Current Labor Market in the United Kingdom - Essay Example

Introduction: The aim of the paper is to explore the current UK labor market in the construction industry and categorize its various properties, issues challenges and the road ahead from this point in time of the economy. The paper will also state and analyze the current trends of the labor in the industry quoting statistics data and the recent news. The estimated turnover, issues related to recruitment and solutions to reduce shortfall in manpower are the main areas of focus. With the 'Global Meltdown', the UK Construction industry is hit badly and analysts say with the rising prices and worst is yet to come. The current labor market in the UK has grown steadily in accordance with the employment rate and the number of people employed from the years of 1995 to 2008 according to the Labor force survey published in the Blue book 2008. The office of National Statistics 2008 reports, "Employment tends to react to changes in out put with a lag because of the costs of hiring and firing workers. Therefore, it is not surprising that weaker output growth has not caused large falls in employment. Moreover, in the first instance, employers can vary labor input through the number of hours worked, rather than laying off workers." The construction industry today in the United Kingdom consists of over 250 000 firms employing over 2.1 million people. This huge work force is spread over a multitude of namely construction materials and products suppliers and producers, contractors, sub- contractors, professionals, advisors and construction clients. The United Kingdom construction output contributes 8.2% to the GVA (Gross Value Added) of the EU nations, which is the second largest. The Labor trend Below is the trend in the UK labor market represented in a graph. The graph, derived from figures published in the Blue Book 2008 reveal the labor employed in thousands across industries from the Year 1999 until 2007. It is a depiction of the Labor force trend in the UK. Source: Fig 2.5 Pg 104 Blue book 2008 The graph showing an upward trend a positive sign of growth in the number employed also, predominantly a growing economy adjusting to shocks and other that exist in an economy. Considering this as the parent graph let us explore the graph in the employment that exists in the construction sector. Source: Fig 2.5 Pg 104 Blue book 2008 The above graph reflects a trend that has been steadily climbing over the years. However, the recent economic turmoil and the rise in the inflation have led to a complete crash of the housing industry affecting construction as a business and the employment in turn. The Olympics 2012 that proposes massive opportunities for this industry does not seem to stir or spur vibrant business in this sector as the people's daily reports "Builders of the 2012 Olympics facilities will have to compete for skilled workers due to a shortage in the labor market, according to Financial Times on Thursday. Construction Skills, a council established by the government to ensure that the industry has enough qualified workers, estimates that building for the Olympics will create 33,500 extra construction jobs over the next years. The peak year for employment would be 2010 when 7,500 workers would be needed, the council said. The construction industry forecast it needed 88,000 new recruits a year even before the Olympics were awarded to London." The above report indicates a shortage of labor in the UK for the construction business. Here's another report from the 'Thomson Financial' explaining the situation even more. The British construction industry has shown a"meek response" towards bidding for London 2012 Olympics projects which in turn could lead to a failure to achieve best value for money on the games, a group of British MPs said Wednesday. In a report, the committee said the 2012 games "represent a massive challenge for the construction industry". "The scale of the programme is twice that of Heathrow's recently opened Terminal 5, but must be delivered in half the time. It will use between 12 percent and 14 percent of the sectors capacity in the South East and London over the next four years, with around 9,000 workers on site at its peak," the committee noted." (Thomson Financial 2008) It is quite evident from the above news that the industry is not equipped to handle the huge workforce requirement in the current scenario. Either there are not enough trained manpower in the pipeline or the existing are too small in number to match the requirement. Else, a situation where the turnover is high leaving huge gaps in fresh recruitment. Let us examine the turnover rates in the industry. Labor Turnover, jobs, and age of workforce- UK construction: In the 1990's workers aged over 55 were 11% - currently till the end of 2007 workers ages over 55 are 17% In the 1990, 36% of the workers in the