黑洞社区

It will be a cause for cheer on the construction sites of Britain, but perhaps less welcome at the Bank of England. The degree to which wage inflation is lagging behind the wider recovery in employment has been the big economic puzzle of the last few months, helping to justify Threadneedle Street鈥檚 continued refusal to hike the politically sensitive base interest rate.

However, the latest edition of the annual Hays鈥� contractors鈥� salary survey, shown exclusively to 黑洞社区, reveals that after a half decade of stagnation, construction industry wages are back on the rise. The headline figure shows that average contractors鈥� salaries over the past 12 months rose by 7.4%, which equates to nearly five times the current headline inflation rate of 1.5%. They follow recently published Office of National Statistics figures showing that across the whole industry, earnings were up 4% year-on-year.

And these increases are not being enjoyed in London and the South-east alone - the fillip to the housing market, brought on by the Help to Buy initiative, has rippled out across most of the regions. Only north-east England and Northern Ireland salaries have yet to see an improvement, according to Duncan Bullimore, building division director at Hays Construction.

Hays says the housing market boost has had a knock-on effect on specialist contractors such as cladding, building envelope functions and joinery trades people. With contractors increasingly able to identify a pipeline of work, pressure is on to find staff at every stage of the construction process from planning to on site.

Bullimore says: 鈥淭here is sustained broad-based recovery of the industry reflected across many roles in many regions. Things are always amplified in London and the South but there is upward pressure on salaries in all areas.鈥�

Brian Green, analyst at consultancy Brickonomics, warns that Hays鈥� figures are based on salaries placed by the recruitment agency, and are likely to be involve bigger pay uplifts than those of colleagues who stay put. Yet, the strength of the rebound still paints a rosy picture.

Senior vacancies

The survey contains particularly good news for those in more senior posts. Senior site managers, planners and assistant site managers all enjoyed salary increases of around 10%. Project managers and senior quantity surveyors saw average salary increases of 10.4% and 10.1% respectively, compared to the recruitment consultancy鈥檚 figures for the previous 12 months.

According to Hays, a shortage of experienced candidates means that they are increasingly able to call the shots when negotiating pay and benefits. The premium enjoyed by relatively senior staff is particularly marked within quantity surveying. While senior quantity surveyors have enjoyed a 10.4% salary uplift over the last year, assistant QSs saw average pay rises of just 2%. The premium on experienced candidates reflects the industry鈥檚 hollowing out over the past five years.

Bullimore says: 鈥淭hey were the people who were lost during the last recession. If you were over 50 at the start of the last recession, the chances are that you got out if you could.鈥�

But it would not make sense for contractors to lure them back, he argues. 鈥淚t鈥檚 going to require training and familiarising with new systems when you are only going to get a few years out of them, which is probably not attractive.鈥�

The pressure to get staff who are able to contribute to profitability from day one, cuts at the opposite end of the age spectrum too. Bullimore says: 鈥淚n lean times people disinvest and in times of feast people feel they need to be productive straightaway.鈥� It could be three to four years before an apprentice is productive, at which point it is possible that they will be poached by a competitor, he adds.

Things are always amplified in London and the south but there is upward pressure on salaries in all areas

Duncan Bullimore, Hays

With graduate schemes and apprenticeships having stalled during the recession, Bullimore says employers are often taking on assistant QSs with only one or two years鈥� experience. 鈥淎ssistant QSs are often quite junior. They come out of university with a degree and very quickly find themselves in a role as assistants, so salaries reflect the fact that there are quite junior people in that job title.鈥�

Tony Williams, chief executive of consultancy 黑洞社区 Value, believes that contractors will increasingly look abroad to plug skills gaps. He says: 鈥淟anguage is not really a barrier: a Polish surveyor can work on a building site with a few words of English.鈥�

But Green argues that this route won鈥檛 work for the more experienced roles that are in the highest demand. 鈥淚t鈥檚 difficult to ship in a project manager from another country who is not culturally aware or even qualified to work here.鈥�

In order to attract and retain in-demand staff, the Hays survey shows that contractors are widening the scope of their remuneration packages beyond standard features such as the company car allowance. Increasingly common additional fringe benefits include extra days of annual leave, above statutory minimum pension contributions, and the opportunity to work on CV-enhancing high-profile projects. 

