Future labour needs remain high despite current market conditions

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Large fall in residential consent value

Over the year to January 2009, the total value of residential consents fell by a significant 23%. The reasons for this fall have been well documented — a two-year period of reduced migration into New Zealand, a prolonged period of high mortgage interest rates and, more recently, tighter credit controls for borrowers perceived as higher risk.

In the past, demand for building work has been accurately forecast through the analysis of consents.
However, the heightened uncertainty about the current economic outlook has heavily discounted the reliability of this analysis. The industry is now experiencing a much larger than normal number of consented projects being delayed, altered or cancelled before work begins.

Construction workforce contraction continues

It will likely come as no surprise to learn that the sharp downturn in residential building has seen the total workforce in construction industries fall by an estimated 11%* over the past year. During the year ahead, it is expected that the total workforce in the industry will contract a further 5%.

However, this contraction of 5% will be overrun by the number of workers forecast to leave the industry. Each year an estimated average of 9% of existing workers leave construction industries** (ranging between 4700 and 6400 workers per year).
Therefore, by mid-2010 the industry will require new entrants to maintain productivity.

Firms need to train now for future labour needs

While it is difficult to think about training new and existing workers in the current economic climate, this is the only way to stave off the boom and bust cycle in the industry’s workforce.
Over the coming year, construction industries will need to replace at least half the existing workers leaving and, in each of the following three years, take on more new workers than those who leave, if they are to meet the increasing demand for construction.

The reality of the situation is that 8300 new workers will be required per year by 2013 — 14% of the total workforce. The industry must start planning for this eventuality now, or it will be playing catch-up and competing with other industries for labour, as it has done in the past. Call a BCITO Skills Broker today to talk about upskilling your team or bringing on a new apprentice.

* NZIER forecast to March 2009.
** Demand for new workers is derived from growth (or in the current case, decline) in demand for new building, plus replacement of existing workers leaving the industry due
to retirement, moving industries, emigration, illness and injury.

This information has been prepared by NZIER to assist firms in planning for their future skills and training needs, by informing industry and interested stakeholders about the medium-run outlook for the economy in general, construction activity in particular, and labour needs in the industries covered by the BCITO.