The Talent Deficit Coming for Australian Construction Companies

Australian construction businesses will already be feeling the talent pressure, but there’s a lot more to come in the years ahead. Gaining an in-depth understanding of these issues, what they’ll look like, and how to handle them, will become indispensable.

So why is finding and hiring skilled workers so challenging and what can you do about it? 

What does the construction industry look like right now?

First up, let’s do a quick industry temperature check.

In terms of economic scope, data from the Australian Bureau of Statistics tells us that the construction industry accounted for over  9% of the nation’s GDP in 2024, and it is projected to continue growing. 

Source: ABS and Job and Skills Australia.

However, despite the sector’s robust contribution to economic development, one of the most pressing challenges facing construction companies today is sourcing and retaining top talent.

What’s behind the growing skills shortage?

The shortage of skilled labour in Australia’s construction industry is a longstanding issue that’s become even more pronounced in recent years. 

According to a 2023 report by Master Builders Australia:

• Over ‘80% of builders reported difficulties in finding suitable workers
• The construction workforce has grown by over 4% in just 12 months and is projected to keep expanding.
• 40% of trade roles were in shortage in 2023

This skills gap is not only confined to roles like carpenters and electricians but also affects office-based roles such as project managers, engineers, and estimators.

There’s a few stand-out factors helping to produce this worker deficit.

An ageing workforce

Australia’s construction workforce is getting older and many workers are fast approaching retirement age. This issue is then coupled with fewer younger workers entering the field. 

The median age of a construction worker in Australia is over 40, according to the Australian Industry Group, and there’s been a noticeable decline in apprenticeships and traineeships in recent years.

Strong appetite for construction projects

As Australia’s population booms and infrastructure projects expand, the demand for skilled construction workers has surged. This in turn leads to high competition for those with the requisite skills.

The need for qualified professionals to help realise these projects is getting sharper.

COVID-19 restrictions are still being felt

We can sometimes forget about the effects of the pandemic as it fades into obscurity, but there’s still a very real and lasting impact being felt.

The pandemic disrupted training programs, halted many apprenticeship schemes, and limited the flow of skilled labour from overseas. Many international workers who traditionally filled gaps in the Australian construction workforce were unable to enter the country due to travel restrictions. This led to a tight labour market where local talent is in high demand, but supply remains low.

What’s the government doing about it?

Well aware of the importance of the construction industry and the value in helping to bolster skills and employment opportunities, as of 2024, the Australian government is taking several steps to address the labour and workforce shortage in the construction industry:

Skilling Australia’s workforce program

The government is investing in programs to boost skilled trades training, including funding for apprenticeships and upskilling workers in sectors like construction. 

Better migration pathways

The Home Affairs Department is expanding visa programs to help attract skilled foreign construction tradespeople. They’re currently focusing on facilitating faster processing of skilled migration applications.

Women in trades initiatives

As per the 2024 federal budget, the government is focusing on creating programs targeting increased participation of women in construction trades through scholarships, mentorship, and career pathways.

Technology and innovation support

The government aims to encouragement of automation and digital technologies in the construction sector, aiming to improve productivity and reduce reliance on manual labour.

Investment in infrastructure projects

The government is funding large-scale infrastructure projects such as roads, housing, and energy, which are expected to create more jobs and stimulate demand for skilled workers. 

What are the main sectors and roles being affected?

While we’re seeing demand across the board, certain areas in the industry have been hit particularly hard by talent shortages.

Skilled tradespeople

Electricians, plumbers, carpenters, and bricklayers are some of the most difficult roles to fill. With an ageing workforce and fewer new apprentices entering these areas, companies often find themselves scrambling to find workers with the necessary skills and experience.

Project managers and engineers

The demand for qualified project managers, civil engineers, and quantity surveyors is also high, especially as complex infrastructure projects (like the Western Sydney Airport and Brisbane’s Cross River Rail) require significant expertise.

Safety and compliance specialists

As we all know, safety will always be a serious priority in construction. As new regulations and technologies continue to be rolled out, there’s a growing need for safety officers, compliance specialists, and risk managers. The skills required for these roles are undoubtedly specialised, making it difficult to fill vacancies.

What kind of impact is this having on construction companies?

There’s no two ways about it, the inability to secure top talent has significant consequences for construction companies.

• Project delays
• Increased costs
• Quality concerns
• Existing staff burnout

What can you do to attract and retain the best candidates?

Given the scale of the talent shortage, it’s prudent for construction companies to start rethinking their hiring and retention strategies. What specifically? 

Apprenticeships need serious focus

This may come as no surprise, but investing in the next generation of workers will put you in an excellent position to insulate yourself from future pressures.

It’s commonly understood that employers who invest in apprenticeships are more likely to secure a long-term, skilled workforce – and that’s the name of the game.

If feasible (and if you haven’t already) partnering with TAFE and other education providers is a sound idea. Offering paid apprenticeships with clear career progression can help retain talent in the industry.

Make sure you’re offering competitive salaries and benefits

There’s an obvious correlation between competition for talent and wages. If you’re not offering attractive pay, you’re always going to be battling uphill.

While high pay is always going to be a major deciding factor for candidates, it isn’t the only factor. Flexible work, genuine work-life balance, health and wellbeing programs, and career development opportunities are certainly going to put you at the top of the list.

Use better technology

Technology is reshaping the construction industry, and workers with tech-savvy skills are in high demand. Adopting the latest construction technologies, such as Building Information Modelling (BIM), drones, and construction management software , can make companies more attractive to younger, tech-oriented talent. 

Additionally, construction companies that embrace sustainable practices such as green building techniques and energy-efficient designs can appeal to workers who are motivated by environmental concerns.

Promote diversity

A diverse workforce brings a wealth of perspectives and can foster innovation in problem-solving. Encouraging women, Indigenous Australians, and other underrepresented groups to pursue careers in construction can help address the skills gap. 

Companies should focus on developing inclusive hiring practices and supporting diversity through training, mentorship, and career advancement programs.

Invest heavily in employee retention

Even if you’re doing well in recruitment and onboarding, if your retention rate is high you’re still going to have a significant workforce problem. To combat high turnover rates, companies must invest in retaining their existing employees. 

This can be achieved by offering career development opportunities, providing mentorship programs, and recognising achievements through bonuses, awards, or other incentives. Creating a positive company culture that values employees’ contributions can reduce attrition and promote loyalty.

Where to from here?

There’s no doubt that the construction industry in Australia faces a reasonable challenge in finding top workers. However, by strategically investing in apprenticeships, offering competitive salaries, embracing technology, and fostering an inclusive workplace, construction companies can better position themselves to attract and retain the skilled workers they need to succeed in an increasingly competitive market. 

There’s no silver bullet here, but with sustained effort, there’s no reason this challenge can’t be met and overcome.

Construction Workforce Readiness Quiz