Wanted: Home-Grown Millennials to Build U.K. After Brexit

(Bloomberg) -- The U.K. construction industry better hope that young Brits suddenly get a taste for the building trade.

The flow of immigrants, who make up almost a fifth of laborers in the housing industry, is slowing in the run-up to Brexit, pushing up wages and creating a headache for construction firms -- and ultimately the government. There are few signs that homegrown workers are rushing to fill the gap.

“Young English lads just don't look at the trade as a career option,” said Jackson Clark, a 28-year-old site manager from London.

The shortfall threatens to derail the government's pledge to increase the number of homes built each year to 300,000 to solve a housing shortage that's hitting London and the Southeast hardest.

In the capital, about half the homebuilders come from other European Union countries. Clark himself has worked on projects where 70 percent of the staff have been non-U.K. nationals, and says migration has been a good thing for the industry.

It may not last much longer. Net migration from elsewhere in the EU has plunged by more than a half since the 2016 Brexit referendum. The U.K.'s departure from the bloc will almost certainly accelerate the process, as laws come into force that will make the U.K. less accessible to foreign workers.

The decline has been particularly severe among citizens of the eight eastern European countries that joined the EU in 2004. A net 12,000 arrived in the year through September, compared with peak levels of around 50,000. This group, along with workers from Romania and Bulgaria, accounts for the largest percentage of non-U.K. construction employees.

So what's to be done? Nigel Hugill, chief executive officer of a London-based developer with more than 29,000 homes in the pipeline, says he's counting on training programs to bring more young Britons into the industry. He's not taking anything for granted, though.

There is “some persuading to do with the millennial generation,” the Urban & Civic Plc CEO said in an interview. “The nation simply cannot afford our industry to disappoint.”

U.K. homebuilders including Barratt Developments Plc and Crest Nicholson Holdings Plc offer about 21,000 apprenticeships annually. That won't be nearly enough to meet demand for new properties. The construction industry is set to grow by 1.3 percent per year through 2022 and will require 35,000 extra builders each year, according to the National Federation of Builders.

“If building more homes is so high on the government's agenda, we must have continued future access to skilled workers from the EU,” said Chris Turner, a spokesman for the Home Builders Federation. “As yet we have no indication as to what the government will do regarding migration.”

Preparing for Brexit

Construction companies need to take matters into their own hands, according to the head of Britain's No. 2 homebuilder. Pete Redfern, Taylor Wimpey Plc's CEO, says that while he hasn't seen any evidence of foreigners leaving the industry yet, businesses should be gearing up for it.

“We need to be training and recruiting ourselves,” said Redfern, whose company has around 300 apprenticeships. “Historically, the industry hasn't been very good at explaining the opportunities and the chance to earn very good wages, but we are getting better.”

Weekly salaries for construction workers have risen 5.2 percent to 606 pounds ($838) since the EU referendum, the biggest gain of any sector, according to the Office for National Statistics.

Bricklayers at small building firms earn an average of 42,034 pounds a year, rising to as much as 90,000 pounds in London, a report by the Federation of Master Builders shows. By comparison, the average annual pay for an architect is 38,228 pounds, while dental practitioners earn 40,268 pounds, the report found.

Attractive Wages

Ruben Rodriguez, a London-based construction-site manager from Asturias in northwest Spain, came to the U.K. seven years ago after his own country's property market crashed. Wages in Britain are very attractive, despite the pound's weakness, he said. As a long-term resident, he's not worried at the moment about the U.K.'s plan to quit the EU.

“Maybe there's still time for the Brexit process to be reversed,” Rodriguez said in an interview. “If it's not, it will be a problem if the government forces caps on immigration.”

To contact the reporter on this story: Sharon Smyth in London at ssmyth2@bloomberg.net.

To contact the editors responsible for this story: Neil Callanan at ncallanan@bloomberg.net, Andrew Blackman, Jon Menon

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