Return of skilled workers eases acute shortage of skilled trades

In a positive turn of events, the Australian construction industry is experiencing much-needed relief from the acute shortage of skilled tradespeople that has plagued the sector in recent years.

According to the latest HIA Trades Report for the June Quarter 2023, there has been a significant improvement in the availability of skilled trades, signalling a positive trajectory for the industry’s future.

The HIA Trades Report, which provides a quarterly review of skilled trades’ availability and demand pressures in the residential building sector, has remarkably improved the Trades Availability Index. HIA Senior Economist Tom Devitt revealed that the Index registered -0.62 for the June Quarter 2023, compared to the peak of -0.92 experienced just a year ago. The Index value of less than zero indicates a shortage of tradespeople, while a value greater than zero represents a surplus.

Among the trades that have seen the most significant improvements in availability are carpentry, roofing, and bricklaying, precisely the areas that faced the most severe shortages a year ago. This positive shift can be attributed to the return of skilled workers following the re-opening of Australia’s international borders in late 2021. The influx of skilled professionals has eased the pressure on the construction industry and positively impacted other sectors, such as house and apartment construction and manufacturing businesses.

As the availability of tradespeople has increased, the price of skilled trades has also slowed down. Over the last year, the price of skilled trades rose by 3.4 per cent, a significant drop from the peak of 10 per cent observed a year earlier. This development brings the price increase more in line with the 2 per cent average annual increase seen in the decade before the pandemic.

Experts believe the demand for skilled trades will likely slow down as home-building activity declines. The Reserve Bank of Australia’s cash rate increase in the past year has led to a drop in new projects entering the pipeline. Although the record volume of projects awaiting commencement has decreased, more than 100,000 houses are still under construction nationwide.

Builders have faced challenges in completing these projects due to persistent materials and labour shortages experienced in recent years. However, the outlook remains optimistic as the volume of homes under construction is expected to decrease rapidly, particularly from late this year. This anticipated decline in construction projects will further ease the shortage of skilled trades.

Looking ahead, experts expect next year to witness the weakest year of new house commencements since 2012, along with an increasing number of projects reaching completion. As a result, there is a likelihood of a further easing of trades shortages, which could have positive implications for the industry’s rebound.

Tom Devitt emphasises that the year ahead presents an ideal opportunity for governments to invest in new public housing stock. Such investment not only ensures a maximum return on investment, as costs and delays will be minimised but also prevents skilled tradespeople from seeking employment in other industries. By strategically investing in the construction sector during this period, the industry can bounce back after the challenging period induced by the Reserve Bank of Australia’s actions.

The return of skilled workers and the easing shortage of skilled tradespeople present a much-needed boost to the construction industry. As Australia moves forward with targeted investments and strategic planning, the sector is poised to recover and thrive, benefiting both the economy and the skilled workforce.