Confidence among Scottish builders slips again amidst concern over rising labour costs

Confidence in the Scottish construction sector has fallen with employers expressing growing concerns about the potential impact of Brexit on industry labour costs.

Employers responding to the quarterly Scottish Construction Monitor survey by the Scottish Building Federation were asked to rate how confident they feel about the prospects for their business over the next 12 months compared to the past year.

The latest results revealed a fall in industry confidence by three points, dropping from minus 3 to minus 6, in what is the third survey period in a row that industry confidence has been rated negative.

More than half (57%) of building contractors responding to the survey said they are concerned that the process of the UK leaving the European Union is likely to drive up labour costs in Scottish construction over the next five years. More than a quarter (26%) predict that the Brexit process will have no impact on Scottish construction labour costs while a further 14% said they were unsure what impact Brexit would have on labour costs within the industry.

Research by the Construction Industry Training Board (CITB) shows that around 8% of the UK construction workforce is made up of people from other EU member states. The corresponding figure for the Scottish construction workforce is thought to be around 4%, equivalent to around 7,300 Scottish construction workers that come from other EU member states. By comparison, London is particularly heavily dependent on non-UK EU nationals for local construction labour with around 50% of the local construction workforce coming from other EU member states, equivalent to around 165,000 workers.

Published on April 11, latest official statistics also show that UK construction output fell by 3% in February 2018 compared to February 2017, the biggest month-on-year fall since March 2013.

Scottish Building Federation managing director, Vaughan Hart, fears that Scotland could suffer from the exodus of skills in London.

He said: “One key impact of the Brexit process for Scottish construction employers will certainly be the availability of skills and labour from other EU member states – and related to this, future labour costs. With only around 4% of the workforce coming from other EU member states, the Scottish industry is less directly exposed to this impact than other regions of the UK, particularly London, where around half of the local construction workforce is made up of non-UK EU nationals.

“However, the indirect impact on labour costs within the Scottish industry could be much more considerable. An exodus of EU nationals from London’s construction sector could be a significant drain on the availability of labour and skills here in Scotland as more Scottish workers relocate to take advantage of job opportunities down south.

“In that context, I think our members are rightly concerned that the Brexit process could drive up labour costs for them over the next five years. Combined with declining industry output across the UK, it’s therefore also unsurprising that general confidence amongst employers about the future outlook for the industry remains weak.”

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