Wage and Labour demands in the B&C Industry

Last year a report came out from the Rider, Levett, Bucknall group known as the oceania report.

This RLB report from 2017 found a link between the increased demands for wage increases and the cost of construction.

The report researched the differing situations in each Australian state with some interesting discoveries.

For example the report outlined that this correlation was linked with labour shortages in specific fields particularly in Sydney. Fewer bricklayers, form workers and carpenters especially has seen an unusual situation; trades are reporting full order books but are unable to accept new opportunities.

Contrastingly, in Melbourne where the residential boom has been slowing down, the report stated that contractors have found wages less of a burden.

It was revealed that overtime work is getting less and less causing a net constant price within the projects. The report says this has been evident in sites where chief contractors have asked subcontractors to increase labour rather than approve overtime.

From all accounts it appears that Brisbane has more than likely peaked and construction will slow. This is most likely due to a higher than usual number of completed commercial projects in 2016/17. The on-flow effect of this has seen boosting CBD and fringe office vacancy rates.

Forecasting the future

The forecast for the Australian B&C market from the RLB report in the next few years is not doom and gloom. They anticipate that construction costs will rise further but fall short of the recent boom period of 2016/17. There will be a softening, gradual process to this change with the structural trades most likely to be affected first.

All in all, from what came out of the RLB oceania report wages and labour costs on Australian building projects will continue to challenge B&C companies. This will be particularly challenging for companies ever seeking to be competitive, profitable and reputable.

Henry Schafing: henry@crm-map.com