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‘Acute’ skills shortage in construction sector now main concern

Skills shortages have leapfrogged access to finance as the major concern of construction sector surveyors, according to a major new report.

Just over eight in 10 surveyors in Ireland say the building sector is now experiencing a skills shortage, an increase of 7 percentage points in the last six months, according to the joint report from the Society of Chartered Surveyors Ireland (SCSI) and professional services firm PwC.

While quantity surveyors and commercial managers are in very short supply, Kevin James, chairman of the Quantity Surveying Group within the SCSI says that the lack of availability of skilled trades such as plasterers, carpenters, electricians, bricklayers and plumbing is posing an “acute challenge” for the sector.

“SCSI members are experiencing the effects of the skills shortage first-hand,” Mr James said.

“One member reported that block-laying costs have increased by 25pc in the past six months. Another believes a lot of skilled trades are hesitant in moving across to residential from commercial contributing to the shortfall.”

In addition, while 70pc of surveyors expect headcount to rise in the year ahead, the independent professional body warned that it remains to be seen where the additional labour will come from.

The organisation also warned on high accommodation costs in Ireland, which it says are a “significant deterrent” to overseas hires.

The SCSI concerns are backed up by a recent report carried out by Central Bank economists Thomas Conefrey and Tara McIndoe-Calder, which found that the construction sector has regained fewer than a third of the jobs lost during the financial and construction crisis that engulfed the country between 2007 and 2012.

As at the end of the second quarter of 2017, the number of people at work in the sector was 110,000 – or 46pc lower than in 2007, according to the report.

The other major challenge to the sector cited by the report from the SCSI and PwC concerns planning and regulation, with 77pc of SCSI members reporting having experienced problems with planning and regulations during the last six months.

Joanne Kelly, real estate leader at PwC said that while changes such as the fast-track planning process for large-scale developments, and the release of new regulation in respect of apartment design and planning have been introduced in an attempt to tackle planning delays and the cost of construction. “It is too early to determine whether these Government initiatives are having a positive impact on the industry.”

In a sign that the economy is again booming in certain parts of the country, the number of surveyors citing finance as a problem has fallen by 13pc in the past six months, the report found.

However with 55pc of surveyors still raising finance as an issue, it remains an overall problem for the sector.

Meanwhile, more than half of surveyors said that they experienced increased activity in the last six months – an increase of 10pc on the previous six months, according to the report.

And the recovery has not been confined to Dublin, with 11pc more surveyors outside of the capital saying that they have experienced an increase in activity in the past six months.

“This is very heartening as it shows the recovery in the construction sector is gaining pace around the country,” said Mr James. The report suggests a positive outlook for the year ahead for the Irish construction sector, with nine in 10 surveyors saying that they expect activity to increase.

Meanwhile almost two-thirds of surveyors expect to see their profits increase.

“For an open economy that relies heavily on FDI and exports, it is critical that we have the housing and infrastructure to support it,” said Ms Kelly.

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