THE UK CONSTRUCTION INDUSTRY – LABOR WORK AN ATTRACTIVE OPTION

 

                                    

 

 

 The UK Construction Industry – Labor Work an Attractive Option

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Overview of the UK Construction Sector

The construction industry of the United Kingdom is one of the key sectors that contribute to economic development of the country both directly and indirectly. Indirectly, the sector contributes to the growth of the economy of the U.K. through employment creation, corporate social responsibilities, and income generation. Rhodes (2015) found that, for instance, in 2014 alone, the sector contributed approximately £103 billion towards the economic output of the country. This represented about 6.5% of the country’s total output during the 2014 fiscal year. In terms of employment creation, the survey established that during the first quarter of the year 2015, this sector created 2.1 million jobs, which represented about 6.2% of the employed in the U.K. The economic contribution of the construction of the UK can be represented graphically as below.

Source: Rhodes, 2015

The UK construction industry during 2012 underwent a difficult period. However, toward the end of 2013 it started to recover, the production increased by 1.3 percent in the final quarter of the year.  According to Chartered Institute of Building (2005), the progress was reinforced by government investment in affordable housing schemes and infrastructure.  In 2014 the UK construction industry contributed 103 billion pounds which was 6.5 percent total of economic output. In Q 2015, 6.2 percent or 2.1 million jobs in the UK economy was in construction sector (Department of Trade and Industry 2002, p234). The gross value added of any Industry measures its contribution in the UK economy. The output of the construction industry in 2014 was 6.5 percent. The 2014, 9.5 percent increase in real terms was the largest since 1990 (Mackenzie Kilpatrick & Akintoye 2000, p. 856).

The Labor Sector the Construction Industry of the UK

Despite the fall in number of jobs in the construction industry between 2009 and 2010, the last ten years have recorded a broad steady employment rate. However, since 2005 jobs in the UK construction industry has been declining from 7.0 percent to 6.2 percent present figure. Young people (millennials) are the primary cause of the skill shortage in the construction industry. There are over 182,000 jobs in the UK construction that need workers by 2018 (Abdel-Wahab Dainty Ison Bowen & Hazlehurst 2008, p.372). The ongoing debate is on how various sectors in the construction sector can attract the young people. In the current economy the industry is most reliant on skills of European workers. According to Clarke and Wall (1998b), there is need for the government to provide a policy response and assurance that insures will retain the skills of workers already in the industry so that more talented young people can be attracted (p.554).

It is necessary for the government and UK construction sectors to get the millennials interested in provide their skills for the industry. In the developed world, UK is among the countries with high employment levels of young generation but still they are unable to fill the construction industry skills gap. According to a government research, people are deterred from the sector because it has an image problem. Young people appeal for jobs in the construction industry is low scoring at 0.42 percent (Rashid, 2013, p.651). A target of 42,000 new houses per year is the stipulated estimate of London Housing strategy. The construction industry demand for skills nationally is rising as underlined by the statistical evidence.

The Challenges Facing the UK’s Construction Industry

The construction industry of UK is weighed down by the various severe difficulties such as shortage of skilled workers, lack of research and development investment and low profitability (Winch 1998, p.532). The reason why young people are diverting their attention is because the public perceives the industry as unproductive low in quality and inefficient. The construction industry has diverse component and embraces sectors such as product producers, professional and merchant services, building contractors and quarrying firms. About 3 million people are employed in the industry with over 350,000 firms. The visible heart of the UK construction industry is the building constructors. The industry is divided in sectors namely infrastructure, non-housing and private housing.

While there are different technical characteristic, internal business challenges and agendas in each construction activity, the common general issues can be identified. These issues include supply chain relationships, employment status, environmental concerns and economic problems. Ball (2014, p.45) asserts that skills for the industry are mostly provided by self-employed workers which have increase subcontracting contracts. Some firms have described such subcontracting as the cause of significant challenges in training and innovation.  Therefore, there is a decline in the number of trainee.  According to 2005, Chartered Institute of Building report above 90 percent lags behind in skills and this has portrayed poor image and other economy attractive sectors have attracted young people attention. Construction industry is an unstable sector in the UK economy. Although the present outlook of the infrastructure investment shows a promising economy, skill shortage can delay the retrieval. Lately the largest falls have been recorded by the private commercial and private industrial construction sector.

