The latest figures from Hays/BCIS Site Labour Indices show that site wages fell by 1.9% in the construction industry in the last quarter of 2022 – bringing the annual increase down to 9.3% from its peak of 12.8%. The last quarter completes three years of data, which covers an eventful period – the onset of the Covid pandemic at the beginning of 2020, the withdrawal of the UK from the European Union at the end of 2020, the relaxation of Covid restrictions during July 2021, the war in Ukraine and rampant inflation since February 2022 .
Figure 1 Comparison of the annual movement in BCIS labour cost index, Hays/BCIS site wage cost index: All-in, RPI, average weekly earnings index: construction
The Hays/BCIS All-in Index moved broadly with RPI over the three-year period. RPI shows an increase of 23.13% against 21.8% for the Hays/BCIS All-in Index. The Average Weekly Earnings Index for Construction has risen only 9.72%, suggesting that labour employed on short-term contracts for immediate fulfilment has been able to take advantage of the skills and labour shortage in the industry by demanding higher rates. Average weekly earnings are based on a broad sample across the industry and are affected both by rates of wages and hours worked whilst the Hays/BCIS All-in Index is a much narrower sample of agency labour.
In the last quarter of 2022, the Hays/BCIS Index recorded a slight fall in rates of wages that coincided with a drop in construction material sales volumes. Builders Merchants News reported that: “Price growth was consistently high each quarter, sitting between +15.0% and +17.7%, while volume started at +1.5% in quarter one and dropped to -11.6% in the fourth quarter.”
The differentiation between operatives employed under the nationally agreed wage agreements and self-employed workers appears to be widening as the self-employed lever their flexibility to obtain higher rates. This may result in a series of robust negotiations in the 2023 pay round with trade bodies working to control costs, against a background of a shortage of skilled workers.
The number of workers in the industry fell from 2.30m to 2.16m over the period, which equates to a loss of 140,000. However, the proportion of self-employed workers in construction also fell from 40% to 35%, which suggests many of the losses have been amongst this group.
BCIS work together with Hays Recruitment to track movement in the cost of site labour in the construction industry by providing the Hays/BCIS Site Labour Indices. The BCIS/Hays Indexes were launched at the beginning of 2020 and are based on market data provided by Hays, reflecting movement in the market for agency labour on a quarterly basis. The Hays/BCIS Indexes are more volatile and faster to react to changes in market conditions than the BCIS Labour Cost Index, which represents the movement in nationally agreed wage awards across the industry as a whole.
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