Summary
The construction sector comprises an important part of the EU economy. It accounts for around 6% of the EU GDP and employs around 13.5 million people (6.6% of employment in the EU-27 in 2021).
In addition to direct job creation, the construction sector also contributes to an important spill-over effect in related industries. It is the job creation – or destruction in case of crisis - in sectors like steel, glass, furniture, plastics, textiles, electrical equipment, and such. The multiplier effect is usually estimated to be more than 2 – meaning that at least 27 million additional jobs depend on the construction sector’s performance.
Construction is also strategically important. Historically investments in construction have acted as catalysts for growth during periods of economic recovery through, for instance, state-funded infrastructure projects. It is notable that the EU’s long-term budget, including the NextGenerationEU (NGEU) instrument designed to boost the recovery from the Covid-19 pandemic-induced economic downturn, has earmarked substantial funding for construction. It also regards improvements in the energy efficiency of buildings. In relation to the latter, two initiatives announced under the umbrella of the European Green Deal (EGD), namely the Renovation Wave (European Commission, 2020a) and the New European Bauhaus (European Commission, 2021a), highlight the strategic importance of the construction sector for securing the transition to a greener EU. Aside from making buildings more energy efficient, the EU green transition will also encompass the large-scale installations of wind and solar farms. It will also contribute to construction activities that are related to, amongst other things, the transition toward Europe’s cities becoming smarter and greener.
These developments suggest a rather positive outlook for the sector. Demand for construction projects is expected to be buoyant because of anticipated investments in physical infrastructures in the Member States. Long-term demand for housing to tackle both existing housing shortages and the additional pressures on housing supply from future increases in urban populations, will also positively affect construction employment.
Meeting future construction demand will be dependent upon there being a sufficient supply of construction skills. As will be documented, these skill needs are subject to considerable change. Meeting construction skill demand can be challenging due to changes in the types of skills necessary to meet new approaches to construction, and the relatively high share of employment concentrated in micro-enterprises which can be difficult to reach through training initiatives.
Figure 1: Skill needs and challenges in the EU construction sector
Employment trends
The economic cycle in construction is more sensitive than the economy as a whole. Length and costs associated with construction projects, and dependence on financial market trends (financial policies, interest rates) make buyers and builders carefully assess investment decisions.
Before the financial crisis, employment in construction was on an upward trend until 2008. Since then, overall employment levels have yet to fully recover (Figure 2). Employment fall following the economic crisis was very sharp. Between 2008 and 2014 the sector lost 3.5 million jobs. Since then, a slow and steady recovery brought back almost 700 thousand jobs. This growth culminated in early 2020, when the Covid-19-induced economic recession led to the destruction of more than 800 thousand jobs and brought the sector to its lowest employment levels in the past 15 years.
Figure 2: Employment in construction, 2008- 2022 (data for Q2)
Source: Eurostat Labour Force Survey. Online data code: LFSQ_EGAN2
During the post-pandemic reopening of economies in spring 2021 there was a surge in construction activity worldwide and in mid-2022, employment returned to pre-pandemic levels. Despite rising inflationary pressures in the EU and a risk of another recession, employment in construction did not fall down again in the second half of 2022, staying just under 13.5 million.
A variety of activities are undertaken in construction. Its employment is concentrated in small sized enterprises (see Figure 3). In 2020, just under half of all employment was in enterprises employing between 0 and 9 persons (46%), a figure which has remained rather stable over the last decade. Over time, the share of employment in large enterprises grows, but these still represent only one in eight jobs in the sector. As for other sectors with similar structure, training provision is often challenging for such entities due to limitations posed by their size (e.g., not being able to release workers to take part in training).
Figure 3: Construction employment by size of enterprise in the EU-27 (in %)
Source: Eurostat Annual enterprise statistics [SBS_SC_SCA_R2]
Future outlook
Cedefop’s newest employment projections indicate that employment in the construction sector is expected to decrease by around 1% between 2021-2035. This would translate into employment decline of around 180,000 job positions. In practice, because of retirements and other reasons for people leaving the jobs in construction, there will still be a substantial job demand, estimated as at least 7 million job openings over the period.
In the immediate post-pandemic period, just as construction was beginning to bounce back from the lockdowns, material shortages and rises in energy prices, began to affect the sector.
During 2022, the future short-term growth prospects of the sector were revised downwards as a result of material shortages, inflationary pressures, and general economic uncertainty exacerbated by Russia’s invasion of Ukraine.
