Impact of labour costs on Irish construction


Labour Costs

We have been talking a lot recently about the boom and growth in the construction industry across Ireland. We have also looked at challenges and risks that come with this kind of rapid growth, the scarcity of skills in the sector being one of them, another trend we have seen at Sherlock is the spiralling cost of labour. Employers are experiencing higher and higher expectations to deliver an ever-increasing package across the board for the teams they have on site. Employee demands are increasing whether its higher rates of pay or adding lodge and travel and much more. Although to meet the demands the workforce is needed but more than often than not the budget or capacity to absorb this increase in cost just isn’t there.  These increased in demands only drives the cost of building higher ultimately impacting on the final cost of the build and the end of the line consumer.

The Construction Sector Group (CSG) recently released a report warning of the upward march of labour costs. According to the CSG this is the biggest threat to the growth of the sector. These warnings are contained in the first report of the CSG, which is a high-level assembly of construction industry stakeholders and senior State officials set up to support delivery of the Government’s Project 2040 plan. “A key concern is the risk of excessive cost inflation which may occur,” the report found.

At Sherlock, we have found that the cost of labour is increasing, and many clients are being pressured by their workforce to offer more and more to their workforce. This is where working with a company like Sherlock becomes hugely beneficial. As Sherlock directly employs the teams on behalf of our clients, we can shelter our clients from the majority of this kind of direct risk. Many of our clients negotiate a set fee in anticipation of starting while they are project planning, so they know exactly how much their staff will cost for the duration of the project will be.

The CSG went on to warn that costs in the construction sector are on an upward spiral across the board, with average hourly earnings in construction increasing by 3.7 per cent in the 12 months to the end of the third quarter last year. The highest level of inflation is in the non-residential sector, with the construction tender price index estimated to have increased by 7.4% in 2018.

The CIF is also preparing to oppose Unions representing the sector who are all rumoured to demand a 12% increase saying that any further increases will only drive the cost of housing up further and exacerbate the current housing crisis.

Having the stability and security of working with an organisation like Sherlock on your site is something worth considering especially if you have several projects on the horizon. If you want to know more about how Sherlock Recruitment & Training can help you keep your projects on track and budget give our team a call on 01 456 8438 or visit us online