construction industry were ages under 30- currently that force is only 25% In 1990, only 4% of the employees were at the age of 60- currently employees at the age of 60 form 8% of the workforce. These shocking figures warns the industry of the lack of fresh blood and the serious lack of image the construction industry has among the youths in the UK today. Although there has been an increase in the construction workforce as depicted in the graph it is spread uneven across the industry. The number of workers aged under 24 has fallen short by 27% and the workers over 60 years have doubled in percentage. Professional trade such as architecture, civil engineering, and mechanical engineering will loose 20% of their workforce in retirement. Another huge issue is the diverse force issue where the actual proportion is 10-12% females and 2-4 % BME's this is way below the industry average of 46 % and 8% respectively. Mark Farrar, incoming Chief Executive for Construction Skills, says: "We haven't had a workforce this old since the Second World War when the construction workforce was hit by conscription and severe labor shortages. National data shows that the trend is increasing, with those in construction aged 40 years and over rising on average by about 2% per year since 1990, and this looks set to continue.(construction skills 2008) There is a call for more training place as reported by construction skills. The construction skills inspire scholarship that received 1000 applications this year had only 68 employers and the construction skills apprenticeship that received 12000 applications had only 2400 vacancies offered. This situation calls for a consensus from the government to take a serious look at the recruitment of the industry. As stated earlier the gaps between the recruitment and employers or builders and contractors have to be patched before the onset of the Olympics 2012. Let us move over to see some interesting data of the jobs in the construction segment over the last one year. All jobs Male jobs Female jobs Jun 06 2169 1929 236 Sep 06 2189 1951 238 Dec 06 2215 1976 239 Mar 07 2215 1994 221 Jun 07 2230 2005 225 Sep 07 2227 2009 219 Dec 07 2210 1992 219 Mar 08 2221 1998 223 Jun 08 2214 1993 221 change on Quarter -7 -5 -2 Change % -0.3 -0.3 -0.8 Change on year -17 -12 -4 Change % -0.8 -0.6 -2 Source: National statistics online pg 22 Employment and jobs The table above portrays the picture of the receding construction employment segment in the last few quarters. Most importantly, the negative changes in the jobs year on year and quarter on quarter. The change in the yearly percentage of Female jobs a - 2%. The graph also clearly indicates the gender distribution, which is no where near the average of 46%. Conclusion: Recruitment in the construction industry should get a new makeover. Besides, the projection of the industry in the various colleges and training institutes should undergo serious changes in order to attract young talent. Training institutes to enroll a healthy mix of men and women to promote diverse workforce and ensure a proper on the job training. The construction industry overall needs a giant pull back from the government in terms of cash flow and policies in order to enable small contractors in business. The projection of the Olympics 2012 is a boon to alleviate the industry from its current levels. A more enhanced medical and insurance package for the construction industry workers can further eradicate any stigma associated about the industry. Architect and civil engineering courses to be set up, and marketed well across to students aspiring for graduation through job guarantee the end of the year. A combined effort of the government, education institutions, training organizations and the construction industry consortiums and forums can make a stronger and progressive environment. References: Office of National Statistics 12 November 2008 Labour Market Statistics First release Retrieved on November 22, 2008 http://www.statistics.gov.uk/pdfdir/lmsuk1108.pdf Office of National Statistics November 2008 United Kingdom National Accounts The Blue Book. Pg 104 2008 edition. Retrieved on November 21, 2008 http://www.statistics.gov.uk/downloads/theme_economy/BB08.pdf October 2008 Department for business enterprise and regulatory reform Construction Retrieved on November 21, 2008 http://www.berr.gov.uk/whatwedo/sectors/construction/index.html Construction Skills 26 June 2008 Construction Industry warnings on 'workforce time bomb' Retreived on 21 November 2008 http://www.constructionskills.net/news/whatsinthenews/20080626-constructionindustrywarnings.asp Balfour Beatty 2008 'UK construction industry response to 2012 Olympic projects meek' Thomson Financial Retrieved on November 21, 2008 http://hk.advfn.com/lse/ShareNews.aspsharenews=BBY&article=27343124&headline=uk-construction-industry-response-to-2012-olympic-projects-meek Read More