People working in the construction industry should brace for more job losses, a new survey shows.

The Hays Construction and NZIOB Salary Guide 2020 asked about the effect of Covid-19 on the hiring intentions of businesses, with just over a quarter of respondents (26 percent) saying they expect permanent staff numbers to decrease in the coming year.

However, 28 percent expect numbers to increase, 30 percent say no change and 5 percent have a recruitment freeze. The survey shows more than one-third (38 percent) have reduced staff numbers because of the pandemic, though just over half (57 percent) said that there had been no change. Only 5 percent said they had increased staff.

The annual survey was taken in June this year of members of the New Zealand Institute of Building (NZIOB). Half of the members are builders and the other half are architects, engineers, consultants, quantity surveyors, and project managers. The survey results show a sector much less optimistic about the future of their businesses than last year. Earlier this year industry association Infrastructure New Zealand warned nearly a third of construction jobs were at risk in the next six months due to lockdowns.

In May Westpac warned that 20,000 job losses in the construction-related sector, employing about 250,000, were possible. The survey shows far fewer construction industry professionals will receive salary increases this year than last and the salary increases will be more modest. More than a third of survey respondents (37 percent) said there would be no salary increases compared with 6 percent in the 2019 survey. The survey shows employers becoming more conservative with salary increases. About a quarter intend to increase pay by up to 3 percent compared to 40 percent intending to increase pay last year by that amount. Over the past 12 months, 38 percent of respondents said their business activity had increased compared to 65 percent saying that last year. More than half (56 percent) expect the economic outlook to weaken compared to 23 percent last year. Just over half said skill shortages would have a minor effect on their business while just over a quarter said they would have a significant impact.

Most firms expected to have an increase in Government work and a decrease in private client work. Just over half thought, the construction sector would be in a better position post-COVID than other sectors. Getting senior and skilled staff was still tough. Nearly 70 percent of employers said it was 'very difficult' or 'hard' to recruit senior managers, Adam Shapley, managing director of Hays New Zealand said. That was followed closely by project managers and construction managers (both 66 percent), estimators (56 percent), quantity surveyors (55 percent), site managers (52 percent), and project engineers (50 percent).

NZIOB chief executive Malcolm Fleming said the difference between now and the Global Financial Crisis (GFC) which caused the last recession was that companies, the banks, and the Government had stronger balance sheets to cope with this recession. Fewer staff had lost their jobs than during the GFC. The survey was less gloomy than they had expected. The survey had shown more senior roles in the construction industry had borne the brunt of salary reductions, while entry-level roles in many cases had either stayed stable or increased, in some instances significantly. This trend was particularly pronounced in the regions. Fleming said salaries for some senior management roles fell between 7 percent and 25 percent from last year such as general managers, commercial managers, and senior estimators. Salaries for commercial managers outside of Auckland fell less, 5 percent to 10 percent. The survey shows salaries for general managers range from $160,000 to $250,000, for commercial managers from $100,000 to $180,000 and for senior estimators $100,000 to $160,000, depending on the size and location of the construction project. At entry level, the salaries for cadets, juniors and leading hands were stable or had risen. In some regions, cadets' salaries had risen about 10 percent and leading hands between 7 percent and 33 percent while foreperson roles rose between 7 percent and 26 percent. That was noticeable in Tasman, the East Coast, Bay of Plenty, Northland and Southland, Fleming said.

The survey shows cadets and juniors starting at $45,000 to $55,000. Fleming said the survey was taken when the country was coming out of lockdowns. In some quarters senior managers had been taking cuts for their companies and organizations. That might be the explanation for the salary falls. "Companies are signaling that they value communication skills above all else from their people, with high demand also for employees with demonstrable leadership skills," he said. At the top of an employee's checklist was job security, meaning that those companies that could point to a good pipeline of work would find themselves being very competitively placed to attract talent.

So what's next? To avoid associated risk and exposure to moisture, environmental hazard, and dirt, more house providers might choose to move the jobs offsite and into the factories. Prefabrication, the practice of assembling a variety of components of a structure at the manufacturing site and transporting those sub-assemblies to the construction job site, might be the way out. With prefabrication comes not only a more controlled manufacturing environment, uniform quality, and more streamlined process, but also a solution to the lack of hands.

Source: Stuff