What impact have recessions had on the construction industry in the past, and how will that play out this year as the IMF predicts a contraction of the UK economy, asks Matt Lamy
In the summer of 2014, a fateful decision was made. Rather than fit zinc cladding with a mineral-rich fire-retardant polyethylene core to the exterior of Grenfell Tower – as had been proposed and approved – the Kensington and Chelsea Tenant Management Organisation and contractor Rydon instead opted to install cassette fix aluminium composite material cladding (ACM).
The result, as we now know, was tragic. But in the aftermath of the disaster, the reason why the exterior cladding specification was changed became quite clear: by fitting cassette fix ACM panels, the price to refurbish Grenfell Tower could be reduced by almost £300,000. In the drive to reduce building costs, it was the most misplaced saving in modern British history.
Whatever lessons have been learnt because of the Grenfell Tower fire, the attendant dangers that come with the reality of economic difficulties can never be entirely removed – and the UK is certainly facing economic difficulties right now. Wholesale energy prices are turbulent; the cost of living continues to rise; and the International Monetary Fund is predicting the UK’s economy will shrink by 0.6% in 2023. According to the UK’s Office for National Statistics (ONS), a third of all businesses reported their turnover falling between November and December 2022; 41% of businesses reported an increase in the prices of goods or services bought in the same period; and 23% of businesses reported their overall performance, including pricing, trading and workforce, had fallen in December 2022 compared with December 2021.
The need to find savings is obvious. But in construction, cost-cutting, circumventing of standards and competence, and heightened pressures on the workforce can bring significant risks. Here we look at some of the most pressing issues.
In male-dominated industries such as construction, mental health is a particular concern. The ONS Suicide by occupation, England: 2011 to 2015 report showed that the suicide rate among low-skilled workers in construction is 3.7 times higher than the national average, with construction workers six times more likely to take their own life than to die in a fall.
How mental health is affected by events such as recessions isn’t entirely clear, although some trends have been identified. In the report Mental health outcomes in times of economic recession: a systematic literature review published in the BMC Public Health journal, researchers found that “periods of economic recession are possibly associated with a higher prevalence of mental health problems, including common mental disorders, substance disorders and ultimately suicidal behaviour”. However, these outcomes are also affected significantly by mediators such as unemployment, income decline and unmanageable debts.
For those in steady work, the effect of recession or economic downturn on mental health is even less obvious, although the added stress that such situations can bring is cause for concern and awareness. In its overview Mental health conditions, work and the workplace, the UK’s Health and Safety Executive (HSE) says: “Work-related stress where such stress is prolonged can lead to both physical and psychological damage, including anxiety and depression. Work can also aggravate pre-existing conditions, and problems at work can bring on symptoms or make their effects worse.”
A major component of such stress can be the pressure of client expectations. However, it is important to remember that under Construction (Design and Management) Regulations 2015 (CDM), there is the expressed requirement for commercial clients to “make suitable arrangements for managing their project, enabling those carrying it out to manage health and safety risks in a proportionate way. These arrangements include [among other requirements] … allowing sufficient time and resources for each stage of the project [and] making sure suitable welfare facilities are provided for the duration of the construction work.”
For construction industry-focused help and advice, mental health charity Mates In Mind offers valuable resources specifically designed for the building industry (see box).
Mates In Mind
Established in 2016 by the Health in Construction Leadership Group (HCLG) with the support of the British Safety Council, Mates In Mind is a charity that aims to improve the mental health and wellbeing of workplaces across the UK by helping employers raise awareness, improve understanding and address mental ill-health.
Steve Hails, Director of Business Services and HSW at Tideway, is the Founder and Chair of Mates In Mind. He says: “There are some organisations that are purely focused on mental health first aiders, but that in itself is reactive: you’re dealing with the problem once the problem has arisen. Mates In Mind also looks at the underlying issues that construction has in abundance that maybe other industries don’t have.
“Do we have such a high suicide rate in construction because we have such a transient workforce? Is it because we have so many people who are self-employed? Is it because we are predominantly male? Is it because in lower-skilled jobs, financial issues are a concern? It’s about bringing the underlying issues to the fore and seeing what you can do differently to create an environment where people feel part of a team.”
Mates In Mind has a simple checklist to help identify if someone might be experiencing mental health problems:
- feeling restless or agitated
- feeling tearful
- not wanting to talk or be with people
- using drugs or alcohol to cope with feelings
- not replying to messages or being distant
- not wanting to do things they usually enjoy
- finding it hard to cope with everyday things
- recent inability to concentrate on work or in meetings
- recent inability to complete work; or
- a new pattern of unexplained lateness or absences.
In terms of physical health and safety during the current economic malaise, HSE comments that while it has not carried out specific research looking at the impact of economic fluctuations on construction health and safety performance, it does monitor trends “using the latest data on the construction industry available from the ONS’s Construction output in Great Britain statistical bulletins”. It continues: “We are also represented on the Task Force of the Construction Leadership Council, which publishes a monthly construction update. This allows us to stay aware of and, where appropriate, respond to developments across the industry.”
