Labour inflation bites
- Average weekly earnings in the construction industry continue to rise in the UK, pushing overall labour costs higher. - Rising pay makes every idle hour, remobilisation, and stacked crew day materially more expensive for contractors. - Higher labour costs amplify the financial impact of poor sequencing, increasing the value of clean handoffs and area‑readiness rules. (bcis.co.uk)
Pay in UK construction is still moving up month to month, even as annual wage growth has slipped below the rest of the economy. In February 2026, average weekly earnings in construction rose 0.2% on the month, while annual growth was down 0.8%. (bcis.co.uk) The figures come from the Office for National Statistics’ Average Weekly Earnings series, which tracks non-seasonally adjusted pay excluding bonuses and including arrears. The latest industry dataset was released on April 21, 2026, with the next update due on May 19. (ons.gov.uk) BCIS said construction has now trailed the whole-economy annual earnings rate for 10 straight months. Across the wider economy, average earnings were up 3.2% in the year to February 2026, down from 3.5% in the year to January. (bcis.co.uk) For contractors, that does not make labour cheap. It means every paid hour on site carries a higher cash cost, so delays, remobilisation, and crews waiting on unfinished areas eat margin faster than they did when wage rates were lower. (bcis.co.uk) That pressure is landing in a market where labour is still the main cost driver. BCIS said in its March 26, 2026 forecast that labour remains the primary driver of project costs, even as some parts of the pipeline are struggling to turn into live work. (bcis.co.uk) The industry is also still short of people in key trades. The government’s sector skills needs assessment said construction employed about 2 million workers in 2024 and would need another 251,500 workers between 2024 and 2028 to meet expected output. (gov.uk) BCIS said specialist shortages are showing up in trades including sprinkler installation and facade works. When those crews are scarce and expensive, poor sequencing on a project can turn one missed handoff into several days of paid downtime. (bcis.co.uk) That helps explain why contractors are putting more weight on area-readiness rules, tighter work packaging, and cleaner trade-to-trade handoffs. On sites where labour is the biggest live cost, productivity is less about headline wage inflation than about whether workers can start immediately when they arrive. (rics.org) The wider productivity backdrop is weak. The Royal Institution of Chartered Surveyors said one in five UK firms never measures productivity at all, and benchmark use in the UK is just 5%. (rics.org) Construction pay has swung sharply before, from a 9.5% annual fall in May 2020 to a 13.4% annual rise in May 2021, according to BCIS. In 2026, the squeeze is less about a wage spike than about what higher labour rates do to every avoidable lost hour. (bcis.co.uk)
