Employment numbers within the construction sector are set to decline over each of the next five years as falling apartment sector activity means the residential building sector is no longer able to absorb labour which has been freed up as a result of the resource sector slowdown, the latest forecasts say.
In a new forecast, the Australia Construction Industry Forum (ACIF) says it expects employment throughout the construction sector to drop by around two per cent in 2016 and to fall every year over the next five years to go from 1.1 million in 2015/16 to closer to 900,000 in 2020/21.
It says that over recent years, employment levels within the sector have been extremely high as surplus labour associated with the downturn in the less labour intensive resources sector has been more than offset by growing levels of activity within the labour-intensive construction sector.
This, however, would cease to be the case as the dollar value of work done in multi-residential construction dropped from a peak of $28.2 billion in 2015/16 to $18.7272 billion in 2019/20, along with a less dramatic tapering off in work on new detached dwellings.
“The dip in building and construction activity, and an eventual drop in residential building activity, will catch up with the industry and induce a decline in employment numbers,” the ACIF said in its report.
“Employment is expected to fall by around two per cent this year (2016-17) and further falls over the next five years are expected to push employment below one million jobs, closer to 900,000 jobs.”
In its report, the ACIF says it expects bleak conditions across all three main sectors.
It says that residential building activity will rise by 4.5 per cent this year to $93.791 billion and remain stable in 2017/18 before dropping back 5.5 per cent in 2018/19 and 8.8 per cent in 2019/20.
Non-residential building activity will fall by 4.1 per cent this financial year before stabilising thereon after, whilst engineering construction will drop by 16.1 per cent in 2016/17 and 4.8 per cent in 2017/18.
Most of the falls will be in apartments as well as heavy industry (mining) and electricity, whilst resource states such as Western Australia, the Northern Territory and Queensland will be impacted most from a location perspective.
In terms of employment, the ACIF says Queensland and Western Australia will be worst impacted in the near term although New South Wales and Victoria would also experience declining employment levels from around 2018/19 onward.
It says lower skilled workers such as labourers will be worst impacted.
Behind the gloom, however, the forecasts also show that there are pockets of opportunity in some subsectors.
Road building work will expand from $15.992 billion in 2015/16 to more than $20 billion in 2018/19, whilst work on bridges, railways, harbours and airports will increase from $5.713 billion to more than $8 billion over that time frame.
Activity in the accommodation sector will also be strong, and there will be good areas of opportunity in large-scale renovations.
Adrian Harrington, head of funds management for Folkestone and chair of the ACIF’s Construction Forecasting Council says whilst conditions are softening overall, areas of opportunity are emerging.
“Now that the peak has passed, opportunities for the industry’s 1.1 million participants are simultaneously softening and relocating, however it is not all bad,” Harrington said.
“The dynamics of business and public spending has seen some expenditure move between sectors, rather than fall away entirely, so the opportunity landscape has changed significantly.”