TACKLING THE SHORTAGE OF CONSTRUCTION SKILLS IN NIGERIA

BEING A PAPER PRESENTED

BY
PROFESSOR K. T. ODUSAMI MNIQS, MRICS, MNIOB Department of Building University of Lagos Akoka, Yaba Lagos Email: ktodusami@yahoo.com &

GLORIA UNOMA ENE FNIQS Department of Quantity Surveying Kaduna Polytechnic Kaduna Email: gloria_ene@hotmail.com

AT

2-DAY NATIONAL SEMINAR ORGANISED BY THE NIGERIAN INSTITUTE OF QUANTITY SURVEYORS, VISION 20-2020: STRATEGIC INDUSTRY DEVELOPMENT WITHIN NATIONAL DEVELOPMENT GOALS IN ABUJA

MARCH 22-23, 2011

Introduction The construction industry plays a key role in the economy of every country contributing between 4-14% of the GDP of both developing and developed countries. The construction sector also provides the infrastructure that supports other sectors of the economy. In the National Implementation Plan for the Nigerian Vision 20: 2020 covering 2011-2103 investment in construction activity is conservatively estimated at about N 4.4 trillion. This will definitely boost construction activity and will constitute a major challenge for the Nigerian construction sector to provide the resources required to achieve the stated goals. Construction skills are one of the major resource inputs into construction activity. Over time, the stock of competent skilled construction workers has dwindled and the industry which is expected to be the highest employer of labour after agriculture is populated with largely unskilled, inefficient and dissatisfied workers who see work in the industry as a stopgap till better things in the future. Few see their crafts as careers worth investing in. This paper takes a critical look at the phenomenon of shortages in construction skills in Nigeria even in the face of a massive 19.7% unemployment level (National Bureau of Statistics, 2010), its effect on the construction industry and the national economy and recommends strategies for tackling the problem.

Overview of demand and supply of construction skills Demand and supply of construction skills may be examined at national level, sector level, industry level, individual organisation level or at project level. For construction skilled workers, it is most appropriate to develop human resource plans at construction industry level for a number of reasons. Uwakwe and Moloney (1991) describe the construction industry as being characterised by an area pool of labour that allows movement of workers between contractors, different classes of construction and different projects. Projects nearing completion requiring decreasing manpower needs and new projects requiring increasing labour requirements. Contractors in need of labour hire from this area pool and return them to the area pool when they are no longer needed.

Without an industry manpower plan, this area pool of labour they argue will be prone to fluctuations between shortages and surpluses given the cyclical nature of the demand for construction products and services. Equilibrium between demand and supply of labour requires an industry wide plan that ensures the development of programmes that will provide adequate numbers of appropriately trained skilled labour in the long term. Construction firms have property rights over capital assets such as plant and machinery which they have invested in. The same does not apply to the human capital created when they invest in training. Firms therefore poach trained workers from other firms rather than train their own workforce. Because of this market failure to train, governments must intervene through provision of financial resources and an effective regulatory framework for the training of craftsmen. (Muya, Price and Edum-Fotwe, 2006; Ziderman, 2001) Any country that wishes to develop industrially requires a highly developed construction industry. The efficiency of the industry is an aggregation of the efficiencies of the organisations within it and these in turn rely on the knowledge, skills and attitudes of their workers and mangers acquired through education and training. Appropriate training policies for construction skilled workers must be taken at industry level and must involve all the stakeholders, government, construction firms and the workers themselves. Figure 1 is a graphical representation of the supply and demand of a certain good or service. The supply curve represents the amount of the good or service that producers or providers are willing and able to sell at various prices while the demand curve represents the amount of the good or service that buyers are willing and able to purchase at various prices. The price P of a product is determined at the point where there is an equilibrium between the price at which buyers are willing and able to pay (demand, D) coincides with the price at which suppliers are willing to produce (supply, D) and Q is the quantity supplied and bought at price P. The supply-demand model shown in Figure 1 is a partial equilibrium model. The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product. This assumes that supply and purchasing power are inelastic. In reality, when prices go up and income remains the same, a negative shift in demand subsequently occurs until an equilibrium price somewhere between P1 and P2 is attained and the quantity sold drops to an equivalent level somewhere between, Q1 and Q2. 2

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and quantity. If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and quantity. If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity. If supply decreases and demand remains unchanged, then it leads to higher price and lower quantity.

