Workplace Insight combines the three main points in any workplace managers day, People, Places and Technology. These make up the majority of this office centered blog. Check out trending topics in what the future of work brings and how businesses have very different environments from one continent to the next.
Recently, Cornerstone OnDemand tested which learning and training courses are of most interest and truly matter to employees to help them navigate the world of work. Among the top five most popular courses, there was a resounding demand for those that centred around wellbeing. And the training that claimed the top spot was ‘The Science of Sleep: Sleep hygiene’.
That’s not to say that your employees are just daydreaming about when they can climb back into their bed but rather, they’re recognising the role and affect that a good night sleeping has on their work and professional lives – not just their own, but others as well. Afterall, for anyone who has tried to struggle through the day on a few hours sleep, fuelled by caffeine alone, it’s not productive and certainly doesn’t aid happiness in the long-term.
If you are not quite familiar with the term sleep hygiene, this simply refers to the specific practices or little calming habits that you do before bedtime to help you sleep better. In a similar way, behaviours and what you do in the workplace can also have a major impact – determining whether you have a good or bad night’s sleep. So here are some simple ways you can help.
Let employees take ten
While employees are clearly keen to catch up on and improve their sleeping habits, they also need a helping hand to do this. That’s where you as an employer can step in.
This may be through offering official training courses so that your employees can learn top tips for creating good habits. Or it may be helping them to relax or get some exercise for a better night’s rest, providing lunch time exercise classes, yoga classes or leading a meditation session. If your budget doesn’t quite stretch to that, just ensuring that your employees are able to take that full lunch break to head to the gym, go for a run or just a walk outside also helps.
It also shouldn’t only be at lunchtime that employees have a moment to relax but they should also be able to take regular, short breaks throughout the day, even when the office is hectic. Taking ten minutes to be calm, reflect, step away from their computer, not only lowers stress levels but it will also help productivity – rejuvenating concentration and helping to see work problems from a new perspective.
Spot warning signs
Sometimes, though, despite all good intentions, many will still struggle with workplace fatigue. Employees may even think they’re getting plenty of sleep, but quality of sleep is also important. So, keep an eye out.
Some employees may be quite vocal about the fact that they’re always tired but for those who are less open, there are some signs you should watch out for. Is the previously super enthusiastic employee now subdued, distant, acting out of character and often late to work? Or have an employee’s productivity levels hit an all-time low? Even a normally neat and now messy desk and fidgeting can all be symptoms of work-related fatigue.
These could all also potentially be related to other issues, so most important of all, talk to your employees to find out the source of the problem and how you can help.
Predict and prevent problems
When big, important project deadlines are looming and there aren’t enough staff members, it sometimes can’t be avoided that employees will have to put in extra hours. Make sure that you’re aware and take this into consideration. Of course, it’s great to have super committed employees but it’s also your role to make sure they don’t take it too far.
This is where management needs to lead by example. Not working all hours of the day, taking that time to have a moment to relax, continuing to follow those good habits and behaviours and as a result, encouraging employees to keep up their sleep hygiene.
Be flexible as well. Life is still happening, employees cannot put that on hold for an important deadline, so you need to let your employees flex to fit it in. As long as they are putting in those necessary additional hours and completing the work, let employees do it when works for them, allowing them to head off to pick up their children or go to that appointment. Whilst you cannot fully catch up on lost sleep, having this freedom, will ensure employees aren’t also stressing about things outside of work and allows some time to recoup. All aiding better-quality sleep.
While these are just some of the ways that you can help your staff to snooze soundly, it goes to show that even small changes and adjustments can make a big difference. Sleep well.
Humanscale has announced the appointment of Andre Loosemore to the position of A&D Director, International, taking responsibility for the planning, implementation and monitoring of the furniture manufacturer’s A&D programme in international markets. Andre has over 18 years experience throughout the commercial sector. He has held key positions with a number of high profile manufacturers, led business development for a global architecture and design practices; and consulted with furniture and building consultancies.
First the good news. Mayor London Sadiq Khan has rejected the proposals for Foster+Partners godawful 300 metre tall Tulip viewing tower in London. The reasons given for the refusal from the Mayor’s office include the fact that the thing didn’t represent the sort of “world class architecture that would be required to justify its prominence”. A nicely dressed up way of saying it’s a terrible idea, a terrible piece of architecture and has absolutely no place in London.
