Labour Market Research - Construction Trades

Australia2017

Labour Market Research and Analysis Branch

Department of EmploymentPage 1

Code / Occupation / 2008 / 2009 / 2010 / 2011 / 2012 / 2013 / 2014 / 2015 / 2016 / 2017
3311-11 / Bricklayer / S / NS / S / NS / NS / NS / S / S / S / S
3311-12 / Stonemason / S / S / S / S / NS / S / S / S / S / S
3312 / Carpenters and Joiners / S / NS / NS / NS / NS / NS / NS / NS / NS / S
3322-11 / Painting Trades Worker / S / NS / NS / NS / NS / NS / NS / S / S / S
3331-11 / Glazier / S / S / S / RS / RS / RS / RS / S / S / S
3332-11 / Fibrous Plasterer / S / NS / NS / NS / NS / NS / NS / S / S / S
3333-11 / Roof Tiler / S / S / S / RS / S / S / S / S / S / S
3334-11 / Wall and Floor Tiler / S / NS / NS / RS / NS / NS / S / S / S / S
3341 / Plumbers / S / NS / S / S / NS / NS / D / NS / D / S
3941-11 / Cabinetmaker / S / S / S / D / NS / NS / S / S / S / S

Key to ratings: S = Shortage RS = Regional shortage D= Recruitment difficultyNS = No shortage

Labour Market Research and Analysis Branch

Department of Jobs and Small BusinessPage 1


An average of

7.4

applicants per vacancy

An average of

1.1

suitable applicants per vacancy

53%

Proportion of vacancies filled

Labour Market Research and Analysis Branch

Department of Jobs and Small BusinessPage 1

Every construction trade assessed by the department in 2017 was identified as being in shortage nationally. The labour market is now tighter than at any point since 2008, although there is considerable variation between regions.

There has been strong demand for construction trades, evident by building approvals and construction trade vacancies both reaching historical peaks in mid-2016 and remaining at relatively high levels since. These strong conditions have led to employment in construction trades peaking in August 2017.

Demand is likely to remain at a relatively high level over the short term with the value of building work in the pipeline reaching an historic high in March 2017.

New supply has not kept up with labour market demand, with a reduction in completions from related apprenticeships and traineeships in recent years.

Note: The department’s research includes cabinetmaker as part of the construction trades. Where data are from other sources, construction trade worker is defined by ANZSCO 33 Construction Trades (excludes cabinet makers).

Skill shortages

  • The labour market for the construction trades tightened in 2017, with all the trades assessed by the department identified as being in shortage nationally.This compares with eight occupations in shortage in 2015 and 2016 and just one in 2012.
  • The last time all assessed occupations werein shortage was 2008.
  • There is considerable variability, however, inlabour market conditions for construction trades across the states and territories (see Attachment A, Table 1).
  • Shortages are most evident in the Australian Capital Territory, Victoria and New South Wales, where construction activity is strongest.
  • By contrast, none of the assessed occupations were found to be in shortage in Western Australia, due mainly to the winding down of investment in resource projects.
  • The department’s research findings are broadly consistent with those of the Housing Industry Association, which show shortages in many construction trades, and Master Builders Australia, whose index of labour constraints is at its highest level since the survey began in 2006.[1]

Survey results[2]

  • The pool of applicants for construction trade vacancies and the proportion of vacancies filled have fallen substantially compared with five years earlier (Figure 1).
  • The average number of applicants per vacancy fell from 10.8 in 2012 to 7.4 in 2017 while suitable applicants per vacancy have more than halved over the same period (from an average of 2.4 to 1.1).
  • The proportion of vacancies filled was 72 per cent from 2011 to 2013 but has dropped to 53percent for the last two years, the lowest rate recorded since 2007.
  • Although there was a modest increase in the number of applicants per vacancy in 2017 compared with 2016, this did not result in an increase in suitable applicants.
  • Of the employers surveyed, 8per cent did not receive any applicants and a further 29 per cent did not receive any applicants who were considered suitable.

