Will temporary migration overhaul ease construction labour shortages?

Labour shortages remain a top concern for construction businesses, a nation-wide survey of builders and developers has found. The building and construction industry platform BCI Central cited 90% of survey participants identifying shortages in skilled labour as a key challenge to their business. Acquiring talent was the top “people” related challenge with 79% of builders surveyed ranking it as their first priority.

This sentiment has been backed up with research by Infrastructure Australia whose annual Market Capacity Report has named labour as the top capacity constraint.

According to the report, the most critical shortages are in white-collar jobs such as scientists, project managers and structural engineers.

The significant pipeline of infrastructure projects across Australia, which are generally higher paying than residential sector jobs, is putting further pressure on high-demand trades, diminishing capacity across the residential construction sector. Residential developers and builders are reportedly competing for apprentices and workers against publicly funded infrastructure projects.

This may jeopardise Australia’s target of building 1.2 million new homes by 2029 (increased in August 2023 by federal and state governments from 1 million). This decision, though deemed a necessary step to alleviate Australia’s housing crisis, has come under fire from industry representatives who warn planning systems and labour capacity may not be able to meet the ambitious target.

Changes to Australia’s temporary migration policy that was announced in December 2023, attempt to address labour capacity issues. The 10-year temporary migration overhaul includes new visa pathways targeting highly skilled workers (earning over $135k).

Current figures estimate a shortage of 229,000 full time infrastructure workers as of October 2023. Engineers and scientists continue to experience the largest of all shortages, a trend expected to continue until mid 2024.

Machine operators, labourers and tradies have been excluded from the “specialist skills” pathway even if they earn more than $135k. This decision has attracted criticism from the building sector who believe it directly contradicts government’s commitment to improve the current rental crises by delivering 1.2 million homes by 2029. A spokesperson from The Abundant Housing Network Australia said:

“If the federal government is serious about making the record increases in housing supply needed to solve the housing crisis, then they have to be realistic: Australians need people to actually build these new homes.”

This carve-out is a response to pressure from unions to save construction jobs for local workers. Home Affairs Minister Claire O’Neil believes including tradies in the fast-track scheme could threaten Australian apprenticeships which would in turn impact the longer-term skilled labour pipeline.

Reference is made to many of our previous articles, particularly reference in our market updates, pertaining to claims inflation. Shortages in construction industry labour continue to put pressure on remediation costs following losses indemnifiable under a range of policies. This being from third party liability to first party loss. It follows higher labour costs for construction and remedial works which puts pressure on premiums.

When considering the use of migrant workers, prospective employers will need to have an understanding of the capabilities and qualifications of overseas staff. Greater supervision and scrutiny will be required to ensure the workers meet skill requirements to complete the tasks expected of them. Employers are exposed to risk associated with the performance of their staff. Professional indemnity insurers may face even more exposures if new staff are not qualified to Australian standards. To protect them from claims arising from work performed by those who are unqualified, insurers may wish to consider the scope of their exclusion clauses. Some already require qualification up to “Australian standards and industry regulations” but not all follow that drafting.

Australia has extremely rigorous work health and safety legislation imposing different quality standards across jurisdictions. Australian employers must ensure workers meet those safe working standards and this may mean more rigorous site inductions. It also means that boards should consider statutory liability risk for non-compliance to the respective standards in the event something “goes wrong” on site.

Our experts can advise your business across a raft of risk exposure pertaining to employment risk and risk transfer options. If you require any immediate advice, please contact our Team via the form below.