End of Furlough in the Construction Industry – What Next?

End of Furlough in the Construction Industry – What Next?

Unprecedented Times

The COVID-19 pandemic in March 2020 resulted in an understandable and necessary shutdown of the entire country including the construction industry. This resulted in millions of UK workers being asked to stay at home and being paid by the government. Although a proportion of construction workers were able to safely continue work on priority projects, the vast majority of the UK construction workforce spent many weeks at home contemplating their own personal situation – which was not of their making.

It is widely accepted that if the UK government had not provided financial support to employers and the self-employed, the UK construction sector and wider economy would have collapsed.

As the UK economy reopens, it is pleasing to see that construction sites are progressively reopening, and many large projects are still in the pipeline. However, as the government support is phased out, many organisation are potentially faced with large staff overhead costs and a reduced revenue stream due to social distancing impacting project productivity. This could lead to large scale redundancies across the construction sector in the latter part of 2020 – with some analysts predicting a redundancy rate of 11% of the workforce.

End to Government Support

Although the UK government has supported the economy throughout the COVID-19 pandemic via the business grants, loans, furlough and self-employed schemes, this level of support cannot carry on indefinitely. Indeed, the business grant, loan and self-employed schemes were a one off support initiative and the furlough support scheme will be reduced from August and phased out by the end of October.

This means that Employers will start to pay a larger proportion of furloughed staff wages from August with a further increasing contribution in September and October. This will clearly drive employers to reopen sites as quickly as possible within social distancing guidelines.

Planning Ahead in the Midst of Uncertainty

Right now, employers are trying to plan ahead in a very uncertain and changing situation. They are attempting to predict forward resource requirements in a changing market where projects are reopening at different times, at different rates of productivity and may still be impacted by material supplies and funding.

The construction industry has notoriously low profit margins, often combined with high commercial risk –  meaning that unutilised resources and proportionally high overhead costs cannot be carried for long periods of time. To date, this has been largely funded by the UK government.

As a result of this complex situation, many employers are currently planning for staff redundancies and are starting to invoke statutory processes to allow this over the coming months. This makes the construction employment market extremely uncertain and is likely to remain so for many months as the industry slowly restarts, and obstacles and hurdles are overcome one by one.

Employment Outlook

Longer term, beyond the Coronavirus pandemic, the outlook for the UK construction industry is good – with many mega projects planned.

Hopefully, large scale redundancies will be avoided, but inevitably, there will be some disruption as companies readjust their operating models and resourcing strategies.

This increased risk of redundancy, combined with day to day financial pressures and the real possibility that similar major economic disruptions could reoccur, have motivated many people to consider their own situation and how they can become less financially exposed and to be able cope with any future disruptions.

Construction Employers are searching for ways to continue to grow whilst also financially de-risking their operations and trying to do more work with fewer employees.

Many Employees are now considering how they can take control of their own destiny and perhaps earn a living from multiple income streams rather than a single employer.

Employment Options

This economic situation, combined with a new progressive working culture, advancing IT infrastructure and new IT tools to connect clients with freelancers now provides a perfect opportunity for the UK construction industry.

A large proportion of construction work is actually desk based and carried out by highly qualified professional staff. This includes design, engineering, site paperwork, planning, estimating and technical documentation to name but a few. These tasks can be delivered remotely from offices and even by home based staff including freelancers.

By using freelancers to deliver short term tasks, clients have the advantage of being able to pick and choose the best people who generally understand that they need to do a good job to gain more clients. Freelancers are generally highly motivated, efficient and willing to take on difficult assignments.

Up until now, it has been difficult for clients to find and engage with freelancers and difficult for freelancers to regularly find clients to maintain their income. However, with new freelancer platforms such as Shareplant Freelance (https://freelance.shareplant.com), the potential for the construction freelance industry is now huge. These platforms allow clients to post scoped tasks of any type and size and for freelancers to find and bid for them. Winning freelancers can then deliver the work in private virtual workspaces and get paid safely when the work is complete. Also, freelancers can advertise specific services to clients on these platforms.

This provides a win-win for everyone – clients can get specialist work done at lower cost without the financial risk of employing full time staff and freelancers can find regular work from a diverse range of clients and  earn as much income as they like – this can be either as top up earnings in addition to a full time job or as their main source of income.

This way of working won’t be for everyone, but for those people who are willing to embrace new technology and think laterally, the potential rewards could be huge!

For more information on the Shareplant Freelance platform please visit https://freelance.shareplant.com

Contact: enquiries@shareplant.com