There have been long-standing concerns about the sector’s capacity to efficiently meet demand. Productivity growth over the past 20 years has been about one-third of that in the economy as a whole. Added to this low profitability, budgetary overruns, and delays, reflected in relatively high levels of customer dissatisfaction, point to a sector with several weaknesses (McKinsey, 2020). Sector fragmentation has been identified as a cause. The sector’s dominance by small- and medium-sized enterprises (SMEs) - 3.3 million construction firms in the EU have fewer than 20 workers – results in:
- competition being based on price rather than quality and reliability which, in turn, is related to risk aversion with respect to the use of new designs, technologies, and materials (McKinsey, 2020); and
- a division of labour based on sub-contracting between large companies, that act as lead contractor, and SMEs sub-contractors. This division adds to transactional costs and limits the incentives for long-term investment in the workforce [European Construction Sector Observatory (ECSO), 2020].
New technologies (e.g., digital tools for monitoring the construction process such as Building Information Modelling (BMI), 3D printing, sensors, and the use of AI / digital twins in design) are recognised as important developments with the potential to address the sector’s weaknesses. There is recognition that BIM and its capacity to encompass the dimensions of time, cost, facility management, sustainability, and health and safety, has the potential, in conjunction with digital twins, to improve productivity in the future (RICS, 2022). Concerns persist, however, that taking up technological advances such as BIM has been too modest. For example, a 2022 worldwide survey of construction professionals reported that around 40% of respondents did not use digital processes and practices in their projects. A survey of construction sector stakeholders across the EU, including those from the public and private sectors plus academia, pointed to the importance of national and EU policy initiatives including awareness raising if the take-up of technologies such as BIM, sensors, augmented reality and so on were to be accelerated, especially among SMEs (ECSO, 2021).
Cedefop analysis of engineering and ICT occupations, associated with the use of advanced technologies, confirms these findings. These occupations represent 14% of employment in the EU sector – behind manufacturing, mining & quarrying, or utility services, such as energy, water, or waste treatment. The growth of employment share in these occupations in construction is well below the growth in the manufacturing industry (Fig. 4).
Figure 4: Employment share of technology-intensive occupations (in %)
Source: Cedefop Skills forecast database. Own calculations.
France, Finland, and Germany are the countries where the construction sector employs the highest share of technology-intensive occupations. Overall, this share is higher in western and northern European countries, and lower in eastern and southern European ones.
Figure 5: Employment share of technology-intensive occupations in the construction sector by countries (2021)
Source: Cedefop Skills forecast database. Own calculations.
Alongside technological developments, the greening of the EU economy significantly impacts the construction sector. The sector is responsible for around 35% of the EU’s total waste generation and produces around 40% of carbon emissions. Design, renovation, new materials, and technologies all have a role in reducing the carbon footprint of construction. The use of safe and sustainable raw materials, recycling, and reuse of materials to reduce waste are all important here. These are being advanced through EU initiatives such as Renovation Wave and the Circular Economy Plan, while several EU-funded research programmes (such as VEEP) have looked into the application of industrial technologies consistent with the concept of a circular economy. The European Commission’s report on the Circular Economy Principles for Building Design (European Commission, 2020c) has indicated the potential for technologies such as BIM to reduce waste in future building construction and demolition by making recycling and reuse of materials easier and safer. Additionally, the BAMB (Buildings as Material Banks) project has addressed the prevention of construction and demolition waste, the reduction of virgin resource consumption, and the progress towards a circular economy through industrial symbiosis. It draws attention to materials passports and reversible building design. More info on similar projects can be found here.
A more innovative, productive, and greener construction sector will require the support of a workforce that has the skills to progress these goals. The signs are that the sector is becoming more highly skilled. E Construction workers’ employment, the core occupation in the sector, has declined by 10% since 2009 and is expected to decline by an additional 10% until 2035. On the other hand, science and engineering technicians became the second most important occupation. Notable increases in other high-skilled roles are also foreseen to continue increasing.
Boosted by technological advancements and automation, electrical engineering jobs are also on the rise. The growing share of occupations tied to management, administration and marketing is another important pattern. (See Figure 6).
Figure 6: Employment shares of key occupations in construction (in %)
Source: Cedefop Skills forecast database. Own calculations.
