Beyond Brexit - Engineering & construction: Where are my people?
01 October 2018
In recent months, I’ve been having more and more conversations with CEOs and leaders of Engineering & Construction businesses about the impact of Brexit. Many of them are starting to express major concerns about the industry’s readiness for leaving the EU.
It’s not hard to understand why. We’re still facing a housing crisis in the UK. The Government has set a target to build 300,000 new homes a year by the mid 2020s, with Homes England having a key role to play in enabling delivery through its enhanced land and investment programmes. Yet, despite an upward trend in the number of housing starts and completions, in 2016 we still started and completed around half that number. Even before the Brexit vote there was, shall we say, ‘healthy scepticism’ about whether we’d hit the Government’s target.
Beyond home-building, the industry is in the middle of, or preparing for, many major construction projects. If we look at what’s happening today, we’ve got major planned projects like HS2, various new-build nuclear projects, and cranes are a common sight across the skylines of most big cities. The Construction Industry Training Board (CITB) has previously forecast a need for 35,740 new recruits across the industry from 2017 to 2021 to deliver these kinds of programmes.
But what’s all this got to do with Brexit?
Construction industry leaders are telling me that they’re already feeling the impact of the vote to leave. It’s getting harder to find workers. They’re concerned about the supply of raw materials. And, linked to that, businesses are unsure whether their supply chains are robust enough to cope.
This is a complex subject with a lot to consider. So, with that in mind, I've written a series of three blogs which I'll share over the coming weeks. I'll cover the three main issues - people, materials, and supply chain. This first one will focus on people. In each blog, I'll also reflect on the ‘no regret decisions’ that my Brexit colleagues have been talking about here at PwC, as this has helped to frame some of the challenges - and think through some of the potential answers.
Where are my people?
One construction CEO shocked me recently when he revealed how many of his workers have downed tools and left the UK since the Brexit vote. His firm isn’t an anomaly - according to the CITB, half of employers in the sector are concerned that recruitment is going to get harder over the next two years.
Within the industry, there are around 200,000 workers from within the EU. CEOs are asking how many of those workers will stay - and how they can replace the ones that leave.
From the conversations I’m having, it seems that there are some common issues forcing workers to look elsewhere. First, and perhaps unsurprisingly, the Brexit vote has made EU workers feel that they’re not welcome in the UK. Second, the drop in the value of the pound has meant that money earned in the UK just doesn’t go as far when it’s sent home. Third, workers will encounter more ‘red tape’ and form-filling, which just won’t be the case elsewhere.
We could consider developing more homegrown talent, getting into schools and colleges to attract young people into the industry. In fact, the Government has already started with its £22m Construction Skills Fund. But change won’t happen overnight. We’re talking years before we see meaningful numbers of new workers.
This leads me to one of the ‘no regrets’ decisions: Support your people.
Having spent time with colleagues in our Immigration practice, I know that in other sectors, major employers are starting to build plans to support their people with applying for settled status - by providing administrative support (including financial support for application costs), immigration guidance and pastoral care during the application process. I’m advising leaders in our sector that they also need to be working on plans - right now - to hold on to the workers they already have and signalling intent to provide this support. This is a powerful way to make current workers feel valued and welcome. In addition, we need to have a united voice on what this sector needs in order to remain an attractive place to come and work in Construction, as government shapes future immigration policy for the UK beyond Brexit.
To get regular updates on Brexit, you can sign up here or please feel free to contact us directly to discuss any of these topics further. My next blog in this series will address materials and supply chain.