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Impact of Major Capital Projects on Employment in Construction 1998-2010

Published: August 2001

Birmingham has experienced a boom in commercial property construction in recent years, with further projects under construction and a development pipeline stretching as far as 2010. The purpose of this report is to estimate the impact of these projects on construction employment and the future demand for construction related occupations.

Impact of the major projects

The first step was to calculate the impact of the major development projects. These can be summarised as:

• We estimate that 440 FTE jobs were created in constructing 21 major projects worth £331.75 million, during the property boom 1998 to 2000;
• Our analysis shows that an additional 2,720 FTE jobs will be created in constructing 42 major projects worth £2.2billion, which are currently under construction in the period 1998 to 2005;
• In addition there are 33 major projects worth £2.6 billion, which are in the planning stage. These projects, if realised, will generate in the order of 3,550 FTE jobs.

Construction Industry Employment Forecasts

These estimated impacts were then used to prepare a set of customised forecasts for employment in the construction sector. The key results can be summarised as:

• The Base forecast is for employment in the construction sector to fall by 11.3% between 1998 and 2010;
• In Scenario 1, we include the impact of all those projects that are completed and under construction. This shows a fall in employment to 2010 of 0.6% – a considerable improvement compared to the base forecast;
• In Scenario 2, where we include all projects currently at the planning stage, the forecast is for an increase in employment of 12.2% to 2010.

Managerial and Professional Occupations in Construction

Managerial and Professional Occupations includes four occupational sub-groups: Managers, Technicians, Professionals and Clerical staff. These occupations accounted for around 22% of construction employment in 1998 and we slowly expect this to increase to around one quarter by 2010. Our forecasts for this group can be summarised as:

• Base scenario: the forecast is for a fall in employment of 2.6% between 1998 and 2010;
• Scenario 1: the forecast is for an increase in employment of 9.1% during the forecast period;
• Scenario 2: the forecast is for an increase in employment of nearly a quarter, 23.2% between 1998 and 2010.

Craft and Manual Occupations in Construction

Craft and Manual occupations include seventeen occupational sub-groups: Carpenters and Joiners, Bricklayers, Painters and Decorators, Plasterers, Roofers, Floorers, Glaziers, Other Specialist Building Operatives, Scaffolders, Plant Operatives, Plant Mechanics/Fitters, Steel Erectors/Structural, Other Civil Engineering Operatives, General Operatives, Maintenance Workers, Electricians and Plumbers. We expect the share of employment accounted for by these occupations to fall slowly during the course of the next decade. Our forecast for these groups can be summarised as:

• Base scenario: the forecast is for a fall in employment of 13.8% between 1998 and 2010;
• Scenario 1: the forecast is for a fall in employment of 3.4% during the forecast period. Employment growth is expected in seven occupational sub-groups;
• Scenario 2: the forecast is for an increase in employment of 9.0% between 1998 and 2010. Employment is expected to fall in just one occupational sub-group and increase in eleven.

Implications

Even in the absence of any development investment, as in the base scenario, there would still need to be recruitment in the industry so that those who retire or leave the industry can be replaced. This is known as replacement demand. The forecasts under Scenarios 1 and 2 show that we expect a higher level of demand than this in Birmingham.

It is essential that in order that demand in Birmingham can be satisfied, and be satisfied with local workers, steps need to be taken to ensure that there is a sufficient supply of suitably skilled workers. Establishing whether such a supply will be available is an area where further research is needed.