With the full implementation of the EGD, there could be a boost in construction employment in the following years. According to Cedefop scenario analyses concerning the implementation of the EGD, there is expected to be a significant increase in demand for construction jobs by about 3.8% compared with the baseline scenarios (Cedefop, 2021a).
Skills in demand: the evidence from OJAs
The evidence presented above underlines the diverse factors that affect the skill composition of the construction labour force. Cedefop’s projections of future skill demand reveal that people will be increasingly qualified to a higher level in the construction sector, working in higher-skilled jobs. More granular level information on emerging skill demands can be gleaned from job advertisements.
Cedefop has been monitoring the construction online job advertisements (OJA) since 2019. There has been a notable spike in the sector’s OJAs during that period:
Figure 7: OJAs in construction (Q1-Q3 data), in thousands
Source: Cedefop Skills OVATE. Own calculations.
Such increase – more than twofold in just 3 years – is, however, driven mostly by the overall growth of the OJA market reflecting the pandemic and the increased digitalisation of HR processes. During the Covid recovery period (2020-2022), employment in construction grew only by 8% (as Figure 8 illustrates) compared to 68% of the overall OJA growth.
Given the limitations of the OJAs – namely representation bias that favours high-skilled jobs – occupation structure in the sector differs from the employment data (see Figure 8). The share of high-skilled roles (managers, professionals, technicians, business administration, ICT) reached 23% in employment but accounted for 63% in OJAs in 2022.
Figure 8: Construction sector: Occupation shares in OJAs and in employment (in %)
Source: Cedefop Skills OVATE and European Labour Force Survey. Own calculations.
However, comparing trends in employment and OJA change indicates similar stories. High-skilled roles are the fastest-growing ones in construction in the last decade, and this may also be a reason for the high number of recent job openings in OJAs.
Figure 9: Top skills required in construction’s OJAs (2020-22)
Source: Cedefop Skills OVATE. Own calculations.
Job postings are also an important source of information on most requested skills and qualifications. The ability to work in teams was the most common skill requirement in construction OJAs in 2022, mentioned in almost half of all sector job advertisements. The largest increases (captured by the green line and the right axis in the chart) concerned the use of CAD software and creative designing – the change was much larger than in the case of general ICT requirements. Additionally, compliance with legal and organisational guidelines and resource management skills notably increased, perhaps driven by the growing emphasis on quality and energy efficiency standards, and shortages of building materials associated both with Covid-19 production outages and loss of imported materials from Ukraine and Russia.
Figure 10: Top knowledge and qualifications required in construction’s OJAs (2020-22)
Source: Cedefop Skills OVATE. Own calculations.
Regarding knowledge and qualifications requirements, areas related to personal and social competences, to management and administration remain the most required ones. Technical areas, such as civil engineering, sales trades or architecture and town planning follow suit. This last area also notably grew in importance – more than four times – in just two years.
When it comes to the values and attitudes of the construction workforce, adaptability remains the most important quality. The ability to work independently, assume responsibility and cope with pressure gained more importance in the past two years – an interesting trend, pointing toward less direct management and empowering of employees to get more involved in decision-making.
Figure 11: Top transversal skills required in construction’s OJAs (2020-22)
Source: Cedefop Skills OVATE. Own calculations.
Research on skill needs in the construction sector points to the importance of soft skills related to communication and management of interpersonal relations across a wide range of construction jobs. These skills are regarded as critical to improving relations between co-workers and managing a working environment which increasingly requires a range of interrelated complicated tasks to be undertaken. The need for these skills is perhaps heightened at the current time given the particular pressures the construction sector faces.
Skill needs in construction: the VET response
Vocational education and training (VET) will have an important role to play in supporting construction to address its current and future skill needs. Many occupations in the sector traditionally concern VET graduates usually at the secondary education level, such as construction workers, construction engineering technicians and electro-engineering workers.
With the anticipated increase in the demand for tertiary education attainment, VET for construction will likely struggle to meet the sector’s future skill needs. Delivery of higher VET programmes could alleviate some of the skill mismatches while existing and new curricula will need to adhere to the challenges raised by digitalisation and the green transition.
Cedefop’s second European Skills and Jobs Survey concluded that while only 15% of construction workers perceived significant skill gaps and only 10% significant digital skill gaps (confirming the low deployment of IT technologies in the sector so far), almost half (49%) felt the need to develop more their technical, job-specific skills. Moreover, 43% of construction workers identify the need to develop more their social skills, such as communication and collaboration with others.