I link to the news item in Dezeen to illustrate a point raised by some commenters on the story. Apparently, people who aren’t designers and architects don’t get a right to have a view on architecture and design. They just need to be told what to accept by their betters, even if they are the Mayor of London.
Such thoughts betray a more common attitude in the A&D community than should exist and it is most apparent when an outsider expresses an opinion that doesn’t fit an architectural orthodoxy. This is most evident in the pleasure architects still take in Brutalism, which most other people detest. Brutalism is an obvious point of contention between architects and the hoi-polloi but it goes for an awful lot of modern architecture. If you want an outsider’s extended diatribe on this kind of thing, including the use of the phrase Age of Blorp, you can find one here.
Some time ago I wrote about how the Farrell Review had deliberately excluded anybody who wasn’t an architect or designer, regardless of their experience, qualifications or general ability to comment on issues related to the built environment. There were to be no muggles. Which makes it all the more amusing when a muggle tells the ministry of magic that they can’t do what they want.
Work will make you free
There is something off about working culture still, so suggesting that the answer to the problems created by that culture is to go deeper into it is misinformed and counter-intuitive
Now the bad news. The former Mayor of London Boris Johnson has decided to contribute to the debate about the UK’s generally poor levels of mental health and productivity by suggesting that the answer may lie in doing more work, when all the evidence suggest that the answer to the challenges of wellbeing and productivity is often to do less. This may especially be the case for men who need to adjust and seize some of the opportunities that change is offering them, if given some of the same choices as women.
There is something off about working culture still, so suggesting that the answer to the problems created by that culture is to go deeper into it is misinformed and counter-intuitive. Some of the problems of that culture are explored in this excellent piece in The Economist which suggests the problems often start with the language of job ads.
“Another newish management mantra is “bring your whole self to work”. This slogan, dreamed up by Mike Robbins, a motivational speaker, seems well intentioned. Workers should not have to suppress their personalities. They should not hide the fact that they are gay, for example, or caring for children or elderly relatives at home.
“It is easy to see how the slogan can be turned into the idea that workers should give 100% commitment all the time. That is asking too much. It is great when people enjoy their work but the fact is a lot of people are doing their jobs to pay the bills, and dreaming of the few weeks in the year when they can take a holiday. They may have hobbies and interests outside work, but the word “outside” is key. Those are the moments when the company has no claim on its employees. Workers should be allowed to leave parts of themselves at home.”
In his article, Boris Johnson is on stronger ground when he throws in some stuff about how organisations should create jobs that improve people’s levels of satisfaction, but there are enough troubling associations, apex fallacies and oversimplifications in the piece to suggest he really doesn’t get it. Or he does but doesn’t care.
The piece provoked a strong response from Poorna Bell in The Independent which adds a lot more information, nuance and complexity to the subject than Johnson allowed himself.
Ignorance is strength
At the risk of sounding like an old fart, we are increasingly drawn to simple solutions even when the problems are incredibly complex
Basically, things are more complicated than that. This should be our standard response when we are presented with a single variable solution to a complex and multi-variate problem. The wise and informed build this into their analyses. Take this assessment of the efficacy of activity-based working – one of a number of commonly fired workplace silver bullets – by the always excellent Kerstin Sailer and Ros Pomeroy. Their analysis is both positive and realistic, concluding that ABW is frequently a good idea, but…things are more complicated than that.
It would be nice to see such equivocation in the mainstream media, especially when it comes to the endlessly fraught debate about open plan offices. Fast Company and Inc are the two worst outlets for published drivel on the matter, but sometimes the big hitters in the media can publish their own questionable pieces.
For example The New York Times has just published this piece setting out a series of ‘trends’ in the design of offices and office furniture that can be dated back 25 years. Unlikely the nonsense fouling up the two titles I just mention, there’s nothing massively wrong with this piece and it’s good to see some ideas crossing into the mainstream, but it would also be great to see journalists digging deeper for some context and complexity.
