EWL Demographic Challenge in Construction Report

8/6/2019 EWL Demographic Challenge in Construction Report

1/19

Ca ita Business Services Limited2011

Extending Working Lives

The demographic challenge facingthe construction sector

Freda Line, July 2011


2/19

The Construction Sector

Page 2 of 19

May 2011

C it B i Servi es Li ited2011

Contents

1 EXECUTIVE SUMMARY................................ ................................ ................................ ....... 3

1.1 Background ................................ ................................ ................................ ........................ 3

1.2 Focus of the research ................................ ................................ ................................ .......... 3

1.3 Key findings ................................ ................................ ................................ ....................... 3

1.4 Potential issues foremployers ................................ ................................ ............................. 3

1.5 Implications of failing to address these issues................................ ................................ ......4

2 INTRODUCTION ................................ ................................ ................................ .................... 5

2.1 Background and rationale................................ ................................ ................................ ....5

3 THE CONSTRUCTION SECTOR WORKFORCE ................................ ............................... 6

3.1 Introduction ................................ ................................ ................................ ........................ 6

3.2 Methodology ................................ ................................ ................................ ...................... 6

3.3 UK population projections to 2021................................ ................................ ...................... 7

3.4 Potential impact of projected demographicchange on construction sector......................... 10

3.5 How the current construction workforce might age overnext 5-10 years ........................... 13

4 CONCLUSIONS AND IMPLICATIONS FOR THE SECTOR ................................ ........... 15

APPENDIX ONE KEY SOURCES ................................ ................................ ............................... 16

APPENDIX TWO DEMOGRAPHIC ANALYSIS DATA TABLES ................................ ........... 17


3/19


Page 3 of 19

July 2011

1 EXECUTIVE SUMMARY

1.1 Background

Extending Working Lives (EWL) is a programme commissioned by the Department of Workand Pensions (DWP) designed to encourage employers to recruit and retain older workers.

Some interest has been shown in the statistics and charts developed by EWL recently, but itis clear that sector trade bodies would be further engaged if it were possible to produce morespecific and less generic information.

1.2 Focus of the research

To this end a desk-based review of publicly available web sources and reports wasundertaken recently. This research aims to demonstrate clearly the impact of current agecohorts on the sector by translating UK population data projections onto the constructionworkforce of the next 5-10 years. It is hoped to show what it will look like for different agegroups, and highlight what the impact of these changes may be on the sector in future.

With this additional information it is hoped to further persuade s ector trade bodies of therelevance of EWL messages.

1.3 Key findings

The results are more startling that antici pated and should provide a wake-up call to thesector.

A significant decline in younger workers i ll 5 % w l

A large fall in the number of workers aged 35 -44 by 2019 5,

Large rises in the number of 50 -60+ year olds 6 ,

1.4 Potential issues foremployers

The implications of the changes to the construction workforce are considerable and include:

The need to confirm the implications of this knowledge in the light of recent researchfrom the CIOB which shows that there a re currently significant skill shortages within thesector

1

The need to introduce or improve performance management / appraisal processes inorder to more effectively manage the ageing workforce especially in the light of theremoval of the default retir ement age

A review on how to enhance the attractiveness of the sector to both younger andmiddle aged workers

The need for the sector to embrace new ways of working in particular encouraginggreater use of a variety of flexible working options including flexible retirement

The sector will need to be more proactive in the development of mentoring andknowledge sharing

A higher level of investment in retraining and up -skilling of workers - particularly thosecohorts who in the past may not have always bee n the focus of training

1

http://www.ciob.org.uk/sites/ciob.org.uk/files/CIOB%20Skills%20in%20the%20Construction%20Industry%202011_0.pdf


4/19


Page 4 of 19

July 2011

A recognition from the sector that there is a need for investment in apprentices whomay not be eligible for government funding as other sectors have done

Consideration of how roles and tasks may need to be redesigned (adjusted) t o reflectthe possible decline in physical capacity of large cohorts of older workers

Greater investment in employee well -being and healthy living to support longer workinglife

Activity to combat and overcome assumptions and prejudice regarding the capab ilitiesof older workers

