Rapid pay increase for tradies

by | Oct 31, 2022

Home Industry Association logoThe HIA Trades Report released 28 October provided a quarterly review of the availability of skilled trades and any demand pressures on trades operating in the residential building industry.

HIA Senior Economist, Nicholas Ward stated that “as a result of a persistent, severe shortage, the price of skilled tradespeople rose sharply by 10.4 per cent over the year to the September Quarter 2022.”

While these severe shortages of skilled trades eased in the September Quarter, the HIA Trades Availability Index remained close to its lowest level on record. These low figures have resulted in the recent rapid increase in rates of pay for tradies, Mr Ward said.

“The HIA Trades Availability Index was -0.86 in the September quarter. This is a marginal improvement in the availability of trades compared with the -0.92 reported in the June Quarter, which was the lowest level on record.”

Any number below zero indicates a skills shortage. These bleak results reflect the severity of the current shortage and the corresponding increase in building costs around the country.

“Since the September Quarter 2021, the index has recorded trades shortages that are worse than all prior readings of the index,” Mr Ward said.

In contrast, the June Quarter 2022 figures showed there were over 104,000 houses under construction across Australia – a record high. This is 81.2 per cent higher than pre-pandemic levels with renovations activity also at record highs.

Mr Ward said, “this elevated demand for home building has exacerbated the pre-existing shortage of skilled trades. The rise in the cash rate will slow building activity, but this is not expected to adversely affect demand for building trades on the ground until 2024.”

The shortage is evident across all regions and all trades according to Mr Ward. The trades with the most severe shortage are Bricklaying, with an index of -1.49, and Carpentry with -1.21.

Mr Ward said there are two bits of good news however.

“Firstly, the number of apprentices in trade occupations was 27 per cent higher in the March Quarter 2022 than the March Quarter 2019, driven by government subsidies and high demand.”

“As these young workers develop proficiency, they will help the industry work through the large pipeline of work that has built up.”

“Secondly, this week’s Federal Budget indicates that Net Overseas Migration is returning much more quickly than previously expected. This likely reflects both a strong desire from foreigners to live and work in Australia and some reluctance amongst Australians, relative to pre-pandemic, to live and work overseas.”

“This improving source of labour supply will help builders and other businesses with the labour shortages that have been exacerbated by the pandemic,” concluded Mr Ward.