Construction the proportion of companies indicating that labor shortages as a limiting factor have almost doubled since the end of 2020, Ministry of Economy (EM) in an information report on projected changes in labor and construction material costs in the construction sector.
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Labor demand in the construction sectors remained high. The construction industry has been relatively less affected by the Covid-19 pandemic and overall labor demand in the sector is above pre-crisis levels. The number of occupied jobs in construction at the end of March 2021 was 3.1% higher than at the end of March 2020, respectively, but 3.9% higher than in the corresponding period of 2019.
Sentiment in the construction sector and expectations of employment growth are improving. In July 2021, the confidence indicator of the construction sector had returned to the level of June 2019, while employment expectations had returned to the level of April 2019. Given the overall positive sentiment in the sector, labor demand in the sector is expected to continue to grow.
At the same time, the share of construction companies facing labor shortages is growing. With the activity of the construction sector remaining high, the share of companies in the sector that face difficulties in finding the employees they need is increasing.
The share of construction companies, which indicates labor shortages as a limiting factor for the company’s operations, has almost doubled since the end of 2020.
According to the Business Survey, at the beginning of July 2021, 20.5% of construction companies indicated labor shortages as a factor limiting production (11% at the beginning of July 2020).
The increase in the shortage of labor in the construction sector is also indicated by the increase in the number of vacancies. Since the end of 2020, the number of vacancies registered with the SEA in the sector has increased by 15.7%. At the end of June 2021, a total of 6,869 vacancies were registered in the construction sector, which is more than 1/3 of the vacancies registered with the SEA and was the highest vacancy rate among the sectors.
Gradual growth of economic activities, implementation of the measures of the Latvian Recovery and Sustainability Mechanism plan, large investment projects (eg Rail Baltica), the new programming period for EU funds indicates that the volume of work in the construction sector will increase in the coming years. It is expected that by 2027, the demand for labor in the construction sector could exceed the pre-crisis level (the number of employees in 2019) by about 9% – more than 7 thousand employees.
With the aging of the labor force and the decrease in the total labor supply, the overall level of labor shortage in the construction sector could increase significantly in the coming years. Substitute labor demand will account for a significant share of total demand in the construction sector. The number of vacancies that could be created in the construction sector in the coming years will exceed the level that was observed in 2018-2019. per year.
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