Figure 1: Proportion of vacancies filled (%), average number of applicants and suitable applicants per vacancy (no.), construction trades, Australia, 2007 to 2017

Source: Department of Jobs and Small Business, Survey of Employers who have Recently Advertised (occupational coverage varies over the time period)

Results by location

  • There were substantial variations in the survey results for this cluster across the states and territories. This largely reflects the marked divergence in building activity across Australia, with strong growth in New South Wales, Victoria, the Australian Capital Territory and Queensland over the past two years contrasting with a contraction in Western Australia and the Northern Territory (Figure 2).[3]

Figure 2: Proportion of vacancies filled (%), average number of applicants and suitable applicants per vacancy (no.), construction trades, states and territories and Australia, 2017

Source: Department of Jobs and Small Business, Survey of Employers who have Recently Advertised

  • In 2017, regional employers filled a larger proportion of vacancies (61 per cent) compared with their metropolitan counterparts (50 per cent) despite attracting fewer applicants and suitable applicantsper vacancy (Table 1).

Table 1: Proportion of vacancies filled (%), average number of applicants and suitable applicantsper vacancy (no.), construction trades, metropolitan and regional areas, 2017

Proportion of vacancies filled (%) / Average number of applicants per vacancy / Average number of suitable applicants per vacancy
Metropolitan / 50 / 7.9 / 1.2
Regional / 61 / 5.8 / 0.9
Difference (percentage points) / 11 / -2.2 / -0.3

Source: Department of Jobs and Small Business, Survey of Employers who have Recently Advertised

Results by occupation

  • The success of employers in filling vacancies varied considerably among occupations (Figure 3).
  • The proportion of vacancies filled was lowest for roof tiler (24 per cent) and highest for fibrous plasterer (62per cent) and painting trade worker (61 per cent).
  • Glazier vacancies attracted large fields of applicants, although 95 per cent were considered unsuitable and less than a third of vacancies were filled.

Figure 3: Proportion of vacancies filled (%), average number of applicants and suitable applicants per vacancy (no.), construction trades by occupation, Australia, 2017

Source: Department of Jobs and Small Business, Survey of Employers who have Recently Advertised

Employer requirements

  • Overall, 84 per cent of vacancies required a relevant trade qualification. The proportion of vacancies requiring a trade qualification was highest for plumbers (98 per cent) bricklayers (97percent) and carpenters and joiners (96 per cent) and was lowest for stonemasons (29 percent) and glaziers (51per cent).
  • Whether or not trade qualifications were required, it was common for employers to give prospectiveapplicants a work trial in order to assess their trade skills and the speed and quality of their work.
  • Other attributes frequently required by employers included experience in a particular industry sector or trade specialisation, particular tickets or licences (such as workplace safety cards), and a range of soft skills such as good communication and reliability.

Unsuitable applicants

  • The most common reason applicants were unsuitable was their lack of formal qualifications.
  • Of those applicants who were qualified, almost two thirds were considered unsuitable.
  • Applicants were generally considered to be unsuitable if they didnot have much experience in the occupations, failed a work trial or trade test, or had insufficient experience in a particular industry sector or trade specialisation.
  • In Western Australia, a number of employers considered applicants whose most recent experience was in the mining industryto be unsuitable. This is because they lacked recent experience in the residential or commercial construction sectors and also because employers had concerns over their commitment to these sectors and their ability to adapt to the required working patterns and quality standards.

Demand and supply trends

Construction activity

  • Building activity has been strong, with the value of construction work done growing by6 per cent over the two years to the June quarter 2017 to stand slightly below the historic high reached in the June quarter 2016.[4]
  • Building activity has been relatively strong in the eastern states, with the value of construction work done up 16per cent over the past two years in New South Wales and Victoria followed by the Australian Capital Territory (up 12 per cent) and Queensland (up 4 per cent). By contrast, building activity fell inWestern Australia (by 28 per cent)and the Northern Territory (by 26percent) and remained at a similar level compared with two years earlier in South Australia and Tasmania.[5]
  • Residential building construction is the main driver of demand for construction trade workers, with the RBA estimating that residential construction accounts for around three-quartersof total construction industry employment.[6]
  • Residential building activity peaked in the September quarter 2016, but remained at a high level in the June quarter 2017. The value of residential work done in the June quarter 2017 was 7per cent higher than two years earlier, while non-residential work increased more modestly, by 3 per cent(Figure 4).[7]
  • Engineering construction has been weaker than building construction in recent years (Figure5), largely due to the winding down of the investment phase of a number of major resource projects.
  • The value of engineering construction work done fell by 26 per cent over the two years to the June quarter 2017 and is 42 per cent lower than its peak in the September quarter 2012.
  • The fall in engineering construction over the past two years has been greatest in Western Australia (63 per cent), the Northern Territory (30 per cent) and Queensland (19 per cent).[8]

