Here’s why the construction sector needs more workers

Tuesday, 5 March 2024

More skilled construction workers are needed to meet the demands of the sector’s current and future pipeline.

Excessive focus on the construction sector downturn could lead to a damaging “tools down” on training new apprentices at a time more skilled workers are needed.

Building & Construction Industry Training Organisation (BCITO) acting director Greg Durkin said more, not less, skilled workers were required to meet the needs of the sector’s current and future pipeline.

Construction activity has slowed over the last 18 months, but it had declined from the “phenomenally high” level of activity seen in the Covid-era boom period, and there was still a strong pipeline, he said.

“At the peak of the boom there was a record high of 51,015 new home consents in the year to May 2022, but that was unprecedented, and beyond the industry’s capacity.

“Prior to that the all time high for consents was 40,025 in the February 1974 year, and in the 2002 to 2008 boom, the annual high got up to about 39,000 consents.”

The most recent Stats NZ data, showed there were 36,453 new homes consented in the year ended January 2024, down 26% on the year ended January 2023.

In contrast, at the industry trough following the global financial crisis (GFC), there were about 13,500 consents over a 12 month period, he said.

A “tools down” approach to training in the GFC led to the industry’s skill shortage, the BCITO’s Greg Durkin says.

“Yes, there’s a downturn, but it is a slowing of the market and nowhere near a recession. There is still a massive amount of work to be done, and that requires a significant amount of people to do it.

“It’s essential we have enough workers coming through to meet the demand, and that includes upskilling the ones we have.”

Durkin was concerned that an overly negative picture was being painted about the pipeline, and it could lead to a damaging “tools down” approach to training new apprentices.

“That approach in the wake of the GFC left us with our current skills shortage, and slowed down infrastructure for years.

“During the GFC, the companies that weathered the lows better were actually the ones that had trained apprentices, invested in staff, and had a highly skilled workforce.”

That was because when it came time to adjust to the changed environment and pivot, from commercial to renovation work for example, they could do so more easily because they had the skill base to do so, he said.

“This will be true today too, as where the work is, and the type of work going on, is shifting around. There is more demand for townhouses than standalone houses, for example.

The Apprenticeship Boost scheme has played a big part in increasing apprentice numbers.

“We are also seeing a bit of an uptick in residential sales, and that is a significant trigger for renovation work because people renovate to sell, as well as after they have bought.”

Durkin said non-residential buildings from both the private sector and central and local government were projected to deliver work which exceeded the current skilled labour capacity.

“The key takeaway is that if the sector is to deliver on what is required, we need to keep training.”

Record numbers of apprentices were being trained, with 17,199 people currently doing apprenticeships, and another 4130 completing their training last year through BCITO alone, he said.

The Apprenticeship Boost scheme, which was implemented by the previous government, has played a big part in increasing apprentice numbers, but the scheme is due to end late this year.

Building Industry Federation chief executive Julien Leys said he wanted to see the scheme continue, but the new government had not yet confirmed whether it would.

It would be disappointing if the scheme was done away with as the sector always needed skilled workers, and demand for housing was only increasing with the record levels of migration, he said.

More detail and clarity on the future of apprenticeships is needed, experts say.

“Hence we need to have people coming through, and we need to have more diversity, and especially more women getting into the industry.”

But the sector was largely made up of small businesses, not ones on the scale of Fletchers or Dominion, and they might employ three to five people, and build half a dozen houses a year, he said.

“They are the ones that need to bring on apprentices, and need the support to do that, and that is where the scheme has been very helpful, and had a positive impact on numbers.”

Certified Builders chief executive Malcolm Fleming said there was a lack of detail on the future of apprenticeships post the government’s disestablishment of Te Pūkenga, and that had created uncertainty.

When combined with the current decline in consumer demand for building that had the potential to be a deterrent to those considering entering onto a building industry apprenticeship, he said.

“For trade-qualified builders a commitment to training the next generation of carpenters via the traditional apprenticeship model is considered close to sacrosanct.”

He would like to see the new government consult with the industry to create a future work-based learning model that blended the best of the pre- and post- review of vocational education structures, he said.

“That would create the certainty that is missing currently.

“It is critical to achieve industry buy-in and to provide quality training for the next generation of tradespeople entering the industry, and to build the skills that New Zealand needs.”