Figure 12: Skill challenges in the construction sector (2021)
Source: Cedefop second European Skills and Jobs Survey (2021).
In addition, the construction sector seems to suffer from significant skill mismatches. Over a quarter of its workers (27%) report they have higher qualifications than what their job requires, which may be a particular issue for many migrants employed in construction. Moreover, a same proportion of workers in construction (27%) only hold lower secondary qualifications or lower (ISCED 0-2). These workers are especially at risk of losing their jobs because of rising or changing skill needs and have generally lower access to training.
As an important sector for making the green transition happen, up- and re-skilling relevant to greening will be needed as a response to various elements of the EGD ambitions, such as new material, approaches to production and collaboration, and waste and energy-saving building techniques. The energy transition already forms the demand for specific construction projects and shapes tasks in several occupations. The European Commission’s BUILD UP Skills initiative is the largest pan-European effort to equip building professionals with the skills needed for the energy transition. Additionally, as of 2020, the sector contributed 37% to total waste generation in the EU (Cedefop 2022b), practices addressing construction and demolition waste management are expected to surge respective skill needs in some occupations in the sector.
The significant replacement demand characterising construction is another pressure point, particularly when taking into consideration the low attractiveness of the sector for younger workers. To balance the ageing of the sectoral workforce and minimise skill shortages awareness-raising initiatives targeting young and female learners are necessary. Inspiring examples are already in place, for example ‘I choose construction’ and ‘Women can build’ in France, and incentives to attract the young to civil construction and public sector works in Portugal.
Box 1. Examples of initiatives relevant to construction skill training
Programmes through the BUILD UP Skills programme, to equip construction workers with skills needed for the energy transition.
- BIMplement, training on-site workers across Europe on how to use building information modelling;
- CraftEdu, an e-learning platform that helps to ensure the availability of the right skills amongst on-site workers and vocational schools in Czechia, and;
- CEN-CE, is a training and certification programme in energy-efficient construction for heating, ventilation, and air conditioning professionals.
CDWaste-ManageVET aims at developing a modern and innovative e-training VET programme in the construction sector.
CODESMA delivered a modular VET course as an open educational resource on construction and demolition waste management.
Affecting both new learners and active employees in the sector, the skill changes described here call for action from both initial and continuous VET. Apprenticeships, a traditional VET pathway for the sector, is expected to gain traction, especially as another means of attracting young learners (for example, see the ‘Apprenticeships for the construction industry of tomorrow’ campaign that aims to attract young talent, improve the image of the sector, and encourage the construction industry to offer more and better apprenticeships). Understanding the skill needs of the sector using skills anticipation methods and tools is necessary even more now, given the complexity and pervasiveness of the green transition and its impact on jobs and skills (Cedefop, forthcoming). A sectoral skills strategy, as currently undertaken by the Construction Blueprint project, can offer guidance on the suitable areas for investing resources. Besides the skills for learners and workers, understanding the learning needs and changing tasks of construction VET teachers and trainers is indispensable for making the sector’s transition happen.
The construction sector is currently at a critically important juncture in its development. Following the COVID-19 pandemic and the linked economic lockdowns there has been a sharp rebound in economic activity. Like much of the rest of the economy, construction has experienced a strong increase in demand even though construction activity and employment during the pandemic were relatively well insulated from the worst effects of lockdowns (Pouliakas and Branka, 2020). The increase in demand has been, at least to some degree, tempered by increases in the price of energy and raw materials. At the same time, the sector was experiencing a period of substantial change as it came to terms with the twin (green and digital) transitions which necessitate changes in the way construction projects are designed and carried out. Longer run changes linked to the persistent need for productivity increases were also in train such as the use of off-site fabrication which, to some extent, pushes activities from the construction sector into the manufacturing one.
As the sector comes to terms with the green and digital transitions and finds ways of responding to the current disruptions caused by supply-chain problems and rapidly rising prices, there will be an acceleration in the use of technologies which ultimately reduce construction costs. This is likely to accelerate changes in the demand for skills linked to the use of productivity-enhancing construction techniques. Given the structure of employment in the sector, especially the significant percentage of micro-enterprises, the task of reskilling existing workers may be a formidable one. There is a danger that if emerging skill needs are not met, this could act as a major constraint on the capability of the sector to respond to the various skill challenges it currently faces.