Australia’s total construction work is reportedly on the rise but experts say it won’t be enough to combat steep tradie wage hikes.
Recent ABS stats for the June quarter saw the price tag of construction projects clocking a modest increase of 0.1 per cent, bumping the industry’s value up to $63.93 billion.
Engineering work was by far the standout, with projects like Victoria’s ‘Big Build’ and Queensland Olympic preparations pushing up activity by 0.5 per cent in the most recent quarter and 4.8 per cent compared to the same time last year.
But while big government projects might be booming, other areas of construction continue to get back on their feet.
Building work was hit the hardest, dropping 0.3 per cent thanks to a steep decline in non-residential work.
“Non-residential work is 0.9% lower than at the same time last year,” ABS said.
Despite July marking the beginning of Albanese’s hotly anticipated Housing Accord initiative, residential building work also fell by 0.1 per cent and is 2.9 per cent lower than in the same period last year.
All in all, the ABS figures paint a bleak picture of an industry limping along after taking a financial battering over the last three years.
And with wage hikes set to bleed developers’ wallets dry in the coming months, Employment Hero CEO and Chief Economist Ben Thompson is skeptical construction has the juice to recover.
“This is a concerning figure considering the sector has seen a significant and disproportionate jump in wages, with an annual rise of 18 per cent and a quarterly rise of 10 per cent,” he told Build-it.
Tradies are cashing in, but at what cost?
These massive wage numbers are thanks to union pay deals earlier this year, which saw some tradies pocket an enviable 20 per cent pay rise over the next four years.
For example, registered plumbers working under this agreement on Victoria’s Big Builds are looking at pocketing a 5 per cent increase in their annual wages, or an extra $6500, for a basic 36-hour week.
These same workers are already raking in almost $2500 a week, which includes a $57-a-day travel allowance and an annual base salary of around $130,000.
By the end of the agreement in 2027, workers would be sitting well above the $150,000 mark and overtime workers would be raking in a whopping $200k a year.
But, with this impressive pay packet looming large over developers heads, Thompson said “wageflation” could be doing more harm to the industry than good.
“Given the skyrocketing price of construction materials, on top of the cost of compliance for employers, construction businesses may continue to experience headwinds which will have broader negative implications for the economy,” he told Build-it.
Despite data actually showing an employee growth increase across the industry by 4.8 per cent for the year and 2.8 per cent for the quarter, the taxing tradie hourly has left a lot of projects unable to add additional value to the sector.
“The sector is in desperate need of efficiency that uplifts both employees and employers,” added Thompson.
“That begins with wage transparency; giving jobseekers a realistic understanding of their value in the jobs market, while equipping employers with affordable tools to find, hire and manage staff to make margins work in this tough economy.”