Fig 1: Graphical representation of supply and demand Demand and supply of constructions skills generally follow the fundamental economic concepts of demand and supply but the complexities of manpower demand and supply and the unique nature of construction itself must be taken into consideration. Demand for construction skills refers to the quantity and quality of skills required to produce a required level of construction output. This therefore means that the demand for construction skills is dependent on demand for construction works which is cyclical, seasonal, dependent on the state of the economy and on government fiscal policy. Supply of construction skills refers to the various means for providing the skills demanded by the construction industry. These include: Providing full training for new entrants into the industry Providing top up training for partly skilled persons in the industry Employment of appropriately trained persons from other geographical locations Re-skilling persons already in the industry to cope with changes in skills requirements due to changes in technology 3

Training invariably provides the highest proportion of construction skills and this requires time and directed effort. Another complicating factor is that employers of construction skills are reluctant to bear the cost of training directly and would rather poach already trained persons from other construction firms. The implication is that when construction activity increases, without commensurate increase in training in construction skills, the resulting shortage drives up wages and creates an influx of unskilled and semiskilled persons into construction work. Even where training is increased, there is a time lag between when training commences to when the products of training are ready for the market. As a result of this relative inelasticity of supply in construction skills, the cost of construction goes up and the quantity and quality of construction products come down. The increases in cost inevitably reduce demand until an equilibrium is reached between supply and demand. By which time the damage of high costs coupled with shoddy construction work has been done.

Shortage of Construction Skills The skills crisis in the construction industry is not peculiar to Nigeria. Haas, Rodriguev, Glover and Goodrum (2001) record that the USA is facing a long term labour shortage. Mackenzie, Kilpatrick and Akintoye, (2000); Dainty, Ison and Briscoe (2005) and Agapiou, Price and McCaffer (1995) each report on the skills shortage crisis in the UK. Syben (1998) warns of a similar situation in Germany while the story is not different in Sri Lanka, a developing country like Nigeria (Jayawardane and Gunawardena, 1998).

United Kingdom A CIOB (2008) skills survey clearly pointed to a shortage of skills in the UK construction industry and the situation was expected to become worse up to 2012. Crafts and trades people were viewed as the most difficult people to recruit, closely followed by senior and middle management. Conversely, admin/clerical workers and labourers were viewed as the least difficult to recruit. The industrys image and the lack of suitable academic/vocational courses and apprenticeships were quoted as the main reasons for this shortage.

Despite the current credit crunch of 2008 - 2010, the majority of UK industry experts believe that there would be a steady increase in construction demand right up to 2020. To meet expected demand, ConstructionSkills (2008) forecasts that 37,000 recruits are required annually from 2009 to 2013 to boost the workforce. Germany The skills problem in the German construction industry is more of a shortage in quality rather than that of quantity. Syben (1998) reports on a downward spiral in the quality of training of construction skilled works which would inevitably lead to a change in the German construction model from one where highly qualified construction skilled workers provide high quality, high productivity and high efficiency levels with low supervision requirements and low unit costs to one where a larger number of less qualified workers requiring higher levels of supervision are used. He noted that construction firms were employing less expensive migrant workers who were also less skilled than their German counterparts. This he predicted would result in lower quality of products that in the long run would also cost more. In addition, the situation would get progressively worse as training provision will decline and training efficiency will be reduced. This prediction seems to have been justified with reports that the German economy recorded a shortage of skills (Shafer, 2010) even in the presence of an unemployment level of up to 8.1% in 2010. The German Economy Minister, Rainer Bruderle is reported to have told a daily newspaper, Handelsblatt that they were considering a cash incentive to attract migrant skilled workers to Germany. (The Local, 2010) USA The Construction Users Round Table (CURT) conducted a survey in 2001, which reported shortages of skilled workers on construction projects of up to 82%. Wang, Goodrum, Haas, and Glover (2008) report that as a result of the shortage, significant spikes in craft wages have occurred in some U.S. geographic regions. They also report that the Construction Labor Research Council (CLRC) predicts that 185,000 new workers need to be attracted, trained, and retained each year up to 2016 in order for the industry to replace expected turnover and to sustain industry growth expectations. The available data indicate that a significant shortage of skilled craft labour continues to exist in the United States and Canada.

