Construction pay increases, but for how long?

The last 12 months has seen some interesting trends in pay and conditions within the construction industry. Paydata’s salary and benefits survey, which we have run for over 14 years, includes 22,000 full-time jobholders employed in over 25 key companies. The results tell us that construction pay is in better shape than many other sectors, but not all sectors!

Interestingly pay increases have been relatively limited in the usual annual pay review cycle, with the most common review in 2016 being 2%, within a range of 2% to 3% (median 2.5%). The latest data for 2017 indicates a similar trend and range. However, this is less than in 2014 and 2015, which saw far more 3% and 3.5% pay reviews. This probably reflects the more uncertain, post-Brexit economic environment and what some construction companies have told us is a “slowing down of forward order books” since early last year. Nevertheless, the salary survey continues to highlight the pay pressures that many construction employers experience for key skills in industry-specific roles.

The survey covers over 80 specialist Civil Engineering, Building, BIM, Environmental and PFi roles from Section Foreman through to Operations / Regional Director. An analysis of matched-movement pay increases, (which exclude starters, leavers and promotions) shows a year-on-year increase in Construction in 2016 of 3.4% within a range 2.7% to 9.6%. This is backed up by HR professionals in the sector who highlight the out-of-cycle pressures they continue to receive for key roles such as Quantity Surveyors, Estimators and Planners. Indeed, the survey shows these roles have enjoyed the greatest pay increases in the past two years. This view of role-specific pressures is further supported by our analysis of new starter salaries (i.e. those with less than 12 months’ service) which indicate that Commercial Managers, Design Managers and Project Directors attract some of the highest golden handshakes in the sector.

Geographically, the London / Rest of UK divide has only widened in the last year with our survey indicating a 14% premium in London, compared nationally, and the South East at 7%; both at the junior / base professional level. Although this is where geographic differences are most pronounced, we do see other regional differences – our survey covers six in total.

Compared to house-building, construction lags somewhat behind, with most reviews at 3% in that sector and our market data showing a year-on-year movement of 5.5%. However, other sectors such as Facilities Management and Construction Consultancy, have seen lower reviews – closer to 2% and in the range 1.5% to 2.5%. Nevertheless, the future remains rather uncertain both within the sector and for the wider economy and although rising inflation increases pay pressures, it will largely be this that determines business performance and ultimately future pay trends.

Tim Kellett from Paydata

 

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