Andrea Singh, head of HR operations at Bam Construct, says her company tries to offer this kind of wider benefits package, with features such as BUPA health cover, across its staff. She advises employees to look beyond the headline salary figures when weighing up potentially juicy job offers. 鈥淥ne of the issues we emphasise to employees who are offered apparently attractive packages is to think through the long-term factors. If the project gets cancelled or delayed, the employee needs to consider what the long-term prospects with a new employer are and whether the new employer has a commitment to the individual and their development and future career path.鈥�

However, after so many years of deferred gratification during the recession, many employees will take the 鈥渏am today鈥� option.  And an increasingly tight labour market could have ramifications for the entire structure of the industry. More than half (56%) of employers said their salary bill had grown over the last year, with just 1% reporting the opposite. The power shift between contractors and staff is reflected in Hays鈥� finding that 41% of employers worry about unrealistic salary demands among prospective staff, while 44% say competition from other employers could prove an issue.

Just under two-thirds (65%) of employers say they are concerned the skill shortages will have an impact on their business, 68% expect a shortage of experienced applicants when recruiting, and 41% say a shortage of qualified professionals is a future problem.

Strained margins

Increasing competition for staff will inevitably put additional pressure on margins, which will be painful for those companies still struggling to deliver contracts negotiated during the downturn. 鈥淭here will be lot of legacy contracts that will be being run at a loss,鈥� says Green.

Contractors finding themselves in this boat will find it hard to reward their staff. 鈥淢argins are still quite tight across a lot of the industry so it鈥檚 not like these organisations can be too generous about the level of salaries being offered,鈥� says Bullimore.

And as companies become more fragile, they will have to pay more to lure staff to stay or join, fuelling further market turbulence, warns Green. With more than half of employees telling Hays that their current firms are unable to offer sufficient job opportunities, labour issues will give a further spur to mergers and acquisitions.

Williams argues, meanwhile, that the industry will have to tell clients, who expect a good level of finish, they will have to pay more for it. But with the construction industry expected to grow at a 5% per annum rate until 2016, he believes 鈥渢he golden years are back鈥�, meaning it will be easier to adopt this robust position on pricing.

In the meantime, Bullimore thinks that salary levels will start to taper off during the next 12 months as firms get used to more buoyant conditions. He also believes that, once short-term bottlenecks have eased, companies will focus on productivity 鈥渞ather than making a dash for every candidate on the move鈥�.

One route, he argues, to greater productivity is to make more use of off-site methods. This could enable companies to tap a wider pool of potential recruits by drawing on people who have worked in less in-demand disciplines, such as assembly and manufacturing. In this scenario, many construction professionals would have to temper their expectations.

However, the policy makers at the Bank of England will no doubt smile on the industry鈥檚 revival offering fresh opportunities for the UK鈥檚 rust belt industrial regions.

Planners鈥� pay 2014

	Senior planner	Planner	Assistant planner
North-west	48,000	38,000	23,750
North-east	46,750	37,500	22,000
Yorkshire & Humber	47,500	37,500	24,250
West Midlands	46,000	37,000	25,000
East Midlands	49,000	39,500	24,750
East of England	46,000	39,000	25,000
Greater London	57,250	47,250	29,500
South-west England	46,000	42,750	25,000
South-east England	50,000	37,000	25,000
Scotland	50,000	37,000	23,000
Northern Ireland	42,250	33,500	22,250
Wales	49,000	39,500	24,500
National Avg.	拢48,146	拢38,792	拢24,500
Average change 2013 - 2014	9.2%	10.0%	4.6%

 

Quantity surveyors鈥� pay 2014

	Senior QS	Contract QS	Assistant QS
North-west	47,500	37,250	23,500
North-east	46,000	38,750	23,750
Yorkshire & Humber	47,250	38,750	23,750
West Midlands	42,000	33,500	27,000
East Midlands	46,250	37,000	25,000
East of England	48,750	37,875	24,750
Greater London	53,250	41,000	33,000
South-west England	46,250	39,250	27,750
South-east England	50,000	40,500	22,250
Scotland	44,500	37,250	22,000
Northern Ireland	43,500	33,500	22,250
Wales	47,250	36,125	22,750
National Avg.	拢46,875	拢37,563	拢24,813
Average change 2013 - 2014	10.1%	9.4%	2.3%

