Last Updated on July 3, 2024
If you find it challenging to hire skilled workers and fill vacancies on your construction jobs or service sites, you’re not alone. The construction industry is facing a labor shortage and is projected to hire an additional 342,000 new workers on top of the typical hiring in 2024 to meet labor demands, as per the Associated Builders and Contractors. This is also presuming that construction spending will slow down significantly next year. On top of that, we’re not just facing a worker deficit; it’s also a skills gap, with one in four workers over 55 nearing retirement.
For construction businesses, the impact of this labor shortage is far-reaching, leading to project delays, increased labor costs, and substantial pressure on profitability and cash flow. The question becomes – in an industry where labor shortage is so prevalent, how do you ensure project success if there’s no one to work with? In this article, we will delve deeper into the specific reasons behind this labor shortage and explore practical strategies to navigate and mitigate its impacts on the construction industry.
Background: Construction Labor Shortage
The construction labor shortage has been a problem for over a decade, particularly since the global financial crisis of 2008. The COVID-19 pandemic further intensified the labor crisis in the industry as projects froze and trained professionals moved out to other jobs. In the 2020 CONSTRUCTION OUTLOOK SURVEY, 72% of construction firms anticipated labor shortages to be the biggest hurdle for them. And just as expected, the skilled labor shortage is still not getting any better, despite rising interest rates.
The pandemic and subsequent economic uncertainties have exacerbated the shortage across all kinds of construction jobs, including project managers, general laborers, and skilled workers like electricians, welders, and carpenters. Addressing this issue requires a multifaceted approach, encompassing strategic planning, enhanced recruitment efforts, and a focus on training and retaining talent.
Reasons Why the Labor Shortage Exists in the Construction Industry
- Retiring workforce: A significant portion of the construction workforce is ageing. With 40% of workers aged between 45 and 64, the industry faces a wave of retirements, leading to a substantial skill gap.
- Lack of interest from the next generation of eligible workers: While trade jobs are relatively well-paid, younger generations such as millennials and Gen Z show less interest in traditional construction roles. This trend is influenced by a preference for less physically demanding jobs and careers perceived as offering better work-life balance and technological engagement.
- The post-pandemic factor: While the pandemic is over, it caused many workers to seek alternative work due to a lack of financial stability and fear of infection.
- Economic cycles and instability: The construction industry is known for its economic cyclicality, with periods of boom followed by slowdowns. This unpredictability can be off-putting for individuals looking for stable, long-term employment. Economic uncertainty, exacerbated by global events like the 2008 financial crisis and the COVID-19 pandemic, can lead to project delays or cancellations, affecting job security and the attractiveness of the industry to potential workers.
- Lack of diversity: The construction industry historically has not fully leveraged the potential of diverse talent pools. This includes underrepresenting certain demographics, such as women, minorities, and younger generations. Broadening recruitment, eliminating disparities, and widening recruitment networks could solve the construction skills shortage.
Why It’s Important to Act and Tackle the Skills Shortage
While the overall result of a construction labor shortage is a loss in productivity and profitability, reviewing the specific impact areas will help us identify when the shortage is affecting us directly. You may notice:
- An overstretched skilled workforce
- Risks of burnout and quality of work
- Project delays
- Increased costs
- Inability to scale your construction business
The construction labor shortage is bad not just for the business itself, but for the people at work. Worker safety is a top concern since statistics show that 34.9% of new workers suffer injuries during their first year on the job.
1. Rethink your Tech
With a younger, tech-savvy workforce coming to play (and work!) contractor businesses should rethink the technical aspect of their employees’ work. Younger generations are born into technology and consequently are skilled at adapting to it. If you’re still using the proverbial pen and paper to track your jobs and services, it will be hard to keep workers engaged. By using construction technology solutions like construction management software, you will be moving with change, and be able to better manage your workforce. This strategy not only boosts productivity but also reduces the need for manual work with automated processes, making businesses more efficient.
