Workforce without workers: Why construction’s labor challenge is really a capability crisis

Construction has always been labor-intensive. Today, it remains so but with a critical difference. The limiting factor is no longer simply how many workers are available, but whether the right skills, experience and supervision can be deployed at the right moment across fragmented project teams. Zurich’s Beyond 2030: The Future of Construction report identifies this shift as a move from labor shortage to capability shortage – one that is harder to solve and more consequential for delivery risk.

“This is no longer a question of headcount,” says Kelly Kinzer, Zurich’s Global Head of Construction & Surety. “Projects can look fully staffed on paper, but still be exposed if critical expertise isn’t in place when it’s needed. That’s where delivery risk now sits.”

The scale of the issue is already clear. In the U.S, the sector needs an estimated 349,000 additional workers in 2026 to keep pace with demand. Southeast Asia requires 1.5 million skilled workers, while Australia faces a shortfall of more than 300,000 by 2027.

Demographics reinforce the pressure. Around two in five construction workers in the U.S. are expected to retire by 2031, removing a significant pool of experience as demand rises. In Europe, ageing populations are widening labor gaps, that migration is unlikely to fully offset.

But focusing on numbers alone misses the deeper issue.

The real constraint is capability

Construction does not draw on a single, stable workforce. Delivery depends on complex subcontracting networks, with skills and supervision distributed across firms, trades and geographies. Success hinges on coordinating scarce expertise at the right moment.

That makes certain roles disproportionately important. Commissioning engineers, system integrators, quality assurance leads and digital coordination specialists now carry a growing share of delivery risk.

Gaps in these roles can trigger cascading delays across programs.

Productivity under pressure

This challenge is compounded by construction’s longstanding productivity problem. While overall labor productivity in the U.S. economy roughly tripled between 1970 and 2020, construction productivity stagnated, with a worker in 2020 producing less value than 50 years earlier. Similar patterns are seen across major markets.

When labor tightens, productivity can fall further. During the U.S. shale boom (2011–2014), shortages contributed to productivity declines of around 40 percent, while timelines extended by 20–25 percent.

In addition to raising costs, shortages reduce the industry’s ability to convert labor hours into reliable output.

Automation: solution and risk

Automation is often presented as the answer – and increasingly, it is unavoidable.

Prefabrication, robotics-assisted tasks and digital coordination are already reducing reliance on manual labor, shifting work from site-based execution to more controlled, repeatable production processes.

But automation does not eliminate risk – it reallocates it into fewer, more specialized roles. As construction becomes more integrated and digitally sequenced, fewer individuals are responsible for more tightly coupled systems. Errors become harder to detect and more costly to recover.

“Automation is essential but it raises the stakes,” says Kelly Kinzer. “You are relying on fewer people to get more right, first time – especially in supervision, integration and commissioning.”

Knowledge loss and the experience gap

A further challenge lies in the loss of tacit knowledge.

Experienced workers bring more than technical skill. They understand sequencing, anticipate failure points and manage coordination under pressure. As they retire, much of this knowledge leaves with them.

This knowledge is difficult to codify or replace. Even where headcount appears sufficient, the absence of experience can lead to delays, rework and quality issues – risks that increase as systems become more complex.

Competition for skills

Competition for capability is intensifying.

The same skills required in modern construction – digital coordination, controls engineering and systems integration – are also in demand across energy, advanced manufacturing and technology infrastructure.

New project types are adding further pressure. High-power, high-integration assets such as data centers and grid infrastructure require specialist commissioning and high-voltage expertise, concentrating demand on the same narrow talent pools. This is a structural constraint, not a temporary imbalance.

What changes in practice

For risk managers, workforce risk now concentrates at specific points in the delivery process:

• System integration and commissioning
• Interface management between trades
• Quality assurance and supervision
• Digital coordination

Failure is less likely to arise from general labor shortages and more from breakdowns at these critical stages, where delays are hardest to absorb and recovery options are limited.

Originally published in Commercial Risk on July 8, 2026.