Of course, this is something of an old-fashioned idea and not just because newspapers don’t have the resources they once did to spend on stories. At the risk of sounding like an old fart, we are increasingly drawn to simple solutions even when the problems are incredibly complex.
As Gemma Church writes in this piece about the peculiarly modern challenges of dynamic resource allocation:
It’s not easy to accurately predict what humans want and when they will want it. We’re demanding creatures, expecting the world to deliver speedy solutions to our increasingly complex and diverse modern-day problems.
Over the last few decades, researchers have developed a range of pretty effective mathematical solutions that can allocate resources across a variety of industries and scenarios so they can attempt to keep up with the daily demands our lives place on them. But when an allocation made at one time affects subsequent allocations, the problem becomes dynamic, and the passing of time must be considered as part of the equation. This throws a mathematical spanner in the works, requiring these solutions to now take into account the changing and uncertain nature of the real world.
The modern predilection is to look at the numbers. Swimming in a sea of data gives us the chance to measure everything. So, in a world still shaped by Peter Drucker’s maxim that what gets measured, gets managed, Big Data can seem to hold all of the answers. This idea is comprehensively dismantled by Rana Foroohar in the FT.
Flexible working could become the default for all jobs in the UK, under proposed legislation being considered by the UK government. The most important consequence will be that employees will no longer be expected to use their right request flexible working for an employer to consider, as is currently the case.
Under the Flexible Working Bill, introduced by Conservative MP Helen Whately, employers would have to make flexible working a characteristic of all job roles flexible in some way or other, unless there was a sound business case for why the role could not be carried out in a flexible way.
Introducing her bill to Parliament, Whately said the traditional 40-hour, five-day working week “made sense in an era of single-earner households and stay-at-home mums”, but it did not accurately reflect the reality of how people want to live and work today. She argued flexible working would help close the gender pay gap, assist parents to share childcare responsibilities and help businesses retain staff who might seek better working arrangements elsewhere.
“At the moment, too many women are reluctantly dropping out of work or going part-time after having children because their employers won’t allow them flexibility,” Whately said, adding that the knock-on effect was it “entrenches the assumption that men are the breadwinners and women are the homemakers”.
“As a result, men don’t get to spend as much time as they might like with their children, women miss out on career opportunities, and the country loses out on the contribution they could and would like to make if only they could do slightly different hours or work some days from home.”
An evolving workplace
The proposal were broadly welcomed by firms. Matt Weston, Managing Director at Robert Half UK said: “The proposed flexible working bill is a sure sign that the modern workplace is evolving. With technology shaping the office of tomorrow, employees no longer need to be at their desks from nine to five to do their jobs. For employers, introducing a flexible working initiative can provide a host of benefits. It can widen the hiring pool to candidates that may live outside of a realistic commuting distance and in some cases, prove to be the deciding factor in getting their preferred candidate over the line. We are seeing more professionals today prioritise their work-life balance and seek out businesses which offer flexibility to achieve this.
“Furthermore, employers that have introduced flexible working will find that it can boost productivity, cut down on commuting time and reduce costs associated with expanding office space. For businesses and employees, flexible working holds the key to the future of smart working.”
Two new studies suggest that the failure to keep workers equipped with the latest technology is having a huge impact on their productivity and causing them to waste large amounts of time. According to the first piece of research from tech provider Insight, UK office workers waste 1.8 billion working hours every year because the outdated technology they’re given isn’t good enough to meet their needs.
The survey of 2,000 UK office workers also suggests that more than a third (34 percent) of employees said that not being equipped with the right technology makes remote and flexible working difficult and stressful. In total, 80 percent of office workers at some point have felt they don’t have the technology they need to do their jobs properly, putting them at a disadvantage.
People want to work when and where they want, and expect employers to provide a technology experience that enables – rather than hinders – this
The research also claims that employees are being flooded with irrelevant information that makes them disengage from their employers and colleagues. Less than half (47 percent) of the information employees receive from inside their organisation is relevant to them, and 60 percent of employees ignore internal communications until it’s brought to their attention.
Technology is also frustrating employees’ efforts to work closer with their colleagues. The average UK office worker suffers delays or an impact on the quality of their work three times a week because collaboration with co-workers is too difficult.