HSE has previously studied safety trends during economic downturns and the results are perhaps surprising. In its report Trends and Context to Rates of Workplace Injury (Research Report 386), which looked at safety data over an almost 20-year period, HSE found the most dominant influence contributing to an individual’s risk of injury is occupation, with the top two most hazardous occupational categories being construction labourers and metal, wood and construction trades. However, analysis of the data revealed that it was actually a 1% increase in GDP above trend that could be associated with a 1.4% increase in the rate of major accidents. Or, in other words, safety risks increased as economic recovery took hold. And further detailed analysis revealed that this pro-cyclical pattern is particularly prominent within construction and manufacturing sectors.
“Two main mechanisms have previously been cited to explain the pro-cyclical pattern in accidents,” the report says. “Firstly, accident rates will increase with the hiring of new staff, since newer workers are more at risk of injury. Secondly, accident rates will increase at times of increased worker effort – for example, as overtime working increases in response to higher demand.”
On that first point, the risk of workplace injury declines rapidly as employment tenure (how long someone has been in a job or role) increases, with increased risks particularly apparent during the first four months of a new job. In simple terms, that means if a firm was to lay off less experienced staff in times of recession, its safety outlook would – according to trends – be more likely to improve.
The second factor, however, could have a negative bearing in recession times, especially if fewer workers are being asked to do more. In terms of worker effort, the report identified that an increase in the ratio of overtime to usual hours was estimated to be associated with higher rates of workplace injury.
Countering this, underworking is also associated with increased accident rates: “In terms of the length of the working day, after correcting for exposure, those working fewer than ten hours per week were most likely to report having had a reportable workplace injury per hour worked,” the report says.
At times when cost-cutting may be prevalent, it’s important to know that, under UK law, employees are allowed to whistleblow if they witness certain types of wrongdoing. However, the wrongdoing must be in the public interest, which means it must affect others. Employees are protected by law if they report any of the following:
- a criminal offence – for example, fraud
- someone’s health and safety being in danger
- risk or actual damage to the environment
- a miscarriage of justice
- a company breaking the law – for example, it does not have the right insurance; and
- if you believe someone is covering up wrongdoing.
The UK Government website says: “As a whistleblower you’re protected by law – you should not be treated unfairly or lose your job because you blow the whistle. You can raise your concern at any time about an incident that happened in the past, is happening now or you believe will happen in the near future.” For more advice visit: gov.uk/whistleblowing
If you are not sure you would be covered by whistleblowing protection as an employee, you can seek further guidance from Citizen’s Advice: citizensadvice.org.uk
Whistleblowing does not include personal work grievances or disputes. If you need help resolving these issues, contact the Advisory, Conciliation and Arbitration Service (ACAS): acas.org.uk
Products and materials
If the situation regarding worker safety during recessions is mixed, what about the budgeting, design and specification of products and materials – essentially the root cause of the Grenfell Tower fire? Douglas Masterson is the Technical Manager of the Guild of Architectural Ironmongers (gai.org.uk) and says his members see the effect of this more clearly than anyone else in the industry.
He adds: “Architectural ironmongery can be one of the most frequently changed items in a building specification because, when contractors and developers are getting towards the end of a project and budgets have started to run low, ironmongery is one of the last things that gets installed. Obviously, a contractor will be looking at ways to bring a project in under budget and it’s a very easy thing to say, ‘I’ll just go with the cheapest alternative’. However, those people may not be the best qualified to do that. It’s easy to supply ironmongery off a shopping list but, when things go wrong on-site, how is that contract managed?
“What we have found in our GAI research is that although ironmongery is worth 2% of a project on average, in terms of its impact on ongoing costs, it can have a 25% to 30% impact on maintenance bills. And when it comes to things like fittings on fire doors and escape doors, if you de-specify ironmongery with a non-compliant solution, you could end up in a very difficult situation.”
Even despite a looming recession, in the wake of the Grenfell Tower fire the product specification landscape is changing. Masterson is also Co-Chair of Working Group 12: one of the working groups set up following the Hackitt Report to look specifically at competence in construction products. He adds: “I think there’s always the temptation to use cheaper products, but at the moment there is more of a push for people to ensure that what they are doing is right. Time will tell, but what comes out of the Grenfell Inquiry will have significant implications. Certainly, when it comes to competency and ensuring that the correct product is chosen and installed correctly, there is more and more pressure being brought to bear.”
That brings us to the issue of competence more generally. While economic considerations are certainly real and significant, the construction industry is in the midst of a mindset change in the way it views competence that seems unlikely to be knocked off course.
“When we’re talking about innovation and change to the wider construction industry, the most significant issue that has come up through the Building Safety Act is a real push in competence and demonstration of that competence,” says Masterson.
“There are a number of new British standards that have been written regarding competence in terms of the principal designer, the principal contractor and those responsible for building safety. In Working Group 12, we have published a white paper on how to be able to assess your competence in construction through a competence product framework, to the extent that we are in the early stages of looking to use that to create a new British Standard. At the moment there is also an Interim Industry Competence Committee (IICC) and I sit on its baseline subcommittee. This will become the Industry Competence Committee later in the year and that will ultimately report directly to the HSE. Whatever the wider economic conditions, if ever there was an agency that would not want people to be falling asleep on its watch, it’s the HSE.”
While it’s impossible to gloss over the economic difficulties currently facing the construction industry, the full picture isn’t necessarily quite as negative as it might appear. The year ahead will be tough for many. But if the industry can continue to commit to the recommendations made following the Grenfell Tower fire, that would be the very least that might be expected out of respect for those who died.
Download the Working Group 12 white paper at: bit.ly/CPA_whitepaper