INSIGHT: Construction jobs see sharp fall amid economic headwinds

The UK construction sector is facing a new period of turbulence, with employment figures dropping sharply in the second quarter of 2025. Data from the Office for National Statistics reveals that 2.08 million people were employed in the industry, a 2.9 per cent drop from the first quarter and a mere 0.6 per cent increase on the exceptionally low base from a year ago.

Noble Francis, Economics Director at the Construction Products Association (CPA), attributed the fall to a perfect storm of economic and market-specific pressures. Widespread uncertainty over the broader UK economy, including the prospect of further tax rises or spending cuts, has prompted many firms to pause new recruitment. Increased National Insurance contributions and a rising National Living Wage have compounded the issue, leading companies to rein in overall wage bills.

The downturn has been particularly acute in housebuilding, the industry’s largest sector. Affordability and demand constraints have created a market slowdown, while bureaucratic delays at the Building Safety Regulator have significantly held up high-rise projects. This disproportionately affects urban areas, especially London, where flats make up the majority of new residential developments.

Activity in other sectors is a mixed bag. While some areas of infrastructure, such as energy, remain robust, others have suffered from a lack of new projects as the Government continues to delay or cancel schemes like roadworks. Similarly, the commercial sector is seeing a split. Smaller, high-quality refurbishment and fit-out projects are strong, but major new developments are being pushed back due to viability concerns driven by high costs and uncertain demand.

The latest figures place the Q2 2025 employment level 340,784 lower than the recent peak in Q1 2019, and a staggering 503,060 below the pre-financial crisis peak of Q3 2008. The fall, Mr Francis notes, is not solely due to demand, but also a persistent age-demographic issue within the workforce that has been a concern for more than a decade.

Why this matters: The dramatic fall in the jobs within the construction sector is a clear indicator of the current state of the sector. This trend is mirrored in many of the segments of the construction sectors including the fenestration element. Firms are recruiting less as the effects of the recent national insurance have increase the cost of staff. Workforces are being cut at all levels, with sales, production and installation staff all being cut as firms adjust to the reality of less orders. The hope is this is a short-term problem, however many economic forecasters are predicting a tough 12-18 months ahead – with an even more uncertain future.