Annex B: Potential effects of Brexit
The Scottish construction sector has approximately 3-4% EU workforce and the UK average is 9-10%. London and south east England have typically 45-55% EU workforce on new housing construction sites. Previous effects of skills shortages in London during the 1980’s, 1990’s and 2004-2008 attracted skilled operatives from across the UK to work in London. If EU workforces opt to leave the UK wide effect of Brexit on the construction workforce is likely to further diminish the availability of future skills supply in Scotland. Table B.1 provides summary information on EU workforce in Scotland. Table B2. Provides information of which skills and job roles areas EU workforce are typically employed, based on 2017 datasets.
The potential negative effects of Brexit may also impact on the sector via indirect routes in relation to World Trade Organisation tariffs (WTO) on material imports if there is a no-deal outcome. Scotland is more exposed to construction material imports for new housing than other parts of the UK primarily through the high proportion of new build timber frame and imported timber and wood panel materials. Engineered wood panels have a WTO tariff of over 10%. If the value of the pound falls relative to other currencies for a period of time import costs will increase. This may then create a two factor increase in additional costs. As has been shown in previous times of cost increases, house building sites under construction which have not included for unforeseen price increases, can sometimes force companies to reduce investments in other areas, such as skills development.
Whilst the Scottish construction sector has a low number of EU workers many other sectors in Scotland are higher, such as tourism and hospitality. If the EU workforce decreases in other economic and industry sectors, for both urban and rural, this will significantly increase competition between industry sectors to employ available workforce. Given the training and qualification time periods involved for some site based skills it may be difficult for construction to be as attractive, versus other sector training programs.
This is further affected by the current high employment rate and low unemployment rate in Scotland and the UK. As such there is not a sufficient available pool of unemployed workforce to draw upon. Shortages in available labour supply can also create inflationary pressures on salaries and site running costs.
House building skills demand is currently very high across regions of Scotland and the current EU workforce in employment play an integral role. Many EU workforce employees arrived with skilled qualifications. If EU workers in the new housebuilding sector decide to leave Scotland and the UK there is in effect a 4 to 8 year gap in new training entrants to be skilled up to similar levels of some of the EU workers who have left. This would impact on productivity and delivery of new house building. Increasing offsite construction may ‘offset’ some of the traditional skills supply issues, however it may still be difficult to fill gaps for site operators, groundworks, infrastructure, services, roofers, utilities, carpenters and fit out staff.
Table B1: Key Points: Scottish EU workforce in construction 
|Key Points: Scottish EU workforce in construction (2017)|
|EU workforce in Scottish housebuilding||4%|
|EU workforce in Scottish civils and construction||3%|
|EU workforce in UK construction industry||217,000|
|EU Workforce in Scotland’s construction sector||7,000|
Table B2 
|EU Workers in Scottish Construction||As share of all workers in occupation (%)||As share of all EU Workers in construction (%)|
|Demolition / groundworks/frames||2.4||5.2|
|Management and professional||2.4||12.9|
Note: the above table is based on Census 2011 and as such can only be used as a guide.