wants to guarantee the rights of these citizens at the earliest possible opportunity. 

Bringing migration under control

A core value of being a member of the EU includes agreeing to freedom of movement for all member states. Although the promise remains that the UK will be open to migration, this is a clear indication that limits are planned. 
 



Exit the single market


Until now, this was an area of ambiguity but the PM has left us with little doubt: the country will be leaving the EU single market

It was widely thought that if the UK wanted membership of the single market, they too would need to maintain a commitment to freedom of movement for workers. However, it has been clear for some time that restricting movement was a priority so the writing was on the wall for single market membership.

The extra 6,000 vacancies that employers need to fill represents a 25% rise in available job opportunities in the construction industry. 

"Instead, we seek the greatest possible access to it (the market) through a new, comprehensive, bold and ambitious Free Trade Agreement."

The Prime Minister also announced that the UK will leave the Customs Union and confirmed that the process of exiting the EU will last for more than two years. 

Employment in the construction industry

Overall unemployment between September 2016 and November 2016 came down once again, with 1.6 million people recorded as being out of work but searching for or available for employment. 

The context of construction is worth looking at. In September 2016 - which is the latest month for these figures - there were 2,206,000 workforce jobs.

Construction demand is still outstripping supply and a restriction in movement will only compound this.

Workforce jobs are defined as the number of filled jobs. September's figure was the first fall for a year. 

However, the number of vacancies in the industry has continued to increase. 

Between October - December 2016, there were 29,000 vacancies that employers were actively recruiting to fill externally. This is a rise of 7,000 from the previous quarter. 

Vacancies have increased year-on-year too. In December 2015, the Office for National Statistics (ONS) figures showed there were 23,000 vacancies advertised. 

The extra 6,000 vacancies that employers need to fill represents a 25% rise in job opportunities in the construction industry. 
"So far however, the amount of jobs in the market has remained fairly stable with no immediate signs of slowing down."

If job vacancies continue to increase in an environment that stems the workers available to fill them, will the industry be able to adapt to this challenge?
 

 


View from Recruitment and Employment Confederation (REC)

BPS World is a global resourcing specialist. The company believes that many employers will face challenges in attracting talent, given that Brexit will undoubtedly impact the ability to do so. 

Construction, already facing a skills shortage, which has led to Simon Conington, Founder of BPS and Chairman at the REC, to urge the government to find a way to maintain access to skilled workers in the EU - or face a decline in the ability to compete. 

He said: "Construction demand is still outstripping supply and a restriction in movement will only compound this. 

"This will make the process of coming into the UK more complex and hence more costly, which will ultimately have a knock-on effect regarding project costs.

"So far however, the amount of jobs in the market has remained fairly stable with no immediate signs of slowing down."

One thing is clear: a loss of access to the EU's skilled workforce has the potential to slowly bring the UK's property and construction sector to a standstill.

However, Simon concedes that despite the warnings, the lack of EU workers could also positively benefit their UK counterparts if they recognise there are better earning opportunities. 

"It may very well of course please UK's construction workers. With a decrease in competition from European workers and more exposure to projects, the potential to earn more and benefit from the changes is greater," he said.

"This however is reliant on continued buoyancy and confidence from the business community to keep construction projects alive."

How does the construction industry feel about the plans?

There is quite a bit of work to do before the Prime Minister's words become actions. MPs overwhelmingly voted to allow the Prime Minister to begin the Brexit process. Despite this, it will take years rather than months to implement actions.

But in the context of a general trend that shows vacancies in the industry are steadily rising, allied to the well-publicised construction skills shortage, it is understandable that even now, people within the sector will be worried. 

Unless alternative plans are put in place, we won't be able to deliver the thousands of homes needed to solve our housing crisis.

Unsurprisingly, restrictions on migration from the EU to the UK figures highly on the agenda. 

A spokesperson for the Federation of Master Builders (FMB), the UK's largest trade association in the building industry, is concerned about how vague the government's immigration policy is. 

"We are very clear that it needs to be flexible when it comes to skilled construction workers, however," the spokesperson said. 


Loss of access to variety of skilled workers

This is a common theme, echoed by Head of Policy at the Royal Institute of Chartered Surveyors (RICS), Jeremy Blackburn. 

While he acknowledged that the speech gave us "a much clearer understanding" of Brexit's meaning, he is worried that losing these workers could potentially damage the construction sector. 

We also need greater clarity on how we attract and retain the best global talent - our future industrial growth depends on it.

He said: "One thing is clear: a loss of access to the EU's skilled workforce has the potential to slowly bring the UK's property and construction sector to a standstill."

RICS' head of policy is under no illusions though; with an ever-pressing need to build houses, and huge targets in place between now and 2020, how to attract talent needs to be addressed - for the UK's long term industrial future. 

"Unless alternative plans are put in place, we won't be able to deliver the thousands of homes needed to solve our housing crisis or create the infrastructure needed to enable our cities to compete on a global stage," Jeremy explained. 

"We must also address the need to grow the UK-based skills pipeline. As the industry's professional body, we are working with government and industry to develop that skills base, building vital initiatives such as degree apprenticeships, in our sector to drive the talent pipeline forward.

"We also need greater clarity on how we attract and retain the best global talent - our future industrial growth depends on it."

Written by John Train

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