Ripple effects of Carillion collapse have yet to surface

Andrew Stephen. Image credit: Phil Wilkinson

By Andrew Stephen, director of construction, property & infrastructure at Change Recruitment

WHEN large employers like Carillion go into administration, there is a ripple effect, the layers and details of which may not be immediately obvious. Indeed, some commentators have likened it to the impact of the collapse of Lehman Brothers on the finance industry.

Certainly, we know over 1,100 people have lost their jobs as a result of Carillion redundancies – the epicentre of this dismal situation.

Many of these individuals found themselves immediately out of work, suddenly seeking employment in a candidate-rich market.

Measures are in place to help people find new employment and it’s likely that the vast majority will be placed very quickly into new roles.

However, we have yet to see the full extent of the Carillion collapse on its supply chain.

Thousands of small companies were contracted by Carillion to help deliver projects and we already know the accumulated debt owed to these companies stretches into millions.  In the coming months, it is likely we will witness many of these small suppliers shed jobs or, sadly, also go into administration.

At Change, we have recently supported a group of construction workers who were made redundant as a result of company administration driven by the Carillion collapse.

Ultimately, taking the entire supply chain into consideration, the Carillion collapse could result in the loss of tens of thousands of jobs.

The increased availability of candidates in the market could lead to inadvertent consequences for recruitment and training in the construction industry.

With a larger pool of employees to choose from, employers may be tempted to remove their focus away from the development of existing staff.

When there is an abundance of talent on the market, there may be less incentive and impetus to invest in the existing workforce.

This could be a particularly damaging consequence for apprentices.

Currently, the apprenticeship levy has been working well, with construction companies using it to support investment in new talent. But there is a risk that we will see this drop as employers turn to the market for labour that is already trained and experienced.

The good news is that, currently, there is capacity within the overall UK construction market to absorb jobs.

That said, it will apply pressure to the industry.  In Scotland, we are seeing candidates being quickly placed into roles, albeit the Carillion job losses have been significantly smaller in Scotland than other parts of the UK.

For those regions that are experiencing more acute job loss pain, such as the Midlands, it’s vital that the Government delivers immediate and practical action.

Government needs to ensure that other public contract suppliers are creating opportunities and helping to absorb the job losses from Carillion.

There is a general willingness across the industry to help and we are seeing companies doing what they can to create job opportunities. Robertson has taken on ex-Carillion employees to work on housing association contracts, and many companies have stepped in to take on hundreds of apprentices.

It remains to be seen exactly how far and wide the ripple effects of the Carillion collapse will go.  Hopefully, lessons will be learned, and steps taken now to mitigate the impact on the jobs market and the economy.