Figures 4and 5:Value of work done ($billions), construction sectors, Australia, June2007 to June2017

ABS, Building Activity, Australia, June 2017, trend;ABS, Engineering Construction Activity, Australia, June 2017, trend

Employment and vacancies

  • In line with the strong growth in construction activity, employment for construction tradeshas alsogrown in recent years (Figure 6). InAugust 2017, construction trades employment reached an historical peak, with employment 8.2per cent higher than the level recorded two years earlier (compared with an increase of 4.1 percent for all occupations over the same period).[9]
  • Over the two years to August 2017,employment increased for all construction trade occupations, except for bricklayer and stonemason[10] which decreased by 7600 (or 22.9percent).
  • Over the same period, construction trade employment decreased in South Australia (down by 13.2 per cent) and Western Australia (down by 0.4per cent), while it increased in the other states and the two territories.

Figure 6: Employment (‘000), construction trade workers, Australia, August 2012to August 2017

Source: ABS, Labour Force, Department of Jobs and Small Business trend

  • The HIA Trade Availability Index is consistent with the department’s findings, showing that the building trades labour market tightened further in the September quarter 2017, indicating a moderate undersupply in the availability of skilled labour nationally.[11]
  • The HIA report suggests shortages are evident in 11 of the 13 trade categories, with the greatest shortage being for bricklaying.
  • The MBA National Survey of Building and Construction report indicate strong construction activity, particularly in the south eastern states.[12]
  • Online vacancies for construction trade workers fell marginally over the month to August 2017, however, this fall was preceded by six consecutive months of growth. In August 2017, the number of vacancies was 4percent higher than recorded two years earlier and 60 per cent higher than five years earlier when vacancies were at an historically low level (Figure 7).[13]

Figure 7: Internet Vacancy Index, construction trade workers, Australia, February 2006 to August2017 (indexed)

Source: Department of Jobs and Small Business, Internet Vacancy Index, trend (January 2006 = 100)

Training

  • The recent period of elevated demand for construction trade workers has coincided with a reduction in apprenticeship and traineeship completions.
  • Annual completions of apprenticeships and traineeships in the construction trades have been at a low level over the last three years. In 2016-17, completions had fallen by 27 per cent over the five years since 2011-12 (Figure 8).[14] Over the subsequent five years to 2016-17,
  • completions fell for all assessed construction trade occupations.
  • All states and the Northern Territory experienced a decline in completion numbers for construction trades apprentices and trainees.
  • By contrast with completions, apprenticeship and traineeship commencements for these trades increased in the five years to 2016-17 (up by 27 per cent). The uptake in commencements for construction tradesis likely to boost completions in the next couple of years.

Figure8: Apprentices and trainees (‘000), commencements and completions, constructiontradeworkers, Australia, 2006-07 to 2016-17

Source: NCVER, Apprentices and Trainees, estimates, certificate III

Outlook

  • The medium-term employment outlook for construction trade workers is reasonably solid.
  • Overall, employmentof construction trades is projected to grow by 5.8 per cent over the five years to May 2022, although at a lower rate than projected for all occupations (7.8per cent).[15]
  • The employment level for each construction trade occupation is projected to increase, albeit modestly for most occupations.
  • There are, however, a number of mixed indicators in relation to the shorter-term outlook.
  • The trend value of building work approved fell in August 2017, although this was preceded by six consecutive months of growth and is just 2 per cent lower than the peak level recorded in July2016.[16]
  • After nine consecutive quarters of growth, the value of building work in the pipeline reached an historic high in March 2017, although, it fell slightly (by 1 per cent) over the quarter to June 2017.[17]
  • Treasury and the Reserve Bank of Australia (RBA) point to some uncertainty in the outlook for dwelling investment which has been the main driver of recent demand for the construction trades.
  • Treasury forecasts dwelling investment will provide support to the economy in the short term, with a strong pipeline of residential construction work yet to be done, predominantly in New South Wales and Victoria. Although, as this pipeline is completed, growth in dwelling investment is forecast to slow to a growth rate of 1.5 per cent in 2017-18,and then decline by around 4.0 per cent in 2018-19.[18]
  • The RBA forecasts dwelling investment is likely to stay at a high level over the next one to two years, sustained by the large pipeline of residential building work already approved or underway, before declining slowly.[19]
  • A possible slowing in activity in some sectors of the building industry from 2019may coincide with the projected increase in apprenticeship completions in the construction trades, leading to anpossible easing of shortages in some industry sectors and regions.

