This year so far: Construction pay trends of 2015

Guest Blog: Hudson Contract’s Ian Anfield discusses the construction pay trends of this year so far.

The start of 2015 displayed the highest indicator of optimism for the construction sector since February 2006. However, with supply chain pressures, skills shortages, economic conditions remaining tough, and the insecurity of the General Election, this past year has seen an undercurrent of uncertainty rippling through the industry.

By reviewing sub-contractor’s earnings from the past 10 months, we can discover how these factors affected the construction industry across the UK.

In early January, construction output remained 3.7% percent up on the previous 12 months, and the Midlands led the way, with average regional earnings up by over 6% over the previous three months. However, the North-East only reported an increase of 1.37%, and there was a preparation across the industry for a slowdown of growth from January, at least until the election was over and the uncertainty of who was to be in power was resolved.

Despite the short days and poor weather, February saw the sharpest expansion of construction activity since October 2014, and apart from the North-East, the pay rates on average held over the three month period.

Moving on to March, and with the most uncertain general election in decades still looming, the insecurities were having an effect on the construction industry’s spending. It seems that plans were placed on temporary hold, although all five regions showed significant growth of 7% to 8% over the past twelve months.

The April showers also brought a levelling of earnings, with the North-West leading the way with a 3% earnings increase, whilst the South-East showed a small reduction of 1.5%. April’s reduction in output was also put down to uncertainties in the run-up to the election, and the continued temporary hold on spending.

Breaking through to May, and the levelling of earnings had taken a downturn, with pay rates down in four out of five regions this month. Paired with Easter, the two bank holidays and resulting short weeks, plus school holidays, appear to have had a consequential impact on earnings. Although, given the election’s result in May, output was considered to pick up again following a mood of growing optimism. Amid all the post-election talk of creating a ‘Northern Powerhouse’, earnings rose in both the North-West and the North-East, whilst being down everywhere else.

With the start of the summer months in June, many firms whose projects and spending went on hold in the run-up to the election went ahead. We saw that annual earnings for freelance builders – compared to June last year – increased in all five regions; with those in the North-East and the South-East – with rises of 10% and 9% respectively – doing best.

There was a big development in July’s pay stats; for the first time in 2015 freelance builders in the North-East saw their average weekly earnings increase by an inflation-busting 5.6%, crossing the £700 threshold. This earnings leap was mirrored slightly in the North-West, with a 3.2% increase. And the good news continued in the Midlands and the South-East, where the average increase was over 2%. But in the South-West rates fell by 1.8%, with the average labour-only subbie earning £670 – making them the lowest earners across the UK.

August also brought a significant increase in earnings.  In the South-East, North-East and the Midlands, the rise was 6%, and slightly less in the North-West, with the South-West 3% better off. Average weekly earnings in the South-East were over £750. Elsewhere, all were on at least £650. 

Earnings were unquestionably buoyant in September, with across-the-board increases for the second month running. The Midlands led the way with a 6% increase on the three months previous. In the North-West and South-East, the increase was 4%, while the South-West showed a more modest rise of just over 1%.

The start of the winter brings us to the end of our month-on-month summary, with October, and earnings saw a considerable dip. Four of the five regions were down on the past three months, with only the North-East showing the smallest of increases at 0.11%. The South-East were this month’s top earners, on roughly £750 a week, which leaves them £110 better off than their counterparts in the South-West, taking the biggest hit with freelance builders earning on average £30 less a week. However, confidence in the construction industry remains high and is actually rising. So whether this is a temporary setback, or the start of an earnings plateau, is something that will become clear over the next few months.

Overall, strong optimism and an increase in work available has been a boost to everyone in construction this year. Apart from the slowdown while the election campaign was in force, the picture has been improving.

Average earnings have increased by nearly 5% so far in 2015. The North-East has seen the biggest increases, with earnings up by over 11%. The North-West and South-East follow, both with increases of over 6%, but the Midlands is trailing with an only 3% increase. The South-West has been struggling, with a 1.3% decrease in average earnings across the year. The South-East has seen the highest average weekly earnings, followed by the Midlands, North-East, North-West, with the South-West offering the least.

The lowest paying months across all the roles surveyed were January and April, scoring regional lows of under £645, whereas the highest paying month was June, with the highest pay averaging £769.96, which shows the shift in attitudes leading up to and immediately after the General Election.

Nationally, on a trade by trade basis, shopfitters and electricians and joiners earned the most, whereas scaffolders and bricklayers received the least. Across the board, average weekly earnings in 2015 have been £707, up 5% (£34 a week), which is well in excess of inflation.

We’ve been waiting a long time for better times in construction, and it’s very satisfying to hear how the construction industry’s ‘confidence level’ has surged to a ten-year high – with increased workloads in both the public and private sectors – and there is strong positivity for the rest of the year ahead.