Construction Industry (2021) Outlook
2020 was a year unlike any other and it certainly had a big effect on the UK’s construction industry. We look back at the sector’s recent output and share developments in 2021.
Construction Output: Volume Seasonally Adjusted By Sector 2020-2021 (ONS)
Whilst government restrictions changed the way people worked together on-site in 2020, construction work continued during the national lockdowns.
Monthly construction output increased by 1.0% in October 2020 compared with September 2020, rising to £13,066 million. October 2020 brought the sixth consecutive month of industry growth, however data suggests that the overall output that month remained 6.4% (£898 million) below the February 2020 level, before the full impact of the coronavirus pandemic. Of the three types of construction, only infrastructure had recovered above the pre-lockdown level of output.
Total construction output grew by 24.9% in the three months to October 2020 compared with the previous three-month period, due to increases in most areas, driven particularly by an increase in new work and repairs and maintenance across buildings, infrastructure and industrial construction.
Construction employment figures
Whilst the Coronavirus Job Retention Scheme enabled employers to retain staff that may otherwise have been lost, the number of people employed in the construction sector fell by 83,000 (3.7%) from the start of April to the end of June 2020.
In August 2020, industry employment figures indicated that the sector employed a total of 2.24m people.
What are the 3 types of construction?
There are three main types of construction: buildings, infrastructure and industrial.
Buildings are usually divided into residential and non-residential construction projects and involve the development of new buildings for personal and private use.
Infrastructure relates to large, heavy engineering works in the built environment, such as the creation and maintenance of bridges, roads, water and utility distribution.
Industrial covers mining and quarrying, offshore construction, power generation, refineries and chemical plants, plus the development of manufacturing facilities.
Major challenges facing the industry
Coronavirus continues to pose a major challenge to the construction industry and its effects will be felt into 2021 and beyond.
Anecdotal evidence from employers suggests that, whilst there has been a continued return to work across the sector since September 2020, due to social distancing measures and national restrictions work still hasn’t returned to pre-COVID-19 levels.
Surveys show that construction employers had a lower proportion of their workforce on furlough than most other industries in 2020. BICS Wave 14 data shows that construction industry respondents had 71.6% of their workforce at their normal place of work, compared with the 55.8% average for all industries.
Compared with other industries, there’s likely to be a lower proportion of the workforce in the construction industry who are able to work remotely or away from their normal place of work.
As Britain diverges from the EU, the construction industry has been forced to confront the effects on sector-wide skills shortages, import and exports of materials, and changes to investments, regulations and standards.
As an industry which relies heavily on migrant labour, changes to the right to free movement are likely to exacerbate the skills shortage, increasing project costs and having knock-on effects to the industry’s capability to meet government building targets.
According to some studies, construction is responsible for up to 50% of climate change, as one of the largest users of global resources and contributors to pollution.
However, the industry is striving to make positive changes, introducing more sustainable ways of working to preserve the environment and minimise negative effects.