What Rising Unemployment Means for the UK Construction Labour Market
The latest figures from the Office for National Statistics show that UK unemployment has risen to 5%, the highest rate since early 2021. While this suggests a cooling labour market across most sectors, the impact on construction is proving to be more complex.
Decline in UK Construction Activity – Unemployment in UK Construction
Construction activity has now contracted for ten consecutive months, with October marking the sharpest decline in more than five years. According to the S&P Global UK Construction PMI, civil engineering and residential projects have seen the steepest slowdowns, as clients hold back on committing to new work amid economic uncertainty and the upcoming Budget.
This mix of rising Unemployment in UK Construction and shrinking project pipelines paints a challenging picture, but not an unfamiliar one for the construction industry. Delayed investment, cautious clients, and political uncertainty often result in project postponements rather than cancellations. The data shows that while output is under pressure, job vacancies across the wider economy have remained largely stable, suggesting that skilled labour remains in demand.
What is the UK Construction Labour Market reflecting on the ground?
At We Build Recruitment, we’re already seeing this reflected on the ground. Some large infrastructure and civils projects have paused recruitment temporarily, yet demand continues to hold strong in key areas like fit-out, housing maintenance, and specialist trades. The ongoing skills gap, particularly for qualified tradespeople and experienced site managers, means construction employers are still competing for the best talent – even as the wider economy cools.
With unemployment expected to stay close to 5% into 2026, we could see a modest easing in labour supply. For employers, that may bring some short-term relief to wage pressures that surged during the post-pandemic boom. For workers, however, it highlights the importance of upskilling and staying adaptable as project demand shifts between sectors.
Ultimately, while the wider labour market shows signs of strain, construction remains a sector driven by long-term investment and skilled work. Economic cycles may slow momentum, but the need for housing, infrastructure, and regeneration projects doesn’t disappear, it simply pauses. And when confidence returns, the industry will once again be competing for skilled hands to build Britain’s future.
Building a flexible workforce
We enable a dynamic labour force that can flex with requirements. Whether demand spikes on a large-scale project or specialist trades are needed at short notice, our teams provide the agility employers need to keep projects moving. By maintaining close relationships with both our clients and contractors, we ensure the right people are always ready to step in, helping the industry stay resilient through shifting economic conditions.
