Rebuilding the construction industry in post-recession Wales

Economy A man on a roof
ViewsFebruary 2nd, 2015

The Great Recession has been a painful time for the construction industry in Wales.

The construction industry’s decline into recession in 2008 was more rapid than at any time in the modern era. It came also at a time of extreme economic uncertainty and against a background of unprecedented global and technological change. By the end of 2013, construction output in cash terms in Wales was down 14% on its 2007 level, with the biggest losses resulting from falling private commercial and housing activity. The cost to jobs has been heavy, a loss of 31,000, or about 25% of the sector’s employment in Wales. And, of course, it has been the local economies least able to withstand the hit that have been hit the most since, as with other industries, the impact of the recession has been regional.

The CIOB’s recent Real Face of Construction report illustrates that London is the only area where the industry has actually expanded over the past six years. In fact, the UK capital now accounts for a vast, and perhaps disproportionate, 20% of all construction work. There are at last signs of recovery outside London too. While this is undoubtedly good news, it will bring with it the growing pains associated with rebuilding capacity after deep recession. Using this economic and regeneration power effectively is essential, and one area where it can make a real difference is in terms of training and apprenticeships.

During the recession, the pool of people employed in the industry younger than 25 years old shrank by 39%. Those aged 25 to 49 dropped 16% and those older than 50 fell by 8%. Even before the recession, the industry was concerned at the lack of young blood. Skills from Eastern Europe provided a lifeline for companies eager to expand and find replacements for those leaving the industry. Since the recession the average age has risen by, on estimation, two years. Almost a third of the workforce is now older than 50. We believe that public investment needs to be tied to training and job creation so that it is geared to the long-term aim of developing skilled young people who will be retained by the industry. This means not just training, but properly structured apprenticeship schemes, qualifications and mentoring, developed and/or accredited by professional bodies. This need for younger people to be trained was identified as critical by Jane Hutt in her statement last month to the National Assembly on procurement in Wales. She pointed to Penarth Learning Community as a key example of Wales doing things differently. The new campus, comprising of St Cyres Comprehensive School and Ysgol y Deri, opened in October. Over 180 people had the opportunity to work on the construction site, and there were 83 apprentices and trainees drawn from the locality, including the Communities First areas in Cardiff South and Penarth. The project also pioneered the introduction of a construction ambassador scheme, funded by the Construction Industry Training Board.

Approaches like this provide a critical boost to employment and encourage a new generation into the industry in areas harder hit by the recession, as well as improving infrastructure and regenerating parts of Wales. Construction also provides a pool of lower-skilled jobs – some casual, some longer-term. This means that in areas of high and long-term unemployment it can open up a potential pathway back into employment. Many, if not most, of the resources used in construction are sourced locally. Most labour is local. This makes investment in construction particularly attractive. The Welsh Government’s own analysis during the procurement debate showed that of the first completed 56 projects, incorporating community benefits with an overall value of over £600 million, 85% of the expenditure has been reinvested in Wales, with nearly 700 disadvantaged people receiving almost 20,000 weeks of training. By pulling together we can build, literally and metaphorically, a better and more stable economy for the whole of Wales.

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