A year ago, British brickmakers were unable to produce enough product to meet racing demand. Now they have the opposite problem: The brickyards aren’t big enough to accommodate the mountains of unsold inventory.
With high interest rates putting many housebuilding projects on hold “for the foreseeable future”, listed brickmaker Forterra is cutting its workforce and mothballing sites, including one in Lancashire where a Gravity ropeway We’ve been hauling clay into kilns for a century.
“These are good, well-paying, unionized jobs,” said Charlotte Childs, national officer for the GMB union. Around 200 employees will be affected, including many in roles such as kiln operators or machine operators, which typically pay in excess of £35,000.
The construction industry has borne the brunt of a wider slowdown in the labor market, hit by a slumping housing market, a squeeze on mortgage holders giving up on housing deferrals and potential scaling back of big public projects such as the HS2 rail line.
The number of job openings has surged amid a post-coronavirus pandemic economic growth, but has been falling for more than a year. The latest official data showed that although average wages were still growing at a record rate, the unemployment rate rose sharply to 4.3% from 3.8% this quarter, and the employment rate fell.
But the figures only cover the period up to July, and analysts have questioned their reliability as response rates have fallen sharply since the outbreak and the Office for National Statistics is overhauling its labor market survey.
Gauging the extent of weakness in the jobs market since the summer will be crucial for Bank of England policymakers as they assess how long to keep interest rates high. The Monetary Policy Committee believes that the unemployment rate must rise and wage growth must slow before inflation can sustainably return to the 2% target. But if the policy is too tight for a long time, it may trigger unnecessary and painful unemployment.
With banks, law firms and consultancies seeing less M&A activity; big tech companies scaling back their UK presence and consumer-facing industries also feeling the impact of tightening household budgets, job seekers are now in a different environment than they will be in 2021 and 2022 A far cry from that, when employers entered into bidding wars to fill job openings.
“People coming back from holiday have their heads down and are staying put, just grateful that they have a job,” said Yael Selfin, chief economist at KPMG, who found that employers across the UK were less Worry about employee turnover and salary pressure.
Others also say the labor market may now be weaker than official data suggests, with wages growing more slowly.
“We’re in a different position now than we were 12 months ago . . . (employees think) if you have the record and the tenure, maybe it’s better to stay where you are,” said Chris Gray, group director at ManpowerGroup UK. He described the overall job market as mixed, with differences between different industries, but “probably more ebbs and flows than trends.”
However, most analysts believe that while wage growth is slowing, job losses are likely to be more limited than in previous downturns – as the UK workforce is already depleted by demographics, EU worker departures and high rates of long-term illness.
Neil Carberry, chief executive of the Recruitment and Employment Federation, said confidence was improving despite employers taking longer to hire new staff. “The impact of a long period of slow growth is less than it has been in the past,” he said, adding that if many companies were willing to continue offering work-from-home flexibility, they would be able to attract candidates at lower wages.
The favorable overall picture masks huge differences across sectors, with construction and retail taking a heavy hit, while areas such as social care remain difficult to recruit. But recruiters say there is still strong demand even in an industry that has seen significant layoffs.
Rhona Carmichael, chief business officer of Nash Squared, a specialist tech recruiting firm, said many regional companies are unable to compete on pay during the post-pandemic hiring frenzy as remote work allows U.S. businesses to draw on broader Recruit from the talent pool.
“When the market got out of hand, they were in a state of confusion… Now we’ve reached a certain level of normalcy.” More than half of the companies still plan to expand their IT teams, she added.
As workers become more cautious about leaving stable jobs, some recruiters say they are in the paradoxical position of employers not planning to increase headcount but still struggling to keep staff full.
Mr Gray said that while job ads were now attracting more applicants, it was “like walking through treacle”, with businesses continuing to recruit to replace staff who have left or fallen sick, rather than expanding.
Even in the hardest-hit industries, industry players are more worried about recruiting difficulties when demand rebounds than about job losses now.
Greg Shaw, regional director for Randstad’s construction team, said the recruitment agency was currently looking to fill only 1,350 vacancies in the sector, down from 1,850 a year ago, and there was a huge gap in skilled workers “integrating into other industries” risk. The “British economy” during the economic downturn.
“The government must act now before people start moving to different industries,” he said, arguing that work to repair unsafe school buildings could help tap into the industry’s idle funds.
Noble Francis, economics director at the Construction Products Association, said the industry’s workforce had fallen by 273,000 since 2019 due to early retirement by the self-employed, the departure of EU workers and the recent economic downturn. He believes this will prevent the government from achieving its goals of building affordable homes and making existing homes more energy efficient or upgrading.
“Once you lose workers to early retirement or other industries, they tend not to come back.”
This article has been updated to correct the number of vacancies to be filled in the construction sector at recruitment agency Randstad
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