Forward planning from the sector on populating management cohorts in the future

Support for the development of age profiling techniques so that individual employerscan be prepared using ideas from this research on their own work age profile

1.5 Implications of failing to address these issues

Over the next few years employers within this sector will find it increasingly difficult tomeet demand especially as the economic recovery develops

The number of SMEs in the sector will shrink substantially as smaller (family run)businesses fail to attract and retain sufficient workers

A shortage of management talent and experience could mean some businessesstruggle to compete

Failure to adapt new ways of working and up -to-date people managem ent techniquescould result in the sector continuing to lose out compared with others in attracting andretaining talent

Poor knowledge transfer could leave employers struggling to deliver

Labour and skill shortages will put pressure on employer cost

Foreign suppliers and contractors may be able to compete more effectively

Prices will rise for consumers both on large and small scale projects

Increased risk of discrimination claims and associated costs


5/19


Page 5 of 19

July 2011

2 INTRODUCTION

2.1 Background and rationale

A business case for EWL is currently being developed based on the generic case for actionon older workers / age and using existing information, research findings and businessintelligence. In essence it is based on the following:

The average age is much higher than that of other sectors

The construction workforce is ageing rapidly and there could be a potentially highnegative impact of lost experience and knowledge if these older workers are notretained

Younger workers have not been attracted to the sec tor because of negativeperceptions about pay and working conditions

Despite the recession there are still significant skill shortages within the sector

The sector does not have a history of investment in training though this is being

addressed There are some significant construction projects in the short to medium term which will

require high levels of skill and experience

New regulations on migrant workers may limit potential labour pools

The economic recovery in Europe may be more advanced than in the UK and thereforeemployers may not be able to rely on European labour

The need to comply with legislation (removal of the DRA) provides a significantopportunity to encourage the sector to improve its people management performance particularly appraisal and performance management processes

The potential extension of the right to request flexible working to all, could also impactthe sector where there is no cultural legacy of flexible working

Activity by employers on older workers will support and compl ement efforts on otherdiversity issues.

Sector trade bodies understand these issues and are aware of their strategic impact. Theyrecognise that the UK population is ageing and that construction faces some real challenges.They are aware that action needs to be taken sooner rather than later to avoid the skill andlabour shortages that were experienced in previous economic up -turns. However, currentpressures on the sector mean that business survival is the main driver and focus of attentionfor sector trade bodies and employers alike.


6/19


Page 6 of 19

July 2011

3 THE CONSTRUCTION SECTORWORKFORCE

3.1 Introduction

This section aims to demonstrate clearly the impact of demographic changes on theconstruction sector workforce over the next five to ten years. The purpose of this document isto stimulate debate in the sector about these issues and to raise awareness about the effectsof forthcoming demographic changes on the construction sector.

3.2 Methodology

This section is based on an analysis of publicly available data from the Office of NationalStatistics. Two datasets have been used: the 2008 UK Population projections and the 2009Labour Force Survey. There were three steps to the analysis.

First, the demographic data for the whole workforce (taken as ages 15-69 years) wasanalysed using 2011 as the base year and then at five and ten year intervals, i.e. in2016 and 2021. The charts and data show the actual numbers and the percentagechange over this period.

The second step involved translating the UK population data projections onto theconstruction workforce of the next 5 -10 years (using the Four Quarter Average 2008 -2009 Labour Force data for the construction sector), broken down by age groups toshow the potential impact on different age groups to assess the effect of thedemographic changes on the sector. This analysis is indicative only but highlightswhere the problems may lie for employers ahead. Further analysis of the LF databetween 2003 and 2009 was conducted to determine any apparent longer term trendsamong the age profile of the construction sector.

The third part of the analysis for this section also started with the 2009 constructionworkforce data and used 2009 as the base year. The aim of this analysis was to try toarrive at a more accurate projection of the demographic changes which will take placeto the construction sector workforce over the next five to ten years. E ach age groupwas aged by five years (to 2014) and again (cumulative ly) by ten years (to 2019) toshow the effect of the change over time on the age profile of the workforce.

Appendix Two contains data tables on which the figures in this section are based (if they arenot included in the body of this section) .


