Mind the Gap

Closing the Skills Gap in Australia’s Construction Industry

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With historically low interest rates and a gradual economic recovery being experienced worldwide following the financial crisis of 2008, the construction industry is booming in most countries around the world. In Australia, for example, the Department of Employment projects that employment in the construction industry will grow by 9.3 per cent by November 2018…
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But the rapid growth in demand experienced by the construction industry has also led to a widening of the skills gap – the gap between the skills required for construction and related trades, and the skills possessed by those employed in the construction industry. So while in many parts of the globe, the construction of both residential and commercial projects is booming, the industry is struggling to keep up with the demand for skilled workers to build these projects.

The skills gap in the construction industry is not a new phenomenon. In many of the world’s industrialized countries, such as the United States and Australia, this trend has its roots in the 1990s, when students were increasingly encouraged to pursue four-year college degrees rather than undertake vocational programs. Many vocational programs were phased out by colleges, thereby reducing the number of trained students that were exposed to careers in the skilled trades. Similarly, the increased emphasis placed on college degrees over trades also created the impression that skilled labour was mindless, that ‘blue-collar’ work was less important and rewarding than the so-called ‘white collar’ work that was accessible to students obtaining liberal arts degrees.

Another contributor to the skills gap is also a widening generational gap within the skilled labour workforce. During the recent recession, the percentage of older workers in the industry grew faster in the construction industry than in other sectors because fewer younger workers were hired. According to the U.S. Census, the percentage of 19- to 25-year-olds hired in the construction sector declined from approximately 18 per cent before 2006 to 13 per cent in 2012-2013, only to be replaced with workers 45 to 55 years old. The percentage of 45- to 55-year-olds employed in the construction sector exceeds the employment share of this age group in all other industries, and they are retiring faster than they can be replaced.

The 2008 financial crisis further exacerbated this trend, when many construction projects were halted and housing starts slowed around the globe. Skilled workers in the construction industry moved to greener pastures as work diminished. Fortune Magazine estimates that In the United States alone, the construction industry shed nearly 60 per cent of its workforce post-2008.

Though housing markets worldwide are now moving toward a full recovery, in many places the construction industry has yet to catch up in terms of staffing levels in order to meet the demand. According to the National Association of Home Builders, the industry remains more than one million workers short of the workforce seen at peak 2006 levels in the United States. The construction industry, according to the Bureau of Labor Statistics, is expected to add jobs at the second-fastest rate among U.S. industries between 2014 and 2024, but construction business owners are still struggling to staff positions.

A similar tale is playing out in Australia. There is fear of a long-term shortage of skilled construction workers, a fear that is further compounded by the concern that there are not enough apprentices currently being trained to replace retiring workers. The Australian Department of Employment estimates that the country will need an extra 47,800 building tradespeople in the five year period between December 2014 and November 2019. Calculations based on Australian Bureau of Statistics’ data indicate that approximately 51,000 of the 365,900 currently employed in construction trades are over the age of 55. Assuming between one-third and half of these retire over the next five years, Australia will need at least 26,000 new apprentices to replace the retirees. The industry is not only losing workers; it is also losing the wealth of knowledge that these older workers possess before it can be passed on to new industry entrants.

Beyond just a loss of institutional knowledge, the consequences of a prolonged skills gap in the construction industry are many. Housing affordability will be one of the primary things to suffer as a result of rising wages and trade prices. Home ownership is something that is prized by most, and with real estate markets around the world increasingly heating up, an additional spike in prices as a result of an inability to fill building demands could make owning a home even more unattainable for many. Infrastructure costs will rise too – as governments and businesses seek to support the renewal of key infrastructure projects, the cost of undertaking these projects will increase if there is a shortage of skilled workers to complete them. This may also create delays in completions of such projects, and possibly discourage projects from being undertaken in the first place. As well, a shortage of locally trained skilled workers may also lead to greater demand for and reliance upon foreign labour. Lastly, the skills gap could compromise safety within our existing infrastructure and on work sites, as there is a shortage of workers who have the correct expertise and skills to execute their tasks safely, potentially leading to a higher number of workplace accidents at construction sites.

Proposed solutions to ameliorate the skills gap run the gamut from formal government intervention and targeted investment in trade education and incentives, to less formal outreach by the industry itself to schools through either speaking engagements or sponsored field trips to capture the interest of students at a young age in construction careers.

In the United States, for example, a school in Manchester, Massachusetts has found an innovative way to expose its students at an early age to careers in construction. As part of a renovation project on an institution for pre-kindergarten to eighth grade, school officials partnered with a construction company to incorporate the renovation and building process into the curriculum. While students’ experience with the construction was strictly observational, the construction company addressed the students frequently throughout the build, highlighting what they were working on and encouraging students to view the progress through portals in the walls and via tours of the worksite. Teachers also applied building themes where possible in the curriculum (for example, in geometry and math), capturing students’ interest at an early age.

Another method of encouraging more young people to enter construction trades is for the industry to cooperate and fund systematic outreach efforts to schools. A prime example of this is an initiative entitled Go Build Tennessee in the U.S. Go Build was launched by a group of construction-related associations in that state as an effort to attract young people to the construction trades by educating them about available opportunities. Go Build features an extensive website that provides snapshots of different construction trades, including a job description, average wages, and video interviews with tradespeople who perform that job. Go Build has also invested in extensive multimedia advertising, a social media presence, and designated outreach to students through participation in career fairs and outreach to school counsellors and educators.

In total, industry initiatives like Go Build seek to demystify construction trades and engage students at a younger age to encourage entry into trade education, dispelling the myth that trades are simply mindless, low-paid labour; rather, they provide the opportunity for a fulfilling and important career.

In Australia, there have been a variety of suggestions for how to encourage more young people to enter trades. These suggestions involve considerations such as lowering the age at which students can leave high school and enter trade school, thereby making it advantageous to students that want to start a career and make their own money earlier. Currently, the age at which students can leave school is 17 in Australia. As well, it has been suggested that creating opportunities for young people to try out various construction trades on a more informal basis prior to signing on for a formal apprenticeship would also serve to ensure better fits in apprenticeship training programs as well as support a higher rate of apprenticeship completions.

Australian trade unionists, like David Noonan, the Construction, Forestry, Mining and Energy Union National Secretary, suggest that the government can do much to enhance the desirability of a career in trades by beefing up procurement policies to require quotas for individuals who are in the process of being trained or apprenticed on any given government project. Similarly, trade unionists advocate for formal licensing and registration requirements in order to practice a trade to ensure that apprentices are fully and properly trained with all the skills they need before they can enter the workforce.

Ultimately, it is clear that addressing the skills gap in the construction industry will require cooperation and input from government and the industry itself to formulate creative, effective and long term solutions.

Home Automation

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October 24, 2017, 5:45 AM AEDT