Two new research papers from the Infrastructure Commission provide baseline information on our infrastructure workforce and global and local factors impacting on labour and material costs in construction.
The first report ‘Who’s working in infrastructure’ claims to provide the first comprehensive baseline analysis of our infrastructure workforce.
“You can’t plan for the future if you don’t have a sense of the size and make-up of your current workforce,” says Commission Director of Economics Peter Nunns.
“We wanted to know how many people work in the infrastructure sector and what sort of work they’re doing. We also wanted to understand who’s working in infrastructure, so we looked at factors like age, ethnicity, gender, training, and migration.
“We found that the infrastructure workforce is large and complex, with over 100,000 full-time equivalent workers spread across more than 100 distinct occupations. That’s around 4.7 percent of the total workforce.
The findings also shed light on who is working in infrastructure and the pathways that they follow into the workforce.
In 2018, the infrastructure workforce included an estimated 108,000 full-time equivalent workers. This is around 4.7 percent of the overall workforce.
These workers are split evenly between ‘horizontal’ infrastructure like roads, water pipes, and electricity transmission, and ‘vertical’ infrastructure like schools and hospitals.
Constructing new projects accounts for less than half of the workforce and the Commission estimates that around 14 percent of infrastructure workers are engaged in planning and design; 46 percent are constructing new assets; and a further 40 percent of infrastructure workers are engaged in asset management and maintenance.
Mobility from other sectors is more important for ‘blue collar’ roles and migration is more important for ‘white collar’ roles.
Professional and technical occupations include a higher share of migrants. These occupations are more likely to have university qualifications. Machinery operators and drivers and labourers are less likely to be migrants, and more likely to have moved between industries in recent years.
Ethnic diversity within the infrastructure workforce is similar to the overall population, but the ethnic mix is uneven across occupational categories. For instance, labourer occupations have a higher-than-average share of Maori and Pacific workers, while professional occupations have a higher-than-average share of European and Asian workers.
Women account for only 11 percent of the total infrastructure workforce compared to around 47 percent of the overall workforce. Moreover, younger age cohorts have a similar share of women as older age cohorts, suggesting that gender balance won’t change as older workers retire.
“This data will help us identify where we will face capacity pressures and how we can respond to them by sequencing work better and training and recruiting new workers. It also highlights increasing gender and ethnic diversity as a key opportunity for lifting our capacity to build infrastructure,” says Nunns.
Construction costs and global and local factors
A second paper published by the Infrastructure Commission looks at past changes in construction wages and prices for five key infrastructure construction materials, shining a light on projects that often cost more than expected.
“We analysed several decades of price data for construction inputs to understand how they are affected by both global and local factors,” says Nunns.
“We found that infrastructure providers have limited control over their input prices. Price changes mostly reflect the impact of things that are happening outside of the construction sector.
“For labour costs, we found that construction wages closely track wages elsewhere in the economy. In the short term, high demand for construction workers can push wages a bit above this trend, but construction wages tend to return to trend within two years.
“Global factors are the primary driver of material prices, especially for traded commodities like structural steel, timber and diesel fuel. Changes in global prices flow through to New Zealand very quickly. Even when we produce or source some materials here, prices are still based on global markets.
“The exception is materials like concrete and aggregates that are too heavy to ship long distances. Regional factors, like limits on setting up new quarries near major projects, are likely to play a stronger role for those materials.”
Delivery cost benchmarking
The findings of this report build upon earlier research by the Infrastructure Commission that looks at infrastructure construction productivity and infrastructure delivery cost benchmarking.
“Understanding what drives infrastructure costs allows us to better plan and mitigate risks and get more infrastructure for the money we spend,” says Nunns.
“While labour and material costs are hard to control, there are some levers we can pull. Infrastructure providers and decision-makers can focus on driving productivity in construction and optimising projects’ scope and design to ensure that we get the most bang for our buck.”