 

Contract/project managers鈥� pay 2014

	Contract manager	Project manager
North-west	拢49,500	拢44,750
North-east	拢46,500	拢41,750
Yorkshire & Humber	拢48,000	拢45,500
West Midlands	拢46,000	拢39,000
East Midlands	拢50,500	拢43,500
East of England	拢45,000	拢43,500
Greater London	拢51,250	拢50,250
South-west England	拢46,750	拢48,000
South-east England	拢53,000	拢48,500
Scotland	拢50,000	拢50,000
Northern Ireland	拢43,500	拢39,500
Wales	拢46,500	拢44,500
National Avg.	拢48,042	拢44,896
Average change 2013-2014	9.0%	10.4%

 

Engineers鈥� pay 2014

	Senior engineer	Engineer
North-west	39,500	32,000
North-east	40,500	34,000
Yorkshire & Humber	39,000	34,000
West Midlands	36,000	30,000
East Midlands	38,750	31,250
East of England	35,000	29,000
Greater London	41,250	37,250
South-west England	38,000	34,250
South-east England	39,500	35,000
Scotland	37,000	32,750
Northern Ireland	32,500	27,750
Wales	41,250	34,250
National Avg.	拢38,188	拢32,625
Average change 2013-2014	7.4%	7.5%

 

Health and safety professionals鈥� pay 2014

	H&S director	Senior H&S manager	H&S manager	H&S adviser
North-west	58,000	47,000	39,125	29,750
North-east	55,000	45,000	35,000	25,000
Yorkshire & Humber	60,000	49,750	36,000	32,000
West Midlands	61,875	52,250	39,000	33,000
East Midlands	63,750	48,750	41,875	31,625
East of England	65,000	48,000	37,000	29,000
Greater London	85,000	59,000	48,000	35,000
South-west England	70,000	51,000	40,000	32,000
South-east England	75,000	55,000	46,000	35,000
Scotland	51,000	42,000	35,000	28,000
Northern Ireland	50,000	42,000	35,750	26,750
Wales	55,000	45,000	35,000	27,000
National Avg.	拢62,469	拢48,729	拢38,979	拢30,344
Average change 2013-2014	1.3%	3.3%	3.3%	4.0%

 

Site managers鈥� and foremen鈥檚 pay 2014

	Senior site manager	Site manager	Assistant site manager	General foreman
North-west	39,500	37,250	27,000	25,500
North-east	41,000	36,500	25,250	26,000
Yorkshire & Humber	40,750	36,500	27,000	25,250
West Midlands	37,000	34,000	29,000	27,000
East Midlands	41,250	37,500	29,500	28,750
East of England	42,000	36,000	28,000	29,500
Greater London	44,000	41,250	36,500	29,750
South-west England	40,000	35,750	27,750	25,500
South-east England	53,750	40,250	34,250	29,500
Scotland	42,000	38,000	28,000	28,000
Northern Ireland	38,000	33,500	24,500	29,500
Wales	38,500	36,000	24,750	26,000
National Avg.	拢41,479	拢36,875	拢28,458	拢27,521
Average change 2013 - 2014	10.1%	9.0%	9.8%	4.5%

 

Estimators鈥� pay 2014

	Senior Estimator	Estimator	Assistant Estimator	Bid Manager
North-west	49,250	41,500	27,750	49,500
North-east	46,000	38,000	25,750	53,250
Yorkshire & Humber	47,500	41,000	25,000	49,500
West Midlands	49,000	38,000	27,000	50,000
East Midlands	49,500	39,500	26,000	49,500
East of England	53,500	40,000	29,750	45,000
Greater London	54,000	45,750	32,750	51,500
South-west England	49,250	43,500	27,000	46,500
South-east England	53,750	44,000	30,000	50,000
Scotland	47,000	39,750	28,000	49,000
Northern Ireland	43,500	34,250	26,250	43,750
Wales	50,250	39,000	27,000	46,125
National Avg.	拢49,375	拢40,354	拢27,688	拢48,635
Average change 2013 - 2014	5.1%	6.3%	4.3%	4.6%