Global Trends in the Construction Industry: Challenges of Employment

Global Trends in the Construction Industry: Challenges of Employment

Begüm Sertyeşilışık (Istanbul Technical University, Turkey)
DOI: 10.4018/978-1-5225-2008-5.ch015
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Abstract

Construction industry is a labor-intensive industry contributing to the employment rate of the countries. The state of the country's economy and its construction industry are interdependent. An increase in the unemployment rate in the construction industry can have adverse impacts on the country's economy. Local markets are not local anymore. Even in the domestic markets, there is international competition due to the globalization. For this reason, global changes and new trends as challenges of employment in the construction industry need to be carefully analyzed due to their potential impacts on the employment rate and on the labor profile. This chapter covers construction industry's contribution to the employment rate of the countries; global trends as challenges of employment in the construction industry and as factors influencing professionals' skills needed in the construction industry; ways of adapting the construction workforce and professionals to the global trends in the construction industry.
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Introduction

Construction industry plays an important role in the global economy as it has 15% share in the world’s GDP (Gross Domestic Product) (Mazhar & Arain, 2015, p. 434). The global construction market is expected to grow further to USD$15,030 billion in 2025 (Department for Business Innovation and Skills [DEFRA], 2013, p. 5). Construction is a labour-intensive activity, and able to provide employment with low investment (International Labour Organization [ILO], 2001, p. 58). Construction industry depends more on labor compared to other industries (Kim, Kim, Shin, & Kim, 2015, p. 1534). Construction industry contributes to the employment rate of the countries (The World Bank, 2016) as well as to their economy. For this reason, construction industry can contribute to the global unemployment problem as global unemployment increased by 5 million people in 2013and as it is expected to rise by a further 13 million people by 2018 (International Labour Organization [ILO], 2014, p. 3). Ernst and Sarabia (2015, p. 24)’s research on structural economic trends in 45 high-income countries, middle-income countries and low-income countries between 1995 and 2009 revealed that the construction sector is crucial for economic growth and employment creation. Similarly, Chiang, Tao and Wong (2015, p. 1)’s study on Hong Kong revealed bidirectional causality links between GDP and construction activities as well as correlations of employment with GDP and construction. Further examples include but are not limited to the construction industries in the UK, Canada, Australia, Portugal, Bulgaria, Spain, Taiwan, United States, and Korea. In the UK, the construction industry contributed to £103 billion in economic output in 2014, and to the 6.2% of total employment in 2015 (Rhodes, 2015, p. 3). Construction industry plays an important role in the economy of Canada (Mazhar & Arain, 2015, p. 434). In Australia, the construction industry employs approximately 9% of the total workforce (Australian Industry Group [AIGROUP], 2015). In Portugal, the construction industry contributes to the 10.7% of total employment and to the 6.4% of GDP (Horta, Camanho, & Costa, 2012, p. 84). Ernst and Sarabia (2015, p. 9)’s research based on the WIOD (World Input-Output Database) (Trimmer, 2012) revealed that the construction industry presented “between 4.5% (Bulgaria) and 10.4% (Spain) of the overall gross output in 1995 and between 4.2% (Taiwan) and 14.6% (Spain) in 2009” and that regarding “total value added, it represented between 4.2% (United States) and 10.1% (Korea) in 1995 and between 2.2% (Taiwan) and 10.8% (Spain) in 2009”. The construction industry further contributes to the economy due to “its ‘pull’ and ‘push’ multiplier effects on other economic sectors.” (Chiang, Tao, & Wong, 2015, p. 1). The construction industry has higher multiplier effects compared to other industries (Ernst & Sarabia, 2015, p. 10). Ernst and Sarabia (2015, p. 24)’s research on 45 countries, based on data obtained through from WIOD and EORA, revealed that construction industry has acted as an employment driver especially in Australia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Japan, Korea, Malta, Netherlands, Portugal, Russia, Spain, Sweden, Taiwan, United Kingdom, the United States in the 1995-2009 period.

Key Terms in this Chapter

Labour-Intensive Production: Production relying more on manpower rather than on machinery and equipment.

Labour Force: Workforce capable of working consisting of employed and unemployed people.

Supply Chain: Production/construction and value creation chain consisting of all subcontractors/suppliers etc. taking part in the production/construction process.

Talent: Someone’s capability of doing something good.

Subcontracting: Outsourcing parts of contracted work to subcontractors.

Economic Fluctuation: Shrinkages and expansions in the economy affecting supply and demand.

Unemployment: Unemployment refers to idle workforce and mismatch between employment demand and employment supply.

Employment Rate: Ratio of employed labor force to the total labor force.

Construction Workforce: White and blue collar construction professionals.

Expertise: Knowledge, valid experience, and capability for doing something.

Capital-Intensive Production: Production relying more on machinery and equipment rather than on manpower.

Immigrant Labour Force: Labor force working outside of their home country.

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