Consult an Insurance Broker if Brexodus Hits Construction
Talk of a ‘Brexodus’ within the UK construction industry, is underpinned by the fear that the extreme skills shortage already affecting the sector could be exacerbated. If this should occur, making an appointment to see an experienced insurance broker might be advisable, to add a layer of protection within various scenarios.
EU construction workers currently fill around 165,000 construction jobs – minimising the degree to which the skills gap affects UK construction and overcoming the big issue of jobs within construction being unappetising to younger people. The UK construction industry has an ageing working population, with 22% of workers aged over 50 and 15% aged over 60.
Contractors often find bricklayers, plumbers, carpenters and electricians hard-to-find, whilst boosting the pool of skilled construction workers through apprenticeships has not really worked.
With an ever-diminishing supply of skilled tradespeople, the sector’s current wage inflation is unfortunately timed. The construction sector’s average weekly earnings figure rose by 6.2% between May and July 2019 - an even bigger increase than in financial services. With margins in construction typically low, and an anticipated hike in import tariffs on the 25% of all materials that are imported, wage rises are very unwelcome.
However, the wage that needs to be paid to attract a worker, is determined by supply and demand and the skills gap is decades-long. The deep concern of contractors stems from the fact that additional costs are being incurred when construction output has slowed and when many firms are struggling. Output fell 1.3% in the three months to June 2019 - and construction had the most ‘new company’ insolvencies (3100), of any sector, in the 12 months to March 31 2019.
The biggest impacts are likely to be felt most in London, where EU nationals make up 28% of all construction workers. Elsewhere in the UK, the figure is 7%.
A good course of action for many SME firms is that of upskilling existing staff, to develop workers with a broad skill base. Construction targets, such as building one million new homes by 2020, still need to be hit and firms will also have the pressures of meeting delivery deadlines and ensuring quality of work. Apprenticeship schemes, mentoring and multi-skill training programmes will all be required, but will eat up both time and money.
The Carillion collapse has provided a warning to construction firms. Many should now have at least considered protecting their finances by talking to a broker about Trade Credit Insurance. This will step in to cover any invoices payable, avoiding the insured missing out on payment, should a debtor’s business fail. With regard to other covers, it is not particularly easy to find or secure affordable Professional Indemnity and Liability cover in the current market, so construction firms need to consult with a broker as soon as possible and several months ahead of their renewal. In this way, insurers can be provided with all the evidence relating to the risk and the risk management strategies in place.
Finding new recruits with the skills required, will require robust due diligence, to ensure training is comprehensive and health and safety compliance maintained. The credentials of new employees will need to be validated and any training qualifications verified with previous employers. A recent case caught out a business that did not conduct such checks and was fined following an incident.
If you need help finding a broker who cannot fill your skills gap, but who can put relevant insurances in place for you, during these trying times, please get in touch.