Shortage of construction skills in Nigeria The average Nigerian construction worker is largely untrained. Training is basically unstructured and dependent on the traditional apprentice schemes without a structured curriculum or standard method of testing and certification. The result is that the Nigerian construction worker is accused of: Low productivity in terms of amount of work produced per time relative to counterparts in the Western world, Asian and even in other West African countries such as Ghana. Low-tech operations and methods resulting in much backbreaking and undignified physical labour Low quality work resulting in unacceptable levels of material wastage during construction and high maintenance costs during the structures life cycle

Awe, Griffith and Stevenson (2010) note that Nigerias youth no longer show interest in skill acquisition unlike the case in developed countries such as the UK where reports indicate that the demand from young people for apprenticeships is outstripping the number of training places available in the industry. The construction sectors skills council was only able to place 8,500 willing people into apprenticeships out of the 50,000 who applied. The same situation is reported in Germany where thousands of unemployed persons are on long waiting lists for placement in training schools. Anecdotal evidence suggests that the Nigerian construction worker is on the average less skilled, less productive and less efficient than his counterparts from neighbouring Benin Republic or Ghana. Construction contractors in Nigeria would rather employ a construction site worker from Ghana or Benin Republic before considering one trained in Nigeria. This speaks loudly about the effectiveness of the training framework for construction site workers in Nigeria. A number of reasons have been advanced for the shortage of construction skills in Nigeria in terms of both quality and quantity: High attrition rate of skilled construction workers into other businesses that are perceived to be more lucrative, such as commercial motorcycle transportation and even into crime Low wages Absence of a clear career path Technical colleges and vocational training schools have become glorified secondary schools where focus is on cognitive or theoretical knowledge and instruction in skills is de-emphasised 6

Poor funding of the practical aspects of the vocational education resulting in poorly equipped training workshops and inadequate and poorly trained staff Students in technical colleges see themselves as being trained to perform supervisory roles rather than to do actual physical work Lack of organised apprentice schemes

(Awe et al, 2010) Awe et al (2009) note that if this trend is left unchecked, the Nigerian construction industry faces a situation where it will have many graduates of construction related fields but an insufficient number of craftsmen who can efficiently and effectively do actual work. This they insist will be catastrophic for the industry and for the nations economy as a whole.

Implications of shortages on productivity and efficiency levels, cost, time, quality and project success Labour is a major component of construction work in Nigeria. Unlike in developed economies such as the UK, USA, Germany, etc. where operations on construction sites are mechanised to a high level (as much as 25-30% of total construction cost), construction work in Nigeria is low tech and labour intensive. Reports indicate that labour consumes between 30 - 35% of the base cost of construction in Nigeria. Productivity is defined as the amount of products or services produced compared to the amount of goods or labour used to produce it. In construction, labour productivity is better known as labour output and is measured as the amount of work done over a period of time. Olomolaiye and Ogunlana (1989) observed that the production outputs in key building trades in Nigeria were lower than they ought to be. Reasons for this were linked to inefficient methods, lack of appropriate tools and poor supervision training. This agrees with a study carried out by Alinaitwe, Mwakali & Hansson (2007) which ranked incompetent supervisors and lack of skills of the workers as the two most significant causes of low productivity of construction workers in developing countries. These problems can be directly linked to poor and inadequate training of construction skilled workers. With shortages in supply of skilled workers, there is that tendency for unskilled workmen to be attracted to and employed by the construction industry. A labourer on site works with a mason for a few months then purchases a trowel and hires himself out as a qualified mason. Tests and certification are not 7

required. He goes on to a construction site and repeats the inefficient processes learnt from observing equally untrained mentors and the cycle of low productivity and poor workmanship continues. Efficiency is the degree to which something is done well or without wasted energy. The presence of many poorly trained and inexperienced workers on construction sites in Nigeria are among the most significant causes of shoddy construction and waste of time and materials on construction sites in Nigeria. For instance, when a mason does not lay his blocks straight remedial work has to be done, wasting time and materials. In addition more mortar than necessary will be required while rendering to straighten the walls and to form the openings. A lot more time is spent doing this for which he will have to be paid. An inexperienced tiler will use more tiles than required to do a piece of work since much of it will be trashed as avoidable waste. Avoidable waste of materials and time on construction sites has been estimated to be between 2-5% of total construction cost. When this percentage is applied to the huge amounts involved in construction work, the enormity of the problem becomes clearer. For instance if these percentages are applied to the Federal Government of Nigerias planned expenditure of N 4.46 trillion on construction projects from 2011 - 2013, then it is likely that between N 89.2 N 223 billion will be lost as waste that could be avoided by working with better trained construction workers. The country and the industry would fare better by spending a percentage of these amounts in training and retraining of construction skilled workers and supervisors. The unsavoury effects of using poorly skilled workmen are not limited to initial construction. Some of those effects begin to manifest themselves when the structures are already in use. Poorly hung doors that do not shut, wall tiles that collapse, uneven road surfaces that do not adequately drain water and therefore form potholes, sagging beams that lead to collapse of buildings and bridges, drains that are not properly linked, poorly routed water and drain pipes, uneven steps that cause accidents, etc. The list is endless. Maintenance costs tend to go up with shoddy construction and the use of poor quality materials. Many end users of construction products in Nigeria have to contend with structures that are not user friendly and do not meet with international or even national standards and a significant portion of the blame must go to the shortage of construction skilled workers and supervisors in the country.