7/19


8/19


Page 8 of 19

July 2011

FiH I P

Q

R

PS T I

lU

V

iS W

T P S

jQ

X

V

iS W

Y

S

a5 -

R

9b Q U

P

Sl

c

Y

R

d a a-

R

a(milli

S W

Y

)

FiH I P

Q

3 PS T I

lU

V

iS W

T P S

jQ

X

V

iS W

Y

S

3d

-49b

Q U

P

Sl

c

Y

R

d a a-

R

a(milli

S W

Y

)

3,400

3,600

3,800

4,000

4,200

4,400

4,600

4,800

5,000

2011 2016 2021

15-19

20-24

25-29

3,800

4,000

4,200

4,400

4,600

4,800

5,000

2011 2016 2021

30-34

35-39

40-44

45-49


9/19


Page 9 of 19

July 2011

Fie f g

h

4 Pi p f

lq

r

ii s

p g i

jh

t

r

ii s

u

i

v

5w

-69x h q

g

il

y

u

w -

(milli

i s

u

)

The figure below demonstrates the scale of the anticipated pop ulation change for differentcohorts by 2021 in percentage terms. So for instance the largest changes by 2021 are goingto be in the 55-59 age band which is going to increase by almost one quarter. The 30 -34year old group will also increase substantially by 22% but there is a smaller increase of 34 -39year olds which will rise by 12%.

The biggest decline in the period will be seen among those in their forties. The 40 -44 and 45-49 age bands will both decrease by 13% by 2021. This projected decline in the n umber of40-49 year olds may present a major problem for employers and workforce planners as theyare the group the sector tends to rely on as the managers or senior managers of the future.More effort will be needed to bring on the less experienced 30 -39 year old age group earlier;and to hold on to the 50 -59 cohort.

The decline in the numbers entering the workforce at 15 -19 will drop by 6% by 2021. Thenext group up 20-24 year olds will fall even further by 10%. This will present employers witha major issue to address and may require finding ways to hold onto older workers.

Fie f g

h

5 At

r

f

q

l

w

p i p f l

q

r

ii s

p g i

jh

t

r

ii s

u

x

q

e

h

e g i f p

is

w 6

q

s y

w

(milli

i s

u

)

5-

9

w-

4

5-

9 3w-34 35-39 4

w-44 45-49 5

w-54 55-59 6

w-64 65-69

w

3,832 4,359 4,399 3,986 4,0

0 4,589 4,61

4,088 3,583 3,

46 3,038

w 6 3,5

1 4,182 4,

38 4,519 4,018 4,064 4,538 4,556 3,985 3,442 3,533

w

3,585 3,918 4,554 4,852 4,546 4,010 4,018 4,482 4,451 3,840 3,260

%t

q

s e

h

x

w

-6% -10% 4% 22% 12% -13% -13% 10% 24% 3%

%

3,000

3,200

3,400

3,600

3,800

4,000

4,200

4,400

4,600

4,800

2011 2016 2021

50-54

55-59

60-64

65-69


10/19


11/19


12/19


Page 12 of 19

July 2011

This is mirrored in the rest of the workforce where t here are currently 1.3 million peopleworking beyond state pension age, 500,000 more than t here were 10 years ago

3. Most of

these work part-time.

Fi

9 A

w

m

l

m

i

i

%

3-

9 (

6-39)

Fi

A

w

m

l

m

i

i

%

3-

9 (4

-6

+)

3From http://www.efa.org.uk/pages/later-life-working-uk-.html

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2003 2004 2005 2006 2007 2008 2009

16-19

20-24

25-29

30-34

35-39

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2003 2004 2005 2006 2007 2008 2009

40-44

45-49

50-54

55-59

60+


13/19


Page 13 of 19

July 2011

Fi

A

w

m l

m

i

i

%

3-

9

A

C

3-

9

16-19 -14%

20-24 30%

25-29 32%30-34 -5%

35-39 -3%

40-44 21%

45-49 32%

50-54 15%

55-59 4%

60+ 61%

3.5 How the current construction workforce might age overnext 5-10 years

The data and chart below look at the 2009 workforce data (from the LF survey) as the baseyear. Each age group is then aged by five years (to 2014) and again (cumulatively) by tenyears (to 2019) to show the effect of the change over time on the age profil e of theworkforce. Clearly, this is an estimate only as it assumes no other environmental changestaking place.