One simple reason for technology frustrations is that employees often aren’t given the training or education they need. 77 percent of office workers have been given technology and apps without being told what benefit they would bring, or how to use them at some point. This means employers may well be making the technology investments their employees need, but falling at the final hurdle. Left unchecked, frustrated employees may begin to look elsewhere: 71 percent of office workers are dissatisfied with the technology in their workplace.
Other key findings include:
– On average, workers say they waste 2.4 hours per week because they don’t have the right technological support, thanks to unnecessary travel or having to work inefficiently.
– The average office worker misses information 4 times a week, and more than a third (38 percent) miss important or useful information at least once a day – meaning they have to work harder just to keep pace with information.
– Only 53 percent of office workers say that internal communications are effective – meaning many employers are not engaging with their employees in the right way.
“In 2019, employees shouldn’t be complaining that technology makes their lives harder,” said Emma de Sousa, UK Managing Director at Insight. “Businesses should strive to keep workers informed and involved, however, company information and updates are being ignored as a result of information overload. In contrast, as a consumer, you have access to a wide range of technology and devices, where information received and shared is tailored based on the user preferences; businesses need to take the same approach. Technology in the workplace that cannot help streamline communication, keep employees engaged and support a healthy work-life balance is not fit for purpose.
“The world is changing; for many “work” is no longer a specific place, but something you do. People want to work when and where they want, and expect employers to provide a technology experience that enables – rather than hinders – this. If this isn’t embraced, all sides will suffer – from workers who are increasingly frustrated with their employer to businesses that suffer lost productivity and find it harder to attract and retain employees.”
Workers put hands in own pockets
According to the second study, almost one in five UK workers (19 percent) claim their outdated office technology has led to security risks. In another survey of 2,000 UK workers, conducted by tech retailer Ebuyer, almost a quarter (23 percent) of workers say they have only ever had one work laptop/desktop computer, and their outdated technology is making them less productive (32 percent) and has presented security risks (19 percent).
Over half of designers claim they are less productive due to outdated technology
Almost a third (29 percent) of scientists admit using outdated technology has led to security risks and to them being unable to connect to a client’s technology in a meeting (29 percent).
In addition, over half (54 percent) of designers claim they are less productive due to outdated technology and 37 percent of electricians say they have had competition from other businesses using more modern technology.
Many employees also claim to having to put their hands in their own pockets when it comes to workplace technology, with over half (54 percent) claiming they have bought something themselves to make their work computer more useable. Almost a quarter (23 percent) say they have bought their own mouse, 19 percent have bought a keyboard and 23 percent have bought a personal laptop bag.
However, it is not just outdated technology that can lead to security risks, with many computers potentially at risk due to the impending end of life for Windows 7 in January 2020. When asked about the update over half of workers (57 percent) said their company hadn’t made them aware of the upcoming end of life for Windows 7. Almost one in five (18 percent) incorrectly think that their operating system will automatically upgrade from Windows 7 to Windows 10 when a new license will actually need to be purchased.
Research gathered from 2000 office workers across the UK claims that eating smelly food is the most irritating behaviour in the office. The study, conducted by 4Com aimed to discover which habits most get under people’s skin in the work environment. When it comes to the habits workers admit to having themselves, 33 percent say they have no irritating habits at all. 15 percent are aware they speak loudly, and 13 percent claim they have a tendency to sing while they work.
The 4Com research also looked at the way people react to workplace irritations. 37 percent of workers say they’ll tell the culprit face-to-face that their habits are irritating, while 15 percent would rather drop an email to express their annoyance, and 11 percent will just leave a passive-aggressive note. But, proving that British politeness is going nowhere, 38 percent will just ignore the problem altogether. Interestingly, men are more likely than women to tell a colleague face-to-face that their behaviour is annoying. Yet men are also more likely to gossip to a co-worker about it, hoping that the colleague will pass on the message.
The top five most irritating behaviours in the workplace
1. Colleagues eating smelly food in the office
2. Colleagues eating someone else’s food
3. Colleagues eating loudly
4. Colleagues speaking too loud
5. Colleagues whistling or singing
Commenting on the research, Mark Pearcy, Head of Marketing at 4Com, says: “If you work full time, you probably spend more time with your colleagues than anyone else, so it’s no surprise that certain habits can start to rub you up the wrong way. In those situations, we’d recommend letting the person know what’s bothering you in a clear, friendly and polite way, as well as being as patient as possible. After all, who knows, there are probably some things you do that make your colleagues grit their teeth.”