Criteria for project success are considered to be: Cost: Time: Quality: A project is considered successful in this area if final cost of construction does not exceed budgeted amounts A successful project should have been constructed within the agreed project duration A successful project has to meet the design specifications in terms of material quality and levels of workmanship which in turn must meet national and international standards Function: A project is not considered successful if it does not fulfil the function for which it was conceived and constructed and if it does not meet the requirements of the end user A large number of construction projects in Nigeria fall short of the above criteria in two or more areas and by definition are failed projects. Low productivity and inefficiency of construction workers take some of the blame for failures to meet criteria for project success.

Socio-economic Issues Employment The employment level in a nation is a key economic indicator. Employed persons by definition comprise all persons above a specific age who during a specified brief period were in paid employment or in self employment. A high unemployment level is an indication that the economy of a country has gone bad. It is also positively correlated to many societal ills such as poverty, high crime rate, high mortality rates, low life expectancy, etc. Unemployment in Nigeria was put at the very high rate of 19.7% in March 2009 (National Bureau of Statistics). High unemployment rates correlate positively with poverty, crime, mortality and low life expectancy levels in the country. Governments of countries try to create jobs by investing in sectors of the economy that are labour intensive and at the same time add value to economic activity. Most governments find that the construction industry fits the bill because all over the world, despite technological advances, construction activity remains labour intensive. In developing countries where construction activity is still relatively low-tech, labour requirements for construction are even greater. In addition to its job creation potential, construction adds value to the economy by providing the infrastructure required by other sectors of the economy for growth and development.

Table 1 below shows the average annual percentage of employed persons in various countries who are employed in the construction industry. Table 1: Average annual percentage of total employed persons working in construction by country (ILO) Country United Arab Emirate Malaysia Egypt United States of America United Kingdom Morocco Germany South Africa China Nigeria Source: Average of Annual Percentage of Total Employed Persons Working in Construction 21.97 9.10 8.28 7.80 7.60 7.52 7.29 6.83 5.00 1.62

Based on labour statistics published in Laborsta Internet the official website of the International Labour Organisation (ILO)

Table 2: Average annual percentage of total employed persons working in construction in Nigeria (NBS) YEAR TOTAL NUMBER OF PERSONS EMPLOYED IN CONSTRUCTION 260,000 267,150 273,049 288,723 329,583 TOTAL NUMBER OF PERSONS IN EMPLOYMENT 46,800,000 47,993,400 49,486,362 52,326,923 54,030,000 PERCENTAGE OF TOTAL EMPLOYED PERSONS WORKING IN CONSTRUCTION 0.56 0.56 0.55 0.55 0.61 0.57

2003 2004 2005 2006 2007 AVERAGE

Table 2 shows annual percentages based on labour statistics for Nigeria published by the National Bureau of Statistics. The difference between the published figures from the ILO and the Nigerian National Bureau of Statistics are probably because the Bureau of Statistics uses more stringent criteria for defining persons who are employed.

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Either way, the percentage of persons employed in construction in Nigeria falls way below what obtains in other countries. Fig 2, 3 and 4 below compares the trends in employment in construction for various countries with Nigeria using ILO published statistics available from 1999 to 2008.

