It is a very strange time for the construction industry, but there is hope on the other side, there’s just one last hurdle to go…
As the furlough scheme begins to wind down there is news of big firms having to make employees redundant. This can be a worrying thought for those in the industry, and especially those training to enter the sector for the first time. But, we have been here before.
Many will remember the great recession of 2008, everything from the housing market to banking systems and the entire Europe-wide economy was affected. The Gross Domestic Product (GDP) dropped by 4.7% making it the worst period for the economy since the Second World War. Construction in particular was hard hit during this period, with surprising similarities to today’s crisis.
The fall of new work in 2009 was, as expected, steeper than that of repair and maintenance. At the time, experts didn’t see a return to 2007 levels until at least 2018. We know now that the construction sector surpassed its pre-recession peak in 2015. In fact, the sector only continued to grow, Q3 of 2019 was 12% higher than in Q1 way back in 2007.
So, what lessons can we learn from the past that apply to the current Coronavirus pandemic? A recent survey from Build UK shows that 86% of construction businesses in the UK have been affected. This statistic alone is not surprising, Covid-19 has had far reaching consequences and it’s hard to imagine a sector that hasn’t felt this. What is surprising however is that the same survey shows that less than one in three (29%) of construction businesses in England believe that Covid-19 will cause them financial difficulties. Almost three in four of those surveyed (73%) are using the furlough scheme and the same number report that they will be able to retain their employees beyond the scheme. That’s because construction is an industry that continuously bounces back.
Pre-Coronavirus, the UK had 2.4 million construction jobs, accounting for 6.6% of all jobs. This is more than at any time since 2007. In 2018 the sector also saw a strong leaning towards housing, making up the lion’s share of new orders.
This is a strong indicator as to the health of the sector, whilst it is expected to see a dip in difficult times the need for housing only increases year on year. The UK population has been steadily growing and at time of writing the UK population sits at 67,880,396 and at some point, they will all need somewhere to live!
Currently it’s time to weather the storm, we are seeing the largest month-on-month drop for the sector since the recession, but the bounce back could be just as acute. As the sector goes back to work with new measures in place we eagerly await figures for June 2020, we at Velocity Recruitment will review these in August and expect to see the turnaround for the sector with growth month-on-month. We are already seeing some recruitment starting to come back! Construction has an advantage over other sectors in this respect as certain sites can observe the social distancing regulations without huge changes to the day to day, and projects that were put on hold are able to re-activate, getting a percentage of the sector back to work.
Construction is a sector that is integral to the economic growth of the nation, and infrastructure relating to health has never been more in demand. If you are heading back to the site please do follow the guidelines and stay safe, if you are waiting to get back to work take this time to develop your offering and train new skills.