Skills Costs Hit The Roof, Due For A Fall
Sydney Morning Herald
Saturday September 11, 1999
Sydney's shortage of trades people - and the prices some are charging - is a classic symptom of an economy that's running at a furious pace and due for a dose of corrective medicine.
One-off events - the Olympics, the hail storm in the eastern suburbs and early home building and renovations to beat the GST - are contributing to the extraordinary strength in the housing market.
This rush of activity has led to shortages of trades people whose books are overflowing.
The general manager of the Master Painters Association, Mr Geoff Sheldon, said: "I've got 130 apprentices registered with me and I can't get my own bathroom painted.
"We've got 300 calls every month from people seeking painters. That's twice the normal level. We have vacancies for 30 to 50 apprentices. There's such a shortage."
Building contractors have responded to this wave of activity by raising prices. Roof-tilers are charging up to 30 per cent more, as people wait up to two months for their problems to be fixed.
But it will not pay to wait until the hail repairs are done. "Rates are likely to stay where they are," warns Cordell's Costing Group national manager, Mr Michael Bartlett.
Painters, too, are cashing in on the boom. If you're in the eastern suburbs you can pay up to 50 per cent more for a paint job. In other areas, painters are charging between $30 and $45 an hour extra.
Demand for tradespersons is so high that the average cost of building a typical house in Sydney leapt 2.6 per cent between April and June this year.
"It may not seem like much, but when you consider that over the last eight years, prices have only increased by 3 per cent, to get it in one quarter is pretty dramatic." The building sector's strength has spilt into the rest of the economy where shortages of skilled workers - metal workers, welders, nurses and information technology workers in particular - have left employers struggling to fill vacancies.
More confident that good times lie ahead, employers seem more willing to put on full-time workers and rely less on temporary staff.
Thursday's Bureau of Statistics labour force figures showed full-time jobs accounted for the vast majority of the new work created during August.
But claims that the labour market is tight may be premature. There's no wages pressures as yet.
The Bureau of Statistics wage cost index on Wednesday showed wage pressures were waning and the Westpac-ACCI survey showed the number of manufacturers expecting to pay bigger wages in their next enterprise agreement were much lower than 12 months ago.
Nevertheless, between now and the Olympics jobs and the economy are set to boom and forecasters predict inflation will rise from about 1 per cent to 2 per cent in 12 months.
And the strong productivity growth which has minimised the inflationary effects of wages over the past few years is about to dry up, according to BIS Shrapnel chief economist, Dr Frank Gelber.
He warns of a 3 per cent inflation impact by the GST, which, with other factors, will push the inflation rate up as high as 5 per cent.
So somewhere between now and next year the economy is in for a dose of corrective medicine.
Laying a course of increases
Changes in the price of building materials over the past quarter (June to August):
Carpentry sheet materials 11%
Timber roof trusses 9%
Sheet membrane roofing 7.5%
Plumbing fittings 15%
Steel fencing and gates 15%
The cost of 1,000 bricks*:
September 1997 $350
September 1999 $370
The cost of laying 1,000 bricks*:
September 1997 $620
September 1999 $650
*Standard, or common house bricks
Source: Cordell Building Information Services.
© 1999 Sydney Morning Herald