Construction Economic Environment of the UK

There are various issues surrounding the forthcoming nature of the construction industry in The United Kingdom. As far as future labour skills are concerned, the young generation, which makes up the architects of tomorrow, has a negative view of the industry, due to the reputation already portrayed. According to Proverbs et al. (2000), the industry has low profitability and minimal attention has been geared towards research and investment (p. 74). Despite many complains about the need for quality services, much has not been realized, therefore, it remains as a major issue in the future of the industry. Besides, reliance on traditional designs, late completion, and acceleration of construction, poor management supervision and low quality buildings top of the list of the issues (Brensen & Marshall 2000, p. 823). The ambiguity of the issues renders them unsolvable in the current time; consequently they will remain to be issues in the future of the construction industry.  The research, which was conducted among construction directors using survey questionnaires, found not only the above issues, but also, twelve others Proverbs et al. (2000, p.78).  A big number of the issues affect the industry far and wide, which requires a peculiar strategy to curb the severity.

Economic Stability and its Effects on the Construction Industry of the UK

The construction industry is faced by several difficulties. The slow recovery in the economy has weakened the demand in the industry. The enduring conservatism of financial organization in the credit crunch in the aftermath has made it difficult to access investment funds. In addition, the economy of the UK construction industry has been affected by the confidence loss in impending trade and industry prospects (Agapiou, Price, & McCaffer 1995, p.236). Thus, it has shelved numerous risky investment projects.

House building in the private sector was affected by the recession. The Q1 2007 housing orders of 76 percent fell suddenly up until 2009. The orders in the private sector in Q2 2015 were 5.6 billion pounds which represented 83 percent of the total orders of houses in the industry.  Between 2009 and 2010, the infrastructure orders rose. However, they have lingered at the same level. During this entire period, the private sector orders have been above the public sector. The total number of the infrastructure orders in the private sector in Q2-2015 has totaled 2.6 billion pounds (Liu and Fellows, 2016, p.530).

Rhodes (2015) established that, like the rest of the advanced economies globally, the construction industry of the UK remains one of the diverse components of the economy that boasts of a large number of businesses encompassing quarrying firms, plant operators, manufacturers, contractors, construction workers, among other stakeholders. It is estimated that the industry provides direct and indirect employment to approximately 3 million people and has slightly more than 350,000 firms (Construction News 2005). The most active sub-sectors in the construction industry of the U.K. include public housing, infrastructure, and private commercial housing. Notably, the output capacity of the sector has been on an upward trend since the late 1990s. For instance, in 1999, the output capacity of the UK’s construction industry stood at £69,294 billion, and increased to £80,240 billion five year later (2004). Except for the 2007-2008 global economic crises and the European economic crisis of the 2012-2013, the output capacity of the sector has been on the rise with the figure standing at £103 billion in 2015 (Rhodes, 2015).

Despite the progress and growth that the construction industry of the UK as been experiencing, the sector has not been without its ups and downs. However, the most noticeable event that has had adverse effect on the success of the sector is the global economic recession of 2007-2008. It was associated with the ‘housing bubble’ across developed economies of the world such as the U.S., U.K., and other countries. Though the rate of the recovery of the sector was relatively faster compared to the economy at large, the impacts of the recession could still be felt in the low demand for the houses in the U.K., thus the continued crisis. Between 2010 and 2011, the construction industry of the U.K. was characterized by flat or stagnant growth, which got followed by an unprecedented sharp contraction in the year 2012 following the European economic crisis (Rhodes, 2015). Thereafter, the sector has been on an upward growth trend, thus spurring development and growth in the overall economy of the U.K. The March 2011 Growth Plan of the U.K. highlighted the construction sector’s activities and these can be summarized as tabulated below.

