Labour shortages impacting construction growth
By Adam Freill
Commercial Construction Construction Materials Industrial Institutional Labour ResidentialAs supply chains normalize and commodity prices ease, labour remains one of the most significant issues facing the North American construction industry.
(Image courtesy of Linesight)
Demand for construction workers has surged, leading to rising labour costs and increased project delays, reports global construction consultant Linesight in its latest Construction Market Insights report for the Americas.
The report reveals that the construction industry has shown resilience with robust growth in the data centre and high-tech industrial sectors offsetting the decline in the commercial and residential sectors. While commodity prices have eased, several challenges persist, including higher finance costs as a result of elevated interest rates, as well as challenging supply chain timelines for MEP equipment and labour shortages.
The widening gap between labour supply and demand is increasing costs. In January 2024, average hourly earnings in the construction sector surged by more than five per cent. Many projects are also affected by inadequate workforce availability, leading to cost overruns, project delays and compromised work quality.
“We know that people aren’t entering the construction industry in the numbers we need to keep up with demand,” commented Patrick Ryan, executive vice-president, Americas, at Linesight. “The industry needs to invest in upskilling workers and recruiting new talent, and it needs to be open to implementing digital technologies. Only this way will the industry be able to maintain its service delivery cadence and be resilient for the future.”
Construction industry leaders and government stakeholders recognize that a long-term solution to persistent labour shortages will include implementation of digital technologies, including automation and robotics as well as modular and off-site manufacturing techniques.
Some of the sector-specific trends the report authors noted included strength in data centre construction due to the increasing demand for cloud services and data-intensive applications, soaring demand for laboratory space resulting in an uptick of office-to-lab conversions in the life sciences sector, and remote and hybrid work models contributing to double-digit commercial vacancy rates, although Grade A spaces and green-rated buildings remain resilient.