With a recent report from Henley Business School highlighting that a shorter working week could add to businesses’ bottom lines through increased staff productivity and uplift in staff physical and mental health, a study from ADP (registration) has further emphasised these findings. ADP’s research claims almost two-thirds of UK workers (61 percent) would opt for a four day week at work if they had the choice.
However, respondents are split in terms of how this would impact their overall hours and pay, with almost half (45 percent) saying they would prefer to work four longer days to earn the same salary and 16 percent preferring standard hours at reduced pay overall. The remaining 39 percent would opt to continue to work regular hours.
The four-day week is most popular amongst those aged 25-44, with two-thirds saying they would opt for this way of working
In addition, the Henley report revealed that almost two thirds (63 percent) of employers said that providing a four-day working week has helped them to attract and retain talent. This, coupled with ADP’s findings, illustrates the growing demand for organisations to seriously consider a transition to a four day working week in order to increase productivity and remain competitive in the skills-shortage climate.
ADP’s research found that the four-day week is most popular amongst those aged 25-44, with two-thirds of this age bracket (66 percent), saying they would opt for this way of working – perhaps due to the challenge of balancing work with family and other responsibilities. The majority of this group would want to maintain their pay levels in exchange for working longer days (46 percent).
ADP’s report surveyed over 10,000 European employees and found that the four-day working week is most popular amongst employees in Spain (63 percent) with the UK (61 percent) following closely behind. It also proved popular in the Netherlands (61 percent) and France (60 percent), whereas only 38 percent of Polish workers are tempted by the idea. Those in the UK are most likely to opt for a four-day week at reduced pay (16 percent), twice as many as in Poland (8 percent).
Jeff Phipps, Managing Director at ADP UK, commented: “With productivity, work-life balance and workplace diversity remaining high on the list of business-critical issues throughout Europe, a shorter week could be the solution. Studies have shown that, in many cases, employees can achieve just as much and enjoy a better work-life balance by working this way, so it’s a win-win for staff and employers. There are also signs that a four-day week could help to improve gender diversity in the workplace, by making it easier for couples to manage family responsibilities and enabling more women to take full advantage of professional opportunities. This allows everyone to pursue the full range of their passions at work, while bringing greater diversity to the office and allowing employees to enjoy a fulfilling home life.”
Phipps continued: “However a cautious approach is advised as, in my own anecdotal experience, working mums have often asked, “How will that help me pick up my kids from school?” We have to listen to and understand our employee needs, then leverage appropriate solutions to give people the balance and flexibility they seek within the specific business context. Silver bullets may make for good political headlines but their practical implementation can fail to deliver the intended benefits.”
The government has launched its latest Good Work Plan consultation which proposes a new single body for employment rights enforcement. The new body would replace the current seven organisations that have responsibility for employment rights enforcement. The proposals include the body having powers to enforce payment of the minimum wage, labour exploitation and modern slavery, along with holiday payments for vulnerable workers and safeguarding agency workers. The consultation considers whether the body should also enforce laws related to workplace discrimination, harassment and bullying.
Under the proposals, the new body would:
deliver extended state enforcement of holiday pay for vulnerable workers and regulate umbrella companies;
provide a strong recognisable single brand source for help to vulnerable individuals and the coordination of complaints;
supply better support for businesses on employment rights and produce a more easily navigable and proportionate approach to enforcement;
pool intelligence and better target proactive enforcement activity to tackle serious breaches;
ensure more effective use of resources and coordinated enforcement action;
give new powers and sanctions appropriate to the seriousness of the breach; and
achieve closer working with other enforcement partners.
The intention is to benefit both vulnerable workers and good employers.
