Coronavirus: 'Dire straits' ahead for construction with borders shut, fewer apprentices

The pandemic could hardly have come at a worse time says a construction industry boss, warning it could potentially leave the industry with a skills shortage like none ever seen before in New Zealand.

Warwick Quinn is chief executive of BCITO, which manages apprenticeships for the building and construction industry. He told The AM Show on Thursday the lockdown has held up many new apprentices' careers. 

"The lockdown has effectively stopped any sign-ups. We would normally be signing up in the order of 200 a week - so over the five weeks we might have signed up 1000. It's not quite zero - we signed up 16 last week."

Construction on many sites has resumed with the dropping of the pandemic alert level from 4 to 3, but the longer-term effect on the economy is expected to result in massive layoffs. House prices have been tipped to plummet 10 percent, resulting in less investment in new builds.

"It's a bit of a wait-and-see, but there's no doubt we'll be seeing layoffs particularly before the end of the year, as work starts to dry up and we see the forward work being cancelled," said Quinn.

"We're already hearing stories of that already. We're in for a bit of a shock over the next six or so months, and we need to insulate ourselves from that by not losing all the apprentices."

The dip coincides with a demographic anomaly that will likely see fewer people signing up for the trades in the next few years.

"Fifteen years ago we had our lowest birth rate ever, so the number of kids coming out of school now is lower than it has been for a long time," said Quinn.

Most economists are picking a massive rebound for the economy in 2021. But with the borders shut to immigrants for an undetermined period of time - perhaps until a vaccine is available, which most experts think will take at least a year, possibly more - new apprentices are expected to be thin on the ground just when the industry wants them back.

"We'll want them back in 12-18 months, you know - and we don't have the capacity this time to search for them in immigration, as those borders are likely to be closed... 

"If we don't resolve this problem over the next three or four years, you think we've got a skills shortage now? You wait until the mid-20s, late-20s. We will be in dire straits." 

Warwick Quinn.
Warwick Quinn. Photo credit: The AM Show

Economist Shamubeel Eaqub, appearing earlier on The AM Show, said the "carnage has only just started when it comes to the bonfire of jobs and businesses".

He's calling for more direct help to small businesses, saying they "have the least amount of buffer to be able to cope with what has been an unprecedented period where they've had no revenue at all".

"If we're not able to keep... a vital part of [the economy] surviving and in good shape on the other side of this lockdown, then we will have unnecessary business failures and job losses that will make the scarring of this recession even worse."

The wage subsidy helped, he said, but wages are only about 20 percent of businesses' expenses.

"It's not going to be enough to be able to offset the shutdown we have experienced. I don't think the response has been big enough or quick enough when it comes to [small businesses]."