Increasing labour rates are set to keep Aussie building costs on the rise for years to come, according to Australia’s leading construction cost data experts.
A lack of skilled workers and several upcoming union pay rise agreements will prevent industry labour costs from stabilising any time soon, potentially threatening the profit margins and survival of hundreds of Aussie construction companies.
Construction cost escalation has remained stable across most other key costing factors, in a welcome relief to the rises seen post-COVID.
The latest industry data, provided by leading national construction costing agency Rawlinsons, showed a nationwide stabilisation of increased rates regarding energy prices, finance rates, material costs, builders’ margin and supply chain procurement.
However, the forecast spike in labour costs could eventually evolve into further problems for a construction sector already under significant pressure.
With an ongoing housing crisis, an upcoming Olympic games to host, and a promise to reach net zero carbon emissions by 2050, it’s safe to say Australia’s construction labour force will be in high demand for the foreseeable future.
Rawlinson’s director, Niall McAree, told Build-it that the forecasted instability in labour costs was simply a case of demand currently outstripping supply.
“You have multiple different construction sectors that are going pretty strong at the minute with multiple major infrastructure and transport projects in most states,” he said.
“Despite all these extra projects, everyone is still pulling out of that one pool of contractors, making skilled workers more valuable.”
Labour costs on the rise
Last month, the Queensland Government brokered a deal with construction unions for a pay rise of more than $10 an hour over the next four years and an extra $1,000 a week to work away from home.
These increases promise to boost the pay packets of workers across the industry, seeing 700-plus-tonne crane operator’s pay rise to $2394 a week and fourth-year adult electrical apprentices to about $44 per hour or $1585 a week.
Skilled labourers will also increase their wages by $10 an hour over the agreement, from $47.63 to $57.89. By 2027, they’ll be paid $2,084 a week.
Carpenters and other qualified tradespeople will be paid nearly $1,948 a week, from $2,351 a week, $54.12 an hour, to $65.78 by 2027.
Union deals to raise wages for entire sector
Mr McAree told Build-it that the impending union pay rises will also drive labour costs across non-union sites.
“These union agreements tend to set a precedent of where labour rates are going,” he said. “When you have these sorts of agreements in place, they impact further down the food chain regardless of whether the labour force is working on a union site – these pay rates drip down.”
By referring to researched and accurate labour cost data, such as Rawlinson’s Construction Handbook 2024 and Construction Cost Guide 2024, firms can ensure they are paying their workers industry-fair rates while still taking care of their profit margins.
“These books are a trusted resource, playing a pivotal role in enhancing the efficiency and accuracy of labour cost estimation,” Mr Mc Aree said.
“By offering detailed and up-to-date information on labour rates, productivity rates, and industry standards, our handbook and cost guide provide the industry with invaluable insights into the current market conditions”.