The consultation proposes that:
the DWP enforcement of statutory sick pay should move to the single enforcement body
where there are gaps in the existing enforcement tools and approach to discrimination and sexual harassment in the workplace available to the EHRC, the single enforcement body may be a better route to address them.
to move enforcement of employment tribunal awards from the existing BEIS penalty scheme to the new single enforcement body.
with the health and safety executive maintaining overall responsibility for the Working Time Regulations enforcement, allow the single enforcement body to enforce specific elements relating to annual leave for vulnerable workers.
The need for good work
This is the first proactive step announced since December 18 in the government implementing The Good Work Plan
Commenting on the new proposals, Carolyn Brown, RSM employment law partner and head of RSM Legal LLP said: “This is the first proactive step announced since December 18 in the government implementing The Good Work Plan. It should certainly tighten regulation, but its impact may not be seen for some while.
“It has also had the effect that there has been a pause of the current BEIS naming and shaming regime for NMW breaches. Despite ministerial statements that defaulters during the pause will eventually be named, it must be assumed that pause will be maintained at least until the results of the consultation are known.
“It is also significant that Matthew Taylor, whose Good Work Review recommendations the government proposes to deliver has been appointed from 1 August for twelve months as the new Director of Labour Market Enforcement strategy. This will allow him the opportunity to implement some of the ideas that his report first proposed.”
The government has taken the view that the proposed new single enforcement body is better placed to develop a consistent approach to “lower harm breaches” by employers through inadvertence causing little damage to the worker where formal enforcement action may not be appropriate and where factors such as whether there was a detriment to the worker or whether the employer has committed other breaches would be taken into consideration.
The government says the proposed new single enforcement body should:
make it easier to raise a complaint
improve the ability to identify non-compliance
publicise breaches more effectively through a consistent and more targeted approach rather than the current myriad complaint routes.
A new approach to naming and shaming
The consultation reflects the fact that the naming and shaming regimes apply differently across different enforcement areas with BEIS naming all employers who have been issued with a notice of underpayment of National Minimum Wage unless employers meet one of the exceptional criteria or have arrears of £100 or less but different application under other enforcement bodies.
Naming everyone subject to enforcement action could dilute the impact of naming
The view is taken that naming everyone subject to enforcement action could dilute the impact of naming. Instead focussing on more serious breaches such as where a business has failed to respond to enforcement action would be more consistent and supportive, with the tougher enforcement action reserved for more deliberate and persistent breaches. Therefore, it is proposed the new body should focus on publishing enforcement action involving more serious breaches such as prosecutions, larger underpayments, individuals who failed to pay a civil penalty and persistent offenders.
It is proposed that the civil penalties regime under the National Minimum Wage Regulations is extended to other enforcement areas where arrears of wages are involved. The new penalties are proposed to be set at the same level as the National Minimum Wage penalties of 200 per cent of arrears with a minimum penalty of £100 and a maximum penalty of £20,000 per worker and, as with National Minimum Wage, a reduction of 50 per cent where the arrears and penalties are paid within 14 days.
It is also proposed to introduce civil penalties where arrears have arisen due to a breach of regulations 12 or 25 of The Conduct of Employment Agencies and Employment Business Regulations 2003 particularly where they relate to pay, such as an employment business which has not received payment from the client withholding pay from the worker or if the worker cannot produce an authenticated timesheet and withholding payments in the entertainment or modelling industries where they are due to the worker and requiring then to be held for no more than 10 days and in separate client accounts.
The consultation ends on 6 October 2019 with funding for the new body already being secured.
The UK Government in partnership with the CBI and TUC has launched a new scheme to help workers whose jobs change or become obsolete because of advances in technology. Workers will be offered help in retraining or finding a new career amid suggestions that up to a third of jobs could be at risk of changing because of automation in the coming 10 to 20 years. The National Training Scheme will be trialled in Liverpool before being rolled out across England. The CBI and TUC are both backing the initiative as a way of boosting productivity, pay and workers’ skills.
Education Secretary Damian Hinds said: “Technologies like AI and automation are transforming the way we live and work and bringing huge benefits to our economy, but it also means that jobs are evolving and some roles will soon become a thing of the past. The National Retraining Scheme will be pivotal in helping adults across the country whose jobs are at risk of changing to gain new skills and get on the path to a new, more rewarding career.
“This is a big and complex challenge, which is why we are starting small, learning as we go, and releasing each part of the scheme only when it’s ready to benefit its users.”