Table 1: The Economic Contribution of the Construction Industry of the UK

Year Output Capacity

(£ Billion)

Real % Changes % of the GDP
2004 76 5.3 6.8
2005 81 -2.4 6.8
2006 86 0.8 6.8
2007 91 2.2 6.9
2008 90 -2.6 6.6
2009 81 -13.2 6.0
2010 84 8.5 6.0
2011 92 2.2 6.3
2012 89 -7.7 6.0
2013 92 1.4 6.0
2014 103 9.5 6.5

 

Source: Author, 2017

Analysis of Industry Support for Young People

The UK construction industry will required more young skilled labor to build houses in the coming decades. The industry has heavily been relying on skills from European Union workers. The UK shortage in skills has been deepened by the Brexit decision. About 12 percent of the 2.1 million employees in the construction industry across the UK are contracted from abroad. Economists argue that the exact number of workers for EU is even higher.  According to this evidence, it is clear that the construction industry and the entire labor market will face workers shortage due to Brexit crisis. Therefore, critical resources such as signaling designers, linesmen, commissioning and test engineers will be limited (Ruhs & Anderson, 2010). The shortage is likely to give outcomes of increased wages in the subsequent five years between 25 and 40 percent.  This drift is expected to engulf the industry and may present a severe problem, making construction projects overpriced and unviable.

Preference of other Careers over Construction

The reason why young people prefer an alternative career choice than construction is the poor image of the industry (Robinson 1999, p.321).  They want a variety and security in their profession. Young people want to be valued and challenged, even though they attracted by industries which they can be proud to work in. For this generation to provide labor for this economic sector, the working practices in the construction industry will have to adjust.

The growing demand of skills in the UK construction industry is leading to high number of contract turn down but the big building contractors. The construction cost is being driven up by the labor shortage and contractors are turning down and putting high prices for works from high risky projects.  In 2015, the prices increased by 10 percent in comparison to previous year. The UK leading construction firms are currently struggling with the unpredictable costs and squeezed profit limits. In the past years the number of construction qualifications in universities and colleges has gone down by 10,000 (Bell & Blanchflower 2011, p.243).

Employee Motivation and Development Theories Relevant to the Construction Sector

The Core-periphery Theory

The lifelong learning of postmodern version compared with traditional concept has powerful attraction. Theory of core-periphery asserts that a relatively skilled, secure and permanent workforce is accompanied by a statistically increasing temporary, part time and lower-skilled workforce that can be controlled as dictated by the economic conditions (European Commission, 2000, p.45). However, the UK construction industry does not follow this picture and results to greater intense work pressure, job insecurities (Clarke &Wall 2000, p 687). Hence, the young people opt to look for career progression from other industries. Industry support for young people delivered by government and contractors is it not enough. The current government strategy is providing transparent information about supply and demand through LSC (HM Treasury 2000, p.124). The idea supporting this policy is that, need will lead into training and later transform into skills. The country has free nature of entry into labor market; a well-established and occupational structure is needed by the young people through vocational training (Dfee 2000, p.20).

The Maslow’s Motivation Theory

One of the management theories that have been applied by most successful organizations both in developed and developing countries is the Maslow’s Motivation Theory. This theory was advanced by Abraham Maslow in 1943. It was founded on the basic assumption that individuals have basic needs for development and growth that must be fulfilled. According to Maslow, these needs can be categorized into safety, self-actualization, social, physiological, and esteem. These needs are ranked in the order to priorities. In the view of Maslow, though all the five need must be satisfied, lower (basic) needs such as safety must be prioritized before one satisfies those in the upper-tiers such as the esteem. The concept of satisfying human wants in the order of priority from basic to secondary to tertiary leads to the self-actualization idea that is popular with the Maslow’s Motivation Theory. However, the achievement of the self-actualization goal is not without limitations. For instance, in a more complex hierarchy structure such as an organizational setup, it is impossible neglecting the conflict external and internal demands of the stakeholders.

