February 13, 2019
Construction is one of the most economically significant industries in Australia, employing almost 1.2 million Australians and contributing over 7% to the national GDP. Due to the sheer scale of the construction industry and its impact on the wellbeing of the country’s economy, many groups have a vested interested in what this year will bring. Experts have provided a wide spectrum of insights, predictions and forecasts regarding Australia’s construction industry and infrastructure projects, so we have narrowed these down to a few key points.
Declining Residential Construction
Towards the end of 2018, residential construction began to show signs of decline, with its Performance of Construction Index (PCI) dropping by 2.5 points to 49.3, indicating shrinkage in the industry. In 2019, the slow down of the construction industry’s residential sector is only predicted to continue. This is backed by economists at National Australia Bank (NAB) who expect residential investment to fall by 18% over this year and the next. Some factors that have contributed to the persisting decline of residential construction, include:
- The completion of many medium to high density residential projects
- Decreasing building approvals
- Waning investor demand
- A general oversupply in the market
- Stricter home loan lending standards
The decreased activity in residential construction will have a significant impact on those working in this sector. Demand for residential construction jobs will weaken, forcing workers to transfer their skills into more fruitful areas, such as road and rail construction projects. However, not every worker will be able to successfully make the transition. NAB predicts that up to 150,000 jobs in housing construction will hang in the balance due to the downturn.
Increasing Infrastructure Construction
2018 saw a major boom in infrastructure development, which led to a significant increase in construction jobs all over Australia and helped offset the slowed growth of the residential sector. Infrastructure construction is expected to continue to rise with various new infrastructure projects initiating and current projects progressing to the next stages of development. Some of infrastructure projects beginning or continuing in 2019, include:
- M4 Upgrade
- Western Sydney Airport
- Murray Basin Rail Project
- Metronet: Thornlie-Cockburn Link
- Forrestfield Airport Link
- Buntie Highway Upgrades
- Cross River Rail
- Bruce Highway Upgrades
- M1 Highway Upgrades
The stable growth in infrastructure construction will be welcome news for construction workers, with total employment in the industry expected to increase by 4.4% over the next few months, mostly thanks to this area. The Federal Government’s $75 billion commitment to infrastructure investment, over the next decade, will mean that this sector of the construction industry will continue to be a strong source of growth and employment in the foreseeable future.
Greater Emphasis On Employing Australian Companies For Infrastructure Projects
There has been a growing movement for Australian companies to be given a fighting chance when bidding for top infrastructure projects. One of the main bodies pushing for this, is newly formed lobby group, Australian Owned Contractors (AOC). Comprised of nine mid-tier Australian contractors including the BMD Group, Decmil and Maca Civil, the AOC are putting pressure on both sides of the government to require involvement from local companies for contracts worth $500 million or over. This movement has arisen from increasing concerns that many of Australia’s large-scale infrastructure projects are being handed out to foreign-owned construction companies. 2019 will most likely see construction lobby groups ramping up their efforts in petitioning the government to prioritise local contractors, and prevent them from being muscled out of the running by mammoth international entities.
If successful, greater involvement of mid-tier Australian construction companies and contractors will help to grow the domestic market, stimulate competition, and enable the development of world-class skills. Anthony Albanese, the Opposition Infrastructure spokesperson stated last year, that if elected, the Labor government will include conditions in federal infrastructure grants requiring international construction companies to work alongside smaller Australian contractors. In light of the many major infrastructure projects lined up this year, it is vital that the government acts sooner rather than later, to ensure that domestic construction contractors are also able to benefit from this boom.
The Construction Industry’s Ageing Workforce
The construction industry is rapidly ageing, with the number of construction workers aged 55 or over growing from 8% to 14.2%, over the last twenty years. It is expected that in 2019, the skills gap that an ageing worker population creates, will become even more apparent with older construction workers retiring in larger volumes and an insufficient amount of younger construction workers available to take their place. This has meant that construction companies are experiencing great difficulties in finding workers who possess the specialised skills that are required to help complete the projects. Many roles across the construction industry have skyrocketed in demand, due to the lack of appropriately skilled and qualified candidates. Some of the most in demand construction workers, include:
The challenges that construction companies face when finding these in demand specialised workers, has led to the increasing use of labour hire companies in the industry. Labour hire companies have become a popular staffing solution for many construction companies, as they are able to outsource the often costly and lengthy hiring processes, and quickly receive pre-vetted workers that match the job brief. This allows the construction/infrastructure project to move along with minimal delays associated with the widening skills gap. Spurred by construction’s ageing workforce, 2019 will most likely see more widespread use of labour hire agencies on construction and infrastructure projects, such as road and rail.
Workfast Labour Hire specialises in construction and infrastructure projects. Our expert team works closely with our construction clients to ensure that they are matched with the best candidates for the role. So, if you’re looking for a labour hire company to provide you with high quality construction and infrastructure workers with the right industry experience, look no further than Workfast Labour Hire. Call 1300 824 403 or submit a Labour Hire Staff Request form.