The scheme was broadly welcomed by Dr Emily Andrews, Senior Evidence Manager, Centre for Ageing Better who cautioned that it should take account of the needs of an ageing workforce.
“A new initiative on retraining is great news, but automation is just one of the major changes reshaping our workforce”, she said. “The proportion of workers over age 50 is growing, and older workers often tell us they don’t get the same learning or training opportunities as their younger colleagues.
“Older workers who lose their jobs due to automation are particularly vulnerable. When older people fall out of the workforce, they find it much harder to get back in than others. That’s why this initiative must take into account the needs of older workers. Retraining must build on their existing experience, and lead to flexible opportunities that fit in with their other responsibilities.”
Activity in the construction sector rose in the second quarter of the year, despite concerns that political uncertainty surrounding Brexit was holding back investment. The Royal Institution of Chartered Surveyors claims that the market has lost patience with the lack of clarity over Brexit and that clients were beginning to push ahead with projects, albeit tentatively. In its construction and infrastructure survey, a balance of 16 per cent of respondents reported an increase in work, up from 9 per cent in the previous quarter.
The markets’ patience with Brexit related indecision appears to be wearing thin, as the results of the Q2 2019 RICS Construction and Infrastructure Market Survey shows output growth accelerating, and workload and employment expectations gathering pace for the year ahead.
After a prolonged period of delays and underinvestment, businesses now appear to be fed up and are proceeding cautiously with new hiring and intentions to invest
Jeffrey Matsu, RICS Senior Economist, says: “Three years on and the long, unrelenting shadow of Brexit uncertainty is testing the mettle of the construction industry. After a prolonged period of delays and underinvestment, businesses now appear to be fed up and are proceeding cautiously with new hiring and intentions to invest.
“While much of this is likely to be backfilling or maintaining existing capacity, the requirements of larger projects such as Hinkley Point C and HS2 are constraining growth opportunities elsewhere. With the range of possible outcomes related to Brexit as wide as ever, we expect to see continued volatility in the construction output data but in the meanwhile foresee workload activity stabilising.”
This quarter, 16 percent more respondents reported an increase in construction workloads, up from a +9 percent net balance in Q1. Relative to other sectors, workloads in public housing grew at the fastest pace, closely followed by private housing. The rise in workloads in social housing (+26 percent up from +6 percent) suggests that the lifting of the HRA borrowing cap may have begun to influence sentiment in social housing construction.
Following a dip in Q1, workloads in the infrastructure sector improved in Q2 and there was also modest growth in commercial and public non-housing activity. Looking to the year ahead, workloads are expected to be most resilient in the private housing and infrastructure sectors with 27 percent and 25 percent more surveyors, respectively, anticipating activity to rise rather than fall.
The capacity problem
Business enquiries for new projects or contracts continued to grow this quarter as 12 percent more respondents reported an increase rather than a decrease over the past three months – unchanged from Q1. However, capacity continues to constrain potential activity with 38 percent more surveyors having to increase headcount in the past three months to support new work, despite the ongoing recruitment challenges.
Other obstacles to growth cited by respondents include access to finance, which continues to be the biggest impediment to building activity (69 percent). Although 18 percent more respondents reported a deterioration in credit conditions over the past three months, year-ahead expectations have become somewhat less restrictive.
Despite an increase in hiring intentions, skill shortages continue to pose a significant challenge as well with half of respondents saying there is a shortage of quantity surveyors. This is underscored by rising labour costs with a net balance of 73 percent of respondents foreseeing an increase in such expenditures over the coming twelve months.
Within infrastructure, the energy, rail and communications subsectors are expected to see the strongest expansion in output over the coming twelve months. However, despite the potential of additional Government spending, nearly two-thirds of respondents were of the view that infrastructure projects will stall without access to funding from the European Investment Bank.
Despite the continued Brexit uncertainty, the RICS market confidence indicator – a composite measure of workload, employment and profit margin expectations over the coming twelve months – rebounded to 21 percent (from 13 percent in Q1). Investments related to equipment, software and worker training are expected to gather pace as well. However, for the fourth consecutive quarter, profit margin expectations remained flat and tender price expectations eased.