Attachment A

Table 1: State ratings, construction trades by occupation, Australia by states and territories, 2017

NSW / VIC / QLD / SA / WA / TAS / NT / ACT / AUS
Bricklayer / NS / S / NS / S / NS / S / S / S / S
Stonemason* / * / * / * / * / * / * / * / * / S
Carpenters and Joiners / S / S / D / D / NS / D / S / S / S
Painting Trades Worker / S / M / S / S / NS / NS / R / S / S
Glazier* / * / * / * / * / * / * / * / * / S
Fibrous Plasterer / S / S / NS / S / NS / NS / na / S / S
Roof Tiler* / * / * / * / * / * / * / * / * / S
Wall and Floor Tiler* / * / * / * / * / * / * / * / * / S
Plumbers / S / S / M / NS / NS / S / D / S / S
Cabinetmaker / S / S / S / S / NS / CNR / CNR / S / S

Source: Department of Jobs and Small Business, Skill shortage research

* Occupations were assessed at the national level only and separate ratings are not available by state and territory

Key to ratings: S = Shortage, M = Metropolitan shortage, R = Regional shortage,

D = Recruitment difficulty, NS = No shortage, na = Not assessed, CNR = assessed but cannot rate

Labour Market Research and Analysis Branch

Department of Jobs and Small BusinessPage 1

[1] Housing Industry Association, HIA Trades Report, September 2017 Quarter; Master Builders Australia, National Survey of Building and Construction, March Quarter 2017

[2] The methodology underpinning this research is outlined at Skill Shortage Research Methodology | Department of Jobs and Small Business - Document library, Australian Governmentand can also be accessed by the QR code

[3] ABS, 8752.0 Building Activity, Australia, June 2017, Table 2, chain volume measures, trend

[4] ABS, 8752.0 Building Activity, Australia, June 2017, Table 1, chain volume measures, trend

[5] ABS, 8752.0 Building Activity, Australia, June 2017, Table 2, chain volume measures, trend

[6]RBA, Statement on Monetary Policy, February 2017, p33

[7] ABS, 8752.0 Building Activity, Australia, June 2017, Table 1, chain volume measures, trend

[8] ABS, 8762.0 Engineering Construction Activity, Australia, June 2017, Table 2, chain volume measures, trend

[9] ABS, Labour Force, August 2017, Department of Jobs and Small Business trend

[10]ABS, Labour Force, August 2017, Department of Jobs and Small Business trend - data are for ANZSCO 3311, Bricklayers and Stonemason (data for the individual occupations are not available)

[11]The Housing Industry Association (HIA), HIA Trades Report, September quarter 2017

[12] Master Builders Australia, National Survey of Building and Construction, September Quarter 2017

[13] Department of Jobs and Small Business, Internet Vacancy Index, August 2017, trend

[14] NCVER, Apprentices and Trainees, June 2017. Data are for the four quarters ending March each year and refer to apprenticeships and traineeships in the construction trades at Certificate III or higher.

[15]Department of Jobs and Small Business, Employment Projections to May 2022

[16]ABS, 8731.0 Building Approvals, Australia, August 2017, Table 38. Values are not adjusted for inflation.

[17] ABS, 8752.0 Building Activity, Australia, June 2017, Table 78, original

[18] The Treasury, Budget Strategy and Outlook 2017‑18, Part 2: Economic Outlook

[19] Reserve Bank of Australia, Statement on Monetary Policy, August 2017, p. 3 & 35