12.00 10.00 8.00 6.00 4.00 2.00 0.00 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 EGYPT MOROCCO SOUTH AFRICA NIGERIA

Fig 2: Trends in employment in construction in selected Africa countries including Nigeria using ILO labour statistics

10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 UNITED KINGDOM GERMANY USA NIGERIA

Fig 3: Trends in employment in construction in selected developed countries in the Western World and Nigeria using ILO labour statistics

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35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 CHINA UAE MALAYSIA NIGERIA

Fig 4: Trends in employment in construction in some selected developing countries in Asia and the Middle East and Nigeria using ILO labour statistics The significantly low figures for Nigeria suggest the following: Construction output in the country is very low compared to other countries The shortage of construction skilled workers in Nigeria is more critical than in it is in other countries The Nigerian construction industry is grossly underdeveloped Successive governments in the country have not recognised the potential of the construction industry to create employment and to improve GDP Cost of Construction Given the low skill levels and low productivity levels of the average construction worker, huge sums of money spent on construction can only result in low construction output not only in terms of quantity but also in terms of quality. In other words, the Nigerian construction industry currently does not provide value for monies invested in it. In May, 2010, the Minister for Communication, Mr. Laran Maku, while addressing journalists after a Federal Executive Council meeting said, The FEC has noted that in spite of all the processes that we have gone through so far, including the Due Process and reforms, the cost of construction in Nigeria is relatively higher than in most other countries, even within the sub-region and other parts of the world. The percentage was put at between 20-30% higher than in neighbouring countries but anecdotal 12

evidence suggests that the actual percentage is much higher than that for government projects at federal, state and local government levels. A significant proportion of the huge sums of funds channelled by government into construction does not go into actual construction itself. This is caused by lack of proper budgeting procedures for construction work, lack of proper procurement processes and lack of proper framework for technical contract auditing processes (NIQS, 2011). The proportion of it that is spent on actual construction does not produce the required results because the basic inputs are expensive and of low quality and also because of poor and inadequate supervision. Capital flight The government of Nigeria and contractors in Nigeria respond to these problems by engaging international construction and management skills without making any effort to put in place a programme for developing indigenous capacity to gradually take over a larger proportion of the work. Today, construction sites and component factories are awash with migrant workers from Ghana, Togo, and Benin Republic. Many component manufacturing firms are populated with skilled workmen form neighbouring countries and from as far as China. As a local contractor interviewed put it, even though they charge higher rates, you are sure they will do a good job and finish it in good time. The procedure appears to be that once a contractor has estimated his requirements for skilled workers for a project, he puts in a request to one of the many agents that source migrant workers. The contractor provides accommodation for them on or close to the site for a fixed duration during which they work to complete the project. On completion most of them return to their countries where their families reside. A large proportion of the wages and fees they earn in Nigeria is repatriated to their home countries. These are wages that unemployed persons in Nigeria could have earned if they were adequately trained for the jobs. The amounts in question may seem of low significance now, but considering the intention of government to channel trillions of Naira into physical infrastructure development, the aggregate amounts could become very significant if deliberate efforts are not made to develop local human capacity.

Assessment of future requirements The demand for construction skills in Nigeria currently outstrips the available supply. The situation will get worse if nothing is done considering the amount of investment in construction as envisaged by 13

government in the draft Vision 20:2020 document. This section attempts to assess the future requirements for construction skills from 2011 to 2013 for Federal Government planned expenditure on construction. Table 3 below shows the planned investment in Federal Government construction projects in Nigeria between 2011 and 2013. Table 3: Federal Government of Nigeria planned expenditure on construction from 2011-2013 THEMATIC AREA Power Transport (roads, railways, airport & ports) Housing Agriculture (silos, warehousing, irrigation) Gas plants & pipelines Mineral resources (laboratories & auditorium) Education (classrooms) Labour & productivity (training centres) Youth development (youth development centres) Governance, security & general administration FCT Niger Delta Environment GRAND TOTAL Source: PLANNED TOTAL SUM N 880,978,010,000.00 2,427,519,410,000.00 250,500,000,000.00 162,817,520,000.00 541,793,940,000.00 485,410,000.00 53,751,810,000.00 15,033,000.00 12,568,340,000.00 18,194,900,000.00 521,029,600.00 97,050,520,000.00 21,432,100,000.00 4,467,628,022,600.00

Figures extracted from Draft Nigeria Vision 20:2020, First National Implementation Plan (2011 2013), Sectoral Plans and Programmes Volumes II & III (2010)