2. Improve Workforce Retention Rates
On average, the turnover rate in the construction industry is reaching about 64% in employees who are younger than 24. Fortunately, there are ways to improve worker retention rates. Tactics such as effective training, increased communication, and better camaraderie help to retain skilled workers for longer. Companies with a people-focused culture can retain workers a lot more easily while earning a reputation as a great place to work.
3. Use your own time more efficiently
When you spend hours manually processing invoices or tracking payments, you are doing double work. This could be spent more productively when you have the right tool for the job. By automating time-consuming and tedious tasks with integrated construction management software, you can free up valuable time which you can spend on other tasks or strategizing and improving processes and operations.
4. Adding a trainee or apprenticeship program
Apprentices start as entry-level employees who work full-time and receive training along with certain benefits. Once you register and meet certain requirements, you can promote your program through social media, professional networks, and online listings – all adding visibility to your business and its labor skills needs. While there are many regulations to keep in mind, there may be time-saving advantages if you’re an individual employer – and sizable bonuses, too.
5. Adjust your business plans
If you continue to operate without an ideal number of skilled workers, some actions you may wish to consider are:
- Taking fewer projects
- Finding a niche / Specializing in smaller projects
- Narrowing the geographic area where you take jobs
While there’s no single recipe for running a construction business short-staffed, you can adapt to the constraints by being specialized and agile. You may find your way to success by limiting the projects you take on while adopting new, operationally efficient practices.
No matter how many people are in your team right now, you can always identify exceptional people inside your own company and offer them the right development opportunities. Start by indexing the key skills of your current employees, identify those who are ready to take on the next challenge or alternative career path, and give them the proper training to be successful. This will help you future-proof your workforce and ensure the succession of key workers as they retire or move on to new roles.
7. Exploring new talent pools
When the water runs out in our well, what do we do? We find another one, we dig down deeper, or we create new sources of water. If cost and time are no issue, we would suggest creating new sources by taking part in school programs, and raising awareness so that younger generations get involved.
Unfortunately, for those that don’t have the time and resources, and who need skilled labor now, deciding to spend your time on creating new sources is unrealistic.
For those businesses, we’ve put together a list of talent pools for you to explore. In addition to traditional resources such as JOB BANK, MONSTER, WORKOPOLIS, and INDEED, the following sites may be helpful:
Canada
- CANADIAN CONSTRUCTION JOBS (CCJ)
- CONSTRUCTION JOBS
- HARBINGER NETWORK
- TORONTO CONSTRUCTION ASSOCIATION (TCA) JOB POSTINGS
- WOWJOBS
- ENGINEER JOBS
- CONSTRUCTION CANADA JOB BOARD
How Jonas Construction Software Can Help You Conquer the Labour Shortage
If a low workforce results in your projects and services running behind schedule and over budget, it becomes challenging to compete with other companies. Especially if they are using other operational strategies like advanced construction software to help them automate processes, streamline workflows, and get timely cost reports which can help them mitigate risk, and maximize profits.
Skilled workers, especially those with difficult-to-find skills can quickly find another company, possibly your competitor if you are not providing an efficient, productive work environment. Employees are not just looking for a paycheck; they want more personalized solutions and assistance from technology to work collaboratively and more productively, so they can focus their efforts on providing better quality work, according to the latest research.
With Jonas’ automated and integrated construction management software, you can create an environment where it feels productive to work in”
- Strategically manage your workforce and make informed decisions on resource allocation and scheduling.
- Ensure timely and accurate cost reporting and payroll management with integrated construction accounting software and payroll.
- Increase field efficiency by integrating job costing, payroll, equipment management, work orders, document management, general ledger, and more on one platform.
- Offer mobile capabilities to empower technicians to complete work orders on-site and save travel time to the office.
- Improve back-office efficiency with automated workflows and real-time data integration between the field and back-office.
Connect with us today to discover how we can help you navigate the labor shortage and maximize your current team’s productivity to help protect your profits.
