Weekly Economic and Construction Update – 20 January 2023
UK construction average weekly earnings in November 2022 overall were 6.2% higher than a year ago according to the ONS. Clearly, it will vary considerably by occupation as wage rises for some have been significantly higher than this. Given CPI inflation of 10.7% in November, this means construction wages in real terms fell by 4.5%.
The fall in UK construction real wages is despite persistent skills shortages in some areas of the industry, particularly for some skilled trades and specialist engineers. Annual real wage growth has been negative for 14 consecutive months in UK construction, even before the energy, oil and commodity price spikes in Spring last year (so the real wage falls are not just because of the sharp rise in economy-wide inflation since Russia’s invasion of Ukraine).
UK construction real wages are highly likely remain negative until economy-wide inflation slows considerably (over a year on from the energy, oil and commodity price spikes) later this year and then as construction demand slows in some key sectors such as private housing new build and repair, maintenance and improvement (rm&i) during 2023.