Methodology The planned investment on construction work was extracted from the draft Nigeria Vision 20:2020 document. Only priority projects clearly defined as construction, renovation, rehabilitation or maintenance of physical structures were included. A lack of published labour statistics in Nigeria limits the use of existing models in calculating skilled labour requirements for the planned investment. For the purposes of this study, skilled trades by construction types as percentages of total construction costs in the United States of America published by McGraw Hill Research and Analytics are adjusted to take care of differences in labour utilisation and mechanisation levels between the USA and Nigeria. The adjustment upwards of 15 % was based on a survey carried out of the opinions of selected professionals in the Nigerian construction industry. The cost of skilled labour for the planned investment is calculated and reduced to skilled labour days 14

required using published labour rates in Nigeria. Numbers of skilled workers required are calculated based on a 261 labour days annually (NJIC, 2005). Table 5 shows percentage of total costs of construction allocated to skilled trades by construction types in the USA and adjusted for Nigeria. Table 5: Percentage of total costs of construction allocated to skilled trades by construction types CONSTRUCTION SKILLED WORKERS TYPE US %AGE Stores 17.5 Offices 19.3 Schools 18.3 Hospitals 17.7 Highways 16.9 Water supply 16.0 Total (All types) 13.9 Source: Extracted from Gentile (2007) SKILLED WORKERS NIGERIA %AGE 20.13 22.20 21.05 20.36 19.44 18.40 15.99

Table 6 shows the stage by stage calculation of the number of skilled workers required to achieve the planned investment by the Federal Government from 2011 to 2013. The required number of 1,610,739 implies that 536,913 additional skilled workers need to be recruited annually into the industry for the period for the planned investment. This figure does not include skilled worker requirements for planned investment in construction by State Governments, Local Governments and .the Private Sector.

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Table: Number of skilled workers required to achieve the Federal Governments planned investment in construction from 2011 - 2013
Skilled Workers Percentage of Total Construction (%) Cost of Skilled Workers by Category (N) Skilled Worker Days (Number) Skilled Worker Years (Number)

Construction Category

Total Cost of Category (N) 880,978,010,000.00 2,427,519,410,000.00

A B C D E F G H J K L M N

Power Transport (roads, railways, airport & ports) Housing Agriculture (silos, warehousing, irrigation) Gas plants & pipelines Mineral resources (laboratories & auditorium) Education (classrooms) Labour & productivity (training centres) Youth development (youth development centres) Governance, security & general administration FCT Niger Delta Environment

15.99 19.44 22.20

140,868,383,799.00 471,909,773,304.00 55,611,000,000.00 29,958,423,680.00 105,324,741,936.00 102,178,805.00 11,314,756,005.00 2,766,072.00 2,645,635,570.00 4,039,267,800.00 83,312,633.04 15,518,378,148.00 3,426,992,790.00 840,805,610,542.04

70,434,192 235,954,887 27,805,500 14,979,212 52,662,371 51,089 5,657,378 1,383 1,322,818 2,019,634 41,656 7,759,189 1,713,496 420,402,805

269,863 904,042 106,534 57,392 201,772 196 21,676 5 5,068 7,738 160 29,729 6,565 1,610,739

250,500,000,000.00 162,817,520,000.00 541,793,940,000.00 485,410,000.00 53,751,810,000.00 15,033,000.00 12,568,340,000.00 18,194,900,000.00 521,029,600.00 97,050,520,000.00 21,432,100,000.00

18.40 19.44 21.05 21.05 18.40 21.05 22.20 15.99 15.99 15.99

4,467,628,022,600.00

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Strategies for Meeting Future Requirements The Nigerian construction industry currently operates under a shortage of qualified skilled workers with the attendant consequences. Education and training of new entrants into the industry and top up training for the semi skilled workers already in the industry are the main strategies adopted in bridging the gap between the demand and supply of construction skills particularly in developing countries (Kumaraswamy, 1997; Jayawardane and Gunawardena, 1998; Muya, Price and Edum-Fotwe, 2006vm). This also has the added benefits of reducing unemployment levels and increasing the contribution of the construction industry to the Gross Domestic Product, GDP. In arranging for training provision due consideration must be given to the following: Nature of training This defines the training structure, type of training, curricula and other broad training policies to be employed. The dual system of training used in Germany, Netherlands and other European countries has been identified to produce the best results in terms of productivity and efficiency. The dual system involves the aspect of developing the capabilities of the trainees for a life-long career in construction and takes place in the classroom and the other aspect of imparting practical skills which are broader in scope than the traditional skills (Clarke and Wall, 1998; Clarke, 2010). This dual system has been used successfully in Benin Republic (Walther, 2006) Defining the training system should be by a collaborative agreement between the government, the construction industry, trade unions and training institutions. Entrants to the programmes Entrants into the programmes need to have the basic reading and numeracy skills. In the UK today, IT is also considered a basic skill. In the Nigerian context minimum educational qualification is the Junior Secondary Certificate of Education Training providers Formal training providers of construction skills in Nigeria today are polytechnics, technical schools, and vocational schools. Informal training is provided by apprenticeships and the school of life. Training provision in Nigeria needs to be better structured and regulated. Institutions providing training need to be better equipped and better staffed with properly trained personnel.