In the view of Shuck and Herd (2012, p.164), the Maslow’s (1943, p.408) is very relevant in the management of the human resources (employees) in the today’s content, particularly with respect to employee retention and motivation frameworks. The two argued that today, it is not necessary for the managers satisfy all the demands of the workers and the youthful employees; rather they get motivated by their unsatisfied lowest level needs. Therefore, the Maslow’s (1943) motivational theory provides clear basis that links the needs of the workers with the managements’ objectives of low turnover. Thus, retaining the employees entails motivating them by meeting their basic needs, especially those in the lower tiers of the pyramid.  As noted Boyd (2014), unmet demands and external values of the employees are likely to bar the realization of the self-actualization of the affected workers with the organizational setup (p.19). Further, Fassin (2012) asserted that the external and macro values of the workers are often influenced by the exploits of organization human resources managers with no clear cut approaches or strategies for improving their socio-economic well-being (p.88). The unique self-actualization motivational elements of individuals must be fulfilled as a way of retaining and developing the employees. Therefore, it is essential for managers in the construction sector to ensure that, though varying, the unique demands of the workers are met to motivate them.

The Existence, Relatedness, and Growth (ERG) Theory

The Existence, Relatedness, and Growth (ERG) Theory was advanced by Alderfer in during the late 1960s. According to Alderfer, existence, relatedness, and growth are the most dominant needs that are common in workplaces around the world; the same applies to the industry. Though he considered the same limitation as did Maslow, he went further to include flexibility of the moments and shifts of the needs (Guillén, Ferrero, & Hoffman, 2014, p.14). According to the Alderfer’s ERG theory, the element of existence include safety and physiological needs that are satisfied through the provision of safe and secure working environment as well as security of earnings (Steidle, Gockel, & Werth, 2013, p.184). The individual needs that are aimed at maintaining considerably meaningful interpersonal relationships with the working environment or elsewhere constitute relatedness needs (Steidle et al., 2013, p.181).

On the other hand, one’s wish for self-fulfillment by establishing growth, creative, and productive opportunities makes the growth needs. The Alderfer’s ERG theory is one of the theories that are fundamental in enhancing the understanding employee retention and turnover strategies. Therefore, manager in the construction industry must be at the forefront in recognizing the multiple needs of the employees such as existence, relatedness, and growth that must be satisfied. Russ (2011, p.242) established that only managers with the ability to identify the three ERG demands of their employees performed much better in keeping their workers happy and motivated. The ERG theory stipulated the need for manager to concentrate on the needs of all workers. Also, fulfilling the work-related demands of the employees is insufficient since unattended to non-work related demands of the employees would force them to seek better options elsewhere, thus leaving the organization (Steidle et al., 2013, p.178-9).

Consequently, it is the duty of manager to fulfill their duties and obligations to workers irrespective of the variations in such wants of the employees. According to Guillén et al. (2014), an exclusive focus on a single need would not succeed in motivating the entire work-force (p.12). For this reason, applying the ERG theory entails developing an array of feasible strategies aimed at addressing the different employee motivational drivers; hence enhance their workplace productivity and retention. Given the complex nature of the working environment it is critical that both work and non-work related wants of the employees are satisfied in order to motivate them.

 

 

The Vroom’s Expectancy Theory

The third theory that the research was founded on is the Vroom’s expectancy theory. Vroom advanced the theory as a response to the Alderfer’s (1969) ERG and Maslow’s (1943) motivation theories. According to this theory, anticipated outcomes of individual actions potentially influence their levels of motivation. The theory examines the one’s workplace related behaviors and motivational factors. In particular, this expectancy theory by Vroom concentrates on establishing the relationships between performance and reward, rewarded individuals goals, and effort-performance relationship. According to Vroom (1964), employee motivational efforts and strategies must focus on exploring the reasons why individuals often make decisions targeted at maximizing their utilities but with minimum pain or costs (p.189).

Unlike the first two theories, the expectancy theory emphasizes outcomes rather than the unique human needs (Kessler, 2013, p.277). Similarly, in the view of Kessler (2013), the employee rewards systems used organizations must be just and fair such that each worker gets rewarded in accordance with their contributions to the output (p.274). Such a reward system has the potential of changing the degree of commitment of employees toward the realization of the primary objectives of the company. However, for the few employees who are not interested in the rewards, leaving the organization becomes eminent irrespective of the value of the rewards or motivations extended to them by the management (Gupta & Shaw, 2014, p.4). Therefore, small construction managers can implement or design highly dynamic, challenging, and involving tasks for ensuring that the workers get fair rewards for their contributions toward the success of the organization.

 


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