Turner & Townsend cautions construction firms not to let skills go to waste and to future-proof their workforces as the sector continues to grapple with a shortage of skilled workers. Construction costs remain stubbornly high, with global disruption and uncertainty unlikely to alleviate.

The global professional services company’s Spring 2025 UK Construction Market Intelligence report (UKMI) shows that tender price inflation (TPI) in the industry is not set to fall, despite construction materials price inflation having eased from the previous record highs.

As the UK government works to boost development across real estate and infrastructure, Turner & Townsend is forecasting that TPI rates over the next three years will remain relatively unchanged. Real estate inflation from 2026 to 2029 is predicted to stay constant at 3.5 percent, while infrastructure inflation over the period is expected to remain at 5.0 percent.

At the root of these predictions is rising wage growth caused by intense competition for a small pool of qualified workers across the sector. Five years on from the pandemic, construction’s share of the UK labour force is currently at a record low, with sector employment down 3.4 percent year on year. Despite new government initiatives such as Skills England, and attempts to boost apprenticeship numbers, the future is currently looking uncertain. The Construction Industry Training Board (CITB) estimates that the average age of a UK construction worker is now over 50 – suggesting a looming cliff edge of retirement.

Wage rises are outweighing the otherwise disinflationary factors the sector is currently experiencing. New work, an indicator of demand, fell 2.4 percent on the quarter, according to the Office for National Statistics (ONS) and key material prices are falling, with the Department for Business and Trade reporting a 3.1 percent quarterly decline for structural steel, and a 2.4 percent fall for sawn wood. However, newly announced American tariffs on materials like steel may see this trend start to reverse.

In this period of uncertainty, Turner & Townsend is calling on firms to focus on consolidating and improving the skills they have, while laying the groundwork for future talent. This should include teaching new skills for the future to existing workforces, and retraining employees into specialisms that better match current demand, such as digital skills and expertise in modern methods of construction. More must also be done to improve retention – recognising career progression, inclusion, and psychological safety to ensure talent remains in the construction sector at this crucial moment.

Recent announcements, from the Planning & Infrastructure Bill to eagerly awaited industrial strategies, emphasise the construction sector's crucial role in the North East's economic and social ambitions. However, several obstacles may hinder our progress.

While keeping a close watch on US tariffs and their uncertain global impact, we must not lose sight of the issues we can address, especially the pressing workforce challenge.

Five years after Covid-19, employment in our sector continues to decline. Our industry needs to rethink our approach to attracting talent, embracing a broader range of disciplines, backgrounds, and skills to create a modern, digitally confident and innovative construction workforce for the North East's future.