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Location of training Location of training should be appropriately divided between classroom and site. Classroom training could be made flexible for partly trained workers already working on construction sites so they can attend classes in the evenings or at weekends. Duration of training Duration for training should not be less than 3 years. This will adequately prepare the trainees for life-long careers in the construction industry. Funding of training Funding of training in construction is an expensive enterprise and is usually taken care of at three levels 1. Government Muya et al (2006) justifies state funding and regulation of training with the following arguments: The benefits of training that accrue to society exceed the private benefits realised by trainees and firms. Provision of a certain skill will promote the development of an industry that is strategic in the overall growth of the economy Firms are reluctant to train people who they do not have property rights over and who may be poached by other firms. Governments therefore have to intervene with regulation to compel firms to contribute to training When left with the private sector, the training system has been riddled with imperfections and inadequacies Without government financing and regulation, the training needs of disadvantaged people in society will not be met. For these groups of people, training is an important tool for improving their employability, incomes and standards of living Government budgets are therefore usually the main source of technical and vocational education and training (TVET) in the formal sector particularly at pre-employment levels Employers and workers however also have a role to play and are expected in many cases to complement government funding in order to improve training results.

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Construction firms Industrial firms in many parts of the world pay a levy to a central training fund in the country in which the firm operates. The levy is usually calculated as a percentage of payrolls. There are various national payroll tax schemes for funding of training but most fall within two main classes. There are revenue generation schemes where the proceeds are used to finance training in government or public institutions and levy-grant schemes which finance in-service training within the industrial firms. In Nigeria we have the Industrial Training Fund (ITF) and the Education Training Fund (ETF). In the UK, levies on construction firms are collected by CITB and administered through ConstructionSkills. Percentages of payroll in the UK range between 0.25%-0.29% for contractors and 2%-2.28% for labour-only contractors. Funding from government is roughly in the ratio of 30:70 of industry levies. In The Netherlands, government funding ratio is the same as in the UK, but levies on firms payrolls are a lot higher amounting to a total of 4.3% with 3.5% for new entrant training and 0.8% for continuing training of adult workers.. The Netherlands government also offers a tax-relief incentive to companies involved in training. In Germany firms pay between 2% - 2.8% of their payroll annually for training of construction workers but are refunded up to 50% of the amounts paid if the firm is involved in training, mainly to cover the cost of lost production time. (Clarke et al, 1998; Agapiou, 1998; Dainty, Ison & Briscoe, 2005) Muya et al (2006) report that formal construction craft skills training in Zambia has been inadequately funded over the years and that construction skills employers had hitherto not been compelled to contribute funds to construction skills training but that the regulatory body TEVETA had plans to create a national training fund with 2% levy on employers payrolls. User Fees There is this argument that trainees or students should finance the full cost of their training since they will be the full beneficiaries as they can expect higher wages due to the post-training value of the skills acquired. In principle, this argument is valid, in reality however, entrants to these training programmes cannot afford the cost of training or do not see the benefit in their investing that much over a 2-3 year period before they can expect to get returns on their investment. Muya et al (2006) report that in Zambia, training institutions were only able to raise about 30-40% of their budgets from user fees. User fees were found not to be an adequate finance bridging measure. 19

Most countries therefore adopt cost sharing schemes where some level of user fees are paid by trainees or students to complement public fund allocations to training institutions. (Ziderman 2001, Muya et al 2006) Regulation of training and certification Currently in Nigeria, training provision is mostly unregulated. Certification of skills is done at state government level where the relevant ministry is supposed to test and award certificates at Grade I, II and III levels. Tests are hardly ever carried out and certificates are obtained by filling forms and paying specified fees. Tests need to be standardised and regulated across the country to ensure that workers employed on construction sites actually have the skills they are certified for. Regulatory Body There ought to be a national regulatory body responsible for the training of construction skills in Nigeria. Strategic training plans have to be formulated within a national training policy for the construction industry which needs to be industry wide and national in scope. Recruitment and training of construction skilled workers because of the unique nature of the construction industry and its products should not be lumped together with every other vocational skill. This could be the reason for the low patronage of construction training by job seekers in Nigeria.