Note that the 16-19 age group needs to be treated with extreme caution and is indicativeonly. It is based on the ONS Population Projections and takes the percentage change inthe age group between 2009 and 2014 and then 2019 and imposes this onto the constructionsector workforce as the 16-19 cohort in 2009 becomes the 20 -24 group by 2014 and the25-29 group by 2014.

The analysis confirms the projected decline in 40 -49 year olds overall and increase in 50 -59year olds.

Fi

E

im

im

im

il

i

4

9(

9)

-100

-50

0

50

100

16-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60+

change 2019

change 2014


14/19


Page 14 of 19

July 2011

Fi

3 E

im

im

im

il

i

4

9

(

9)

A

9

l

4

9

16-19 88,997 -6,230 -10,679

20-24 240,792 -151,795 -158,025

25-29 258,755 -17,963 -169,758

30-34 246,482 12,2 3 -5,689

35-39 303,

08 -5 ,226 -44,953

40-44 31

,161 -13,453 - 0,680

45-49 288,86 28,295 14,841

50-54 251,984 36,883 65,1 8

55-59 194,121 5 ,863 94, 46

60+ 201,091 -6,9 1 50,892


15/19


Page 15 of 19

July 2011

4 CONCLUSIONS ANDIMPLICATIONS FORTHE SECTOR

The construction sector already has a significant proportion of older workers and has variouswell documented labour and skills problems. The Centre for Research into the Older

Workforce (CROW) suggests that a greater or more flexible use of older workers could helpthe sector to remedy this. 4

Research by CROW also found variable attitudes to older workers in the sector:...construction firms are generallymore willingthanotheremployers to allowemployeestostayin workpastretirement age, whichmayhelpovercome labourshortages, but t hey areless likely to recruitstaffover 50, perhaps reflecting the time needed to train and becomecompetent fornewentrants.

In addition to this, the pool for available future workers among young people is declining dueto demographic trends, and also according to Construction Skills, because of workingconditions, hours and comparatively low levels of pay. A major issue arising from theanalysis is that the number of new entrants to the construction sector at 16 -19 has beendeclining over time and is projected to drop substantially further by 2021. The 20 -24 age

group is also projected to decline markedly in the same period.Also, the construction sector is likely to find in ten years time that there will be a dip in thenumber of 40-49 year olds, the age cohort which usually produces managers and seniormanagers.

The construction sector will have to consider its options in addressing these problems. Theyare compounded by a declining immigrant workforce and other environmental factors,including a slow return to growth, impacting on the construction sector. Moreover,Construction Skills is already highlighting a range of current and predicted skills gaps.

Naturally the sector will want to find ways to attract and retain young entrants but asconstruction and other industries compete to draw from this diminishing age group otherapproaches will be essential. In light of these findings and the analysis presented in detail inthis section, it may be necessary therefore for the construction sector to cons ider:

Bringing new entrants into the sector from older age groups and training them (e.g. 30 -39 year olds and even 40+ year olds) to help address skills shortages

Ways of encouraging older people to stay in the workforce longer. This is alreadyhappening as shown by the 61% increase in the 60+ age group between 2003 and2009. This is set to increase significantly by 2016 and again by 2021. It may benecessary to retrain older workers.

4Centre for Research into the Older Workforce for the DWP (2006). Managing an ageing workforcein

construction. Available at: http://research.dwp.gov.uk/asd/asd5/rports2005-2006/agepos1.pdf.


16/19


Page 16 of 19

July 2011

APPENDIXONE KEY SOURCES

The main sources drawn on for this paper included the following:

Department for Work and Pensions

Office for National Statistics

Confederation of British Industry

Construction Skills

Summit Skills

Chartered Institute of Building

Constructing for Better Health

Constructing Excellence

Construction Industry Council

Chartered Institute of Personnel and Development


17/19


Page 1

of 19

July 2011

APPENDIX TWODEMOGRAPHIC ANALYSIS DATA TABLES

This appendix provides the data tables on which the charts in Section 3 are based.

