Tuesday 3rd March 2026
Skills shortages in Construction: why the risks are growing – and how the right insurance protects contractors
Posted by Angus Nanan, Head of Construction, Kerry London Ltd
The construction industry continues to face one of its most persistent challenges: a deep, long‑term skills shortage. Far from being a short‑term fluctuation, labour scarcity is now viewed as a structural issue built into the sector’s future operating environment. Recent industry analysis shows that labour shortages are widespread and chronic across UK and Europe, with many trades reporting severe deficits in skilled workers.
For contractors, this isn’t just a recruitment problem — it has direct implications for site safety, project delays, contractual risk, and insurance exposure. At Kerry London, we work closely with construction firms of all sizes, and we are seeing the real‑world impact of this challenge every day.
The skills shortage and its impact on site safety
A reduced workforce often means sites are operating under increased pressure, with fewer people expected to deliver the same volume of work. According to industry data, over 54% of the current construction workforce is made up of Gen X and Baby Boomers, with only 21% aged under 42 – a demographic shift that exacerbates physical strain and safety concerns on site.
This environment increases risk in several ways:
- Inexperienced workers stepping into critical roles without adequate supervision
- Fatigue‑related errors, especially on fast‑tracked or under‑staffed projects
- Reduced oversight, with supervisors stretched across multiple tasks
- Greater likelihood of accidents, injuries, and HSE breaches
For contractors, this elevates exposure under Employers’ Liability, as well as Public Liability where site safety lapses impact third parties.
Delays: the knock‑on effect of labour shortages
Construction output across major European markets has been under sustained pressure, with skills shortages cited as a key reason behind slowed project delivery and regional contraction in activity.
Labour scarcity leads to:
- Extended project timelines
- Increased dependency on subcontractors, often at higher cost
- Greater vulnerability to supply‑chain interruptions
- Heightened pressure on fixed contractual deadlines
When delays occur, contractors may face liquidated damages or disputes over responsibility — both of which can trigger costly claims.
Robust Contract Works Insurance becomes critical in these scenarios, providing protection during prolonged build phases and shielding contractors from unforeseen events that compound labour‑related delays.
Contractual risk: greater exposure when labour is tight
With labour shortages predicted to remain acute, contractors are shouldering more risk than ever before. Many construction businesses are no longer treating the skills gap as temporary but as a permanent feature of project planning and pricing models.
This shift increases contractual risk in several areas:
- Failure to meet deadlines due to workforce gaps
- Subcontractor errors or insolvencies
- Cost overruns driven by last‑minute labour sourcing
- Disputes over responsibility when a project falls behind
In a climate where margins are already tight, a single contractual dispute can have major financial consequences.
Supporting the construction sector through long‑term challenges
The skills shortage is not going away — it will continue to shape construction risk, claims patterns, and insurance needs for years to come. Contractors who proactively review their insurance arrangements will be better equipped to manage uncertainty, avoid costly disputes, and keep workers safe.
Kerry London’s Construction Team specialises in working with contractors, developers, and the wider built‑environment supply chain to build tailored insurance solutions that reflect the realities of today’s labour‑constrained market.
If you would like to review your cover or discuss how these industry trends affect your business, our team is here to help.
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Kerry London is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent and Lloyd’s registered broker, which means that we work with a wide range of niche and major insurers.
This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such or regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note, we have relied on information sourced from third parties, and we make no claims as to the completeness or accuracy of the information contained herein. You should not act upon information in this bulletin nor determine not to act without first seeking specific legal and/or specialist advice. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to the fullest extent permitted by law.
Categories: Articles by Angus Nanan, Construction,