The United Kingdom which considers construction as one of its largest exports has a Construction Industry Training Board (CITB) which was established in 1964. In 2003 the CITB in partnership with the Construction Industry Council (CIC) formed ConstructionSkills which today is the Sector Skills Council for the construction industry in the UK.

Sector Skills Councils (SSCs) are state-sponsored, employer-led organisations that cover specific economic sectors in the United Kingdom. They have four key goals:

to reduce skills gaps and shortages to improve productivity to boost the skills of their sector workforces to improve learning supply.

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ConstructionSkills has the responsibility for arranging for the provision, approval and funding of the training of skilled workers in the UK construction industry. It is a collaborative effort between government and industry. Other economies such as South Australia and Hong Kong have regulatory bodies that have the sole responsibility for arranging for the provision, approval and funding of the education and training of construction workers. Other countries such as Malaysia, South Africa, and Mauritius have these functions embedded in the functions of their Construction Industry Development Boards.

Conclusions The construction industry is a key driver of the development and growth of any country because it provides the physical infrastructure required by every sector of the economy for productivity. The construction sector also is a massive employer of labour because many of its processes remain labour intensive. Construction skilled workers are a major resource for construction output and the provision of this resource must be given adequate attention. There is currently a severe shortage of skilled construction workers in Nigeria and this has resulted in the employment of semi skilled and unskilled persons on construction sites resulting in low productivity, inefficiency in terms of cost and time, and poor quality of finished products. In addition, there has been an influx of migrant workers and international construction skills to take on jobs which unemployed Nigerians could have done if they were adequately trained. Capital flight is also a consequence of the employment of a large number of foreigners in any economy. This situation will reach crises levels if nothing is done given the planned massive investment in construction by government for the achievement of Vision 20: 2020. It is estimated that at least 536,000 new entrants need to be recruited and trained annually from 2011 to 2013 to meet the demand that the planned investment will create. There is also a need to re-train many of those already employed in the industry. These figures are conservative because only planned investment by the Federal Government was used in the analysis. Planned expenditure by State and Local Governments as well as the private sector were not used in the calculations. Shortage of construction skills is not peculiar to Nigeria as it is a major concern in other countries both developed and developing. What is peculiar is that in Nigeria nothing is being done about it. The government is making the right plans for providing finance for construction but seems to ignore the other factors of production such as labour, materials, plant and management skills. The solution to import most or all of these does not make economic sense in the short, medium and long term. There must be a concerted effort to develop these 21

capacities locally and this must be a collaborative effort between government and industry. For construction skilled workers, these efforts should have started three years ago as it takes that long to fully educate and train a construction skilled worker. The training of construction skilled workers should be taken at industry level because of the casual nature of labour employment in the Nigerian construction industry. Funding of training for construction skills should be borne by government, construction firms and user fees according to a ratio agreed by government, construction firms, trade unions and training institutions. The government however is expected to provide the major share of the required funds for the reasons stated below. The benefits of training that accrue to society exceed the private benefits realised by trainees and firms. Development of the construction industry is strategic in the overall growth of the economy; firms are reluctant to train people who they do not have property rights over and who may be poached by other firms. Governments therefore have to intervene with regulation to compel firms to contribute to training. When left with the private sector, the training system has been riddled with imperfections and inadequacies; without government financing and regulation, the training needs of disadvantaged people in society will not be met. For these groups of people, training is an important tool for improving their employability, incomes and standards of living. Recommendations 1. Government and industry must set about revising the National Construction Policy which remains largely unimplemented. The policy should embed a national training policy for skilled construction workers 2. The government and all industry stakeholders in partnership should establish a body whose main function is to drive the national construction policy to strategically develop all aspects of the Nigerian construction industry. 3. Due to the near crises situation existing in the supply of construction skills, a Construction Skills Council should by established in partnership with the construction industry and training providers that will work within the framework of the national construction policy whose main functions will be to: Keep track of levels of supply and demand of construction skills Implement measures to reduces skill gaps and shortages Arrange for the provision, accreditation, regulation and funding of training of construction skills Boost the productivity of the construction sector workforce To improve the learning supply for the construction sector workforce 22

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