9-11 May 2023
ICC Sydney


Australia, among other developed countries, is looking at even higher construction costs in future years as the Baby Boomer generation of skilled tradespeople retire and are not being replaced.

Workers over the age of 50 make up more than a quarter of the total construction workforce in Australia, compared with less than 15% three decades ago, and the loss of scarce skills as Baby Boomers retire will further push up prices that are already sharply rising due to current elevated levels of demand, RLB says in its latest  International Report .

It’s not a new phenomenon – certain tradespeople such as Stonemasons (for heritage facades) and European plastering are already in short supply – but the trend will worsen as people with more general skills such as carpentry and brickwork fall out of the workforce.

“There is a demographic shift,” said RLB research and development director Domenic Schiafone. “It looks like within the next 10 years, that’s where it’s going to come into play a little bit more.”

New Zealand, the US and Britain join Australia with this  ageing workforce  trend, but it is Canada that is most affected. According to the RLB Report, the percentage of workers aged 55 and over almost doubled between 1994 and 2017.

“It is a global thing,” Mr Schiafone said. “We’re encouraged to study more, to finish school, go into tertiary education. That has an effect on these trades.”

Infrastructure investment soaring

Australia also faces construction cost inflation over the next few years as expected infrastructure investment averages $10.1 billion for each of the next four years – more than double its average over the past decade. In Victoria, where surging infrastructure projects are taking over even as residential work shows signs of easing off, prices are likely to grow 3.6 per cent this year, and 3.5 per cent next year.

Steven Peluso, the managing director of renovations and insolvency work specialist Master Menders Building Group, says his firm faces the double-whammy of an infrastructure boom and an ageing workforce.

‘Older guys are more multi-skilled’

His company employs 28 people, five of whom are over 60 and one of whom is over 70 and the older employees are still able to do more than the younger employees.

“The older guys are more multi-skilled,” Mr Peluso said. “A classic example would be to pitch a roof on a house extension. The young guys need to be mentored and the job would be run by the old guys to go through all the special cuts in the roof and so forth.”

The eventual loss of those older workers means one thing. “It’s going to be costly,” he said.

The loss of the Baby Boomer generation of skilled workers will be partly offset by technology in a construction industry that has been slow to adopt it, Mr Schiafone said.

“Contractors are looking at doing more off-site,  more prefab work ,” he said. “But there’s always going to be something that does require the skilled trades and technology won’t be the answer for everything.”

Changes to Australia’s housing market are also influencing the type of work being done. The recent boom in housing values on Australia’s eastern seaboard has also  made it relatively cheaper for people to knock down their existing house and rebuild , rather than just undertaking a reno.

But moves toward prefabrication may also be hastening the loss of skills. One reason younger builders were unable to pitch a roof for an extension was because of a growing move to prefabricated trusses and walls that were factory made and shipped for assembly on site. This reduced the number of builders able to do a renovation of an existing house, Mr Peluso said.

“Probably 20 per cent of young guys might know how to do it,” he said.

About the author: Michael Belby

Article credit:  Commercial Real Estate

Source:  https://www.commercialrealestate.com.au/news/building-costs-hit-retiring-tradies/

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