Tabl

Total opulationtrend

orall agesbetween

and

All ages in each

year 2011 2012 2013 2014 2015 2016 201

2018 2019 2020 2021TOTALS (personsthousands 62,649 63,0

4 63,498 63,921 64,344 64,

3 65,208 65,645 66,084 66,522 66,958

Source: Population Projections by the Office for National Statistics

Table

Populationprojectionsof5-69

earolds

-

(millions)

Year

Age bands 2011 2016 2021

15-19 3,832 3,5

1 3,585

20-24 4,359 4,182 3,91825-29 4,399 4,

38 4,554

30-34 3,986 4,519 4,852

35-39 4,0

0 4,018 4,546

40-44 4,589 4,064 4,010

45-49 4,61

4,538 4,018

50-54 4,088 4,556 4,482

55-59 3,583 3,985 4,451

60-64 3,

46 3,442 3,840

65-69 3,038 3,533 3,260

Table 3 Percentagechange inpopulationprojectionsof agebands5 through to 69

-

(millions)

Years

Ages 2011 2016 2021

15-19 3,832 3,5

1 3,585

Change - year on year (62) 69

% change -2% 2%

(262) (24

)

% change after 5 and 10 years from2011

-

% -6%

20-24 4,359 4,182 3,918

Change - year on year ( 3) (61)

% change -1.

2% -1.54%

(1

6) (441)


-4.05% -10.12%

25-29 4,399 4,

38 4,554

Change - year on year 33 (

3)

% change 1% -2%


18/19


Page 18 of 19

July 2011

Years

Ages 2011 2016 2021

339 155


8% 4%

30-34 3,986 4,519 4,852

Change - year on year 98 33

% change 2% 1%

533 866


13% 22%

35-39 4,0

0 4,018 4,546


% change 2% 2%

(52) 4

6


-1% 12%

40-44 4,589 4,064 4,010

Change - year on year (138) 91

% change -3% 2%

(526) (5

9)


-11% -13%

45-49 4,61

4,538 4,018

Change - year on year (42) (136)

% change -1% -3%

(9) (599)

% change after 5 and 10 years from

2011

-2% -13%

50-54 4,088 4,556 4,482

Change - year on year 61 (41)

% change 1% -1%

469 395

Change after 5 and 10 years from2011

11% 10%

55-59 3,583 3,985 4,451


% change 3% 1%

402 868


201111% 24%

60-64 3,

46 3,442 3,840


% change 1% 3%

(304) 93


2011-8% 2%

65-69 3,038 3,533 3,260


19/19


f

Years

Ages 2011 2016 2021


% change 0% 1%

495 222


201114%

%

0-

4 2,463 2,810 3,291


% change 4% 0%

34

828


14% 34%

Table 4 FourQuarterA

erage

-

9

abourForcedatafortheconstructionsector

Fourquarteraverage, Summer

to Spring

9 inclusiveConstruction Industry (SIC 45)

Age band UK Change totals%

change%

change

All manual & non-manualoccupations

9

6

6

6

16-19 88,99

-6,0

6 -5,

31 82,921 83,26

-

% -6%

20-24 240,

92 -9,

50 -24,3

231,043 216,415 -4% -10%

25-29 258,

55 19,950 9,129 2

8,

05 26

,884 8% 4%

30-34 246,482 32,941 53,550 2

9,422 300,031 13% 22%

35-39 303,

08

,02

6,662 310,

34 310,3

0 2% 2%

40-44 31

,161 -36,344 -40,023 280,81

2

,138 -11% -13%

45-49 288,86

-4,928 -3

,488 283,939 251,3

9 -2% -13%50-54 251,984 28,894 24,32

280,8

2

6,310 11% 10%

55-59 194,121 21,

84 4

,011 215,905 241,132 11% 24%

60+ 201,091 13,413 29,112 214,504 230,204

% 14%

Total

,39,95

66,9

6

,

3

,45,

6

,454,3

3% 3%

Documents

EWL Demographic Challenge in Construction Report