The construction sector is one of Australia’s largest employers of engineers, and a major driver of engineering activity.

Updated May 2018

The construction sector is one of Australia’s largest employers of engineers, and a major driver of engineering activity. Employees in this sector are involved in the construction and improvement of residential properties and non-residential developments such as commercial buildings. While residential building has always been a significant contributor to the sector, over the past five years residential work has risen as a share of work done. However, the past year has seen significant growth in non-residential building, providing a renewed source of growth.

The diverse range of industries, businesses and individuals that employ construction services tends to reduce volatility in the sector, with weak demand from one group often met by stronger demand in others. The sector is also heavily reliant on favourable economic data, with property prices, business spending and interest rates all impacting demand for construction to various degrees. Australia’s current low interest rates and rising property prices are expected to encourage construction activity over the next five years.

Australia’s construction sector has expanded over the past year, providing ongoing support for engineering demand. Record low interest rates continue to promote growth in the sector, with investors and home-buyers alike able to access finance at all-time low rates. Property prices have had a mixed influence on demand, with high prices limiting access to property for development. However, rapid price growth across major capitals has ensured that investment remains attractive for developers. Property price speculation has seen a wave of new investors enter the sector, purchasing and improving sites before selling to take advantage of capital gains.

Government investment in major infrastructure projects also stimulated growth in construction, however some states have benefited more than others. The ongoing decline in new mining investment continued to weigh against the industry, with an upturn in commodity prices doing little to drive new investment. While prices have fluctuated over the past 12 months, commodities remain relatively cheap compared with the boom years, and are likely to restrain any increase in mining construction over the coming years, with miners instead seeking to derive revenue from existing mines rather than establishing new operations. While construction services are required even in the production phase on mining, it is in the development of new mines that the construction sector is most in demand.

The past five years have provided some highs and lows for the construction sector, with the remarkable rise and fall of mining and residential development contrasted by rising property prices and ongoing economic uncertainty. The overall value of building work done increased by 1.8% over the year to December 2017. A decline in new residential building and residential improvements weighed down this figure slightly, however growth in this area has been strong in recent years. Residential building activity fell by 3.0% after years of solid growth, while alterations and additions to residential building declined by 8.4% over the past 12 months. Conversely, the level of non-residential building work done increased by 12.7% in a remarkable sign of growth for the sector.

Engineering and construction activity, which focusses primarily on infrastructure, also grew strongly over the past year, supported by major growth in public sector spending. The value of work done for the private sector rose by 3.9% over the year to December 2017[1]. However, public sector spending rose much more strongly, with new infrastructure spending driving work done for the public sector up by 15.8%.

Value of engineering work in Australia

Source: ABS Catalogue 8762.0

The pipeline of new infrastructure projects is as full as it has ever been, with major works underway or planned in most states. The mix of projects is dominated by road and rail, which contribute the largest share of the work to be done.

In recent years, austerity programs and efforts to manage the budget deficit had seen infrastructure spending decline. This was lead by the Federal Government, which was elected on a platform of budget repair. However, lower Commonwealth spending was met by renewed efforts from the States, which have stepped up to fill much of the gap, alongside private sources of funding. More recently, the Federal Government has returned to the infrastructure funding game, driving growth in construction overall.

While the rising level of work done has already delivered a raft of new employment opportunities for the nation’s engineers, the massive stock of planned engineering work that has yet to be completed will provide even larger growth. Overall, the results represent the best signs for growth infrastructure has seen in many years, and the engineering profession will be among the major benefactors.



[1] ABS Catalogue 8752.0 – Building Activity, Australia, December 2017

The outlook for the sector remains relatively bright, with low interest rates and renewed emphasis on infrastructure within government policy expected to provide opportunities over the coming years. Property prices show few signs of slowing down, and cheap credit and population growth will provide important support to both supply and demand.

Current projections of population growth – particularly around major capitals – will necessitate continued infrastructure improvements over the coming decades. The substantial lead time on major projects makes swift investment all the more important, as existing assets face the strain. The national freight task is also expected to grow, putting more trucks on the road and crowding networks. While road infrastructure will undoubtedly face significant challenges over the coming years, these challenges raise excellent opportunities for growth.

Commercial building is also forecast to rise over the years ahead, buoyed by steady economic growth and a rising population. The urban sprawl around major capitals is also necessitating the development of new commercial centres along the city fringe, with infrastructure also requiring improvement to service new and growing communities.

Value of engineering work in Australia

Source: ABS Catalogue 8762.0

The construction industry is of major importance to the Australian workforce—being the third-highest employing industry in the nation. According to IBISWorld data, the construction sector is expected to employ one million people during 2017-18[2], representing approximately 9.0 per cent of total employment across Australia. For the same period, total revenue earned by the construction sector is forecast to total $358.3 billion. According to the Australian Trade Commission, the value added by the construction sector accounts for 8.2 per cent of GDP.

The construction sector remains a major driver of engineering activity in Australia, with 13.1% of professional engineers employed in the sector according to the most recent census data[3]. While employment has fallen slightly over the past five years, this slowdown is likely to be only temporary as the economy absorbs the additional supply from mining and resumes a consistent programme of infrastructure development after years of lower spending. Residential construction will also provide opportunities in the sector, while renewed investment in infrastructure is expected to deliver continued growth in construction employment over the coming five years.

Construction sector employment in Australia by industry and year

Source: IBISWorld Industry Reports

Career prospects for engineers are intrinsically linked to the performance and size of major engineering industries. Industries undergoing major growth tend to invest to expand their operations, while major areas of employment such as construction tend to maintain a large stock of engineers. Job vacancy statistics can provide key insights into the performance of an industry and whether employers expect demand to expand over the short to medium term.

Engineering employment by industry, discipline and state

Source: Australian Bureau of Statistics, 2016 Census

Engineering job vacancies by discipline and state

Source: Department of Employment – Internet Vacancies Index

According to data from the Department of Employment, civil engineering roles accounted for over half of all advertised engineering positions over the past year. Within the Australian market, civil engineering skills have the broadest range of applications, and comprise the majority of roles in construction. While the level of engineering and construction activity tends to fluctuate over the years, the volume tends to necessitate a large number of engineers, providing opportunities for civil engineers. The number of advertised civil engineering roles has increased over the past 12 months, providing a raft of new opportunities for civil engineers. This growth indicates that employment prospects for civil engineers are improving, and qualified candidates are likely to find suitable employment upon entering the market.

Engineering vacancies map

Source: Department of Employment – Internet Vacancies Index


[2] IBISWorld, Industry Report E, Construction in Australia
[3] Australian Bureau of Statistics, 2016 Census

In May 2017, Professionals Australia surveyed professional engineers across Australia regarding remuneration and conditions in their workplace. Engineers employed in the construction sector reported a median base salary of $87,498 and a median total package of $102,221. This result places engineers in construction at the bottom of the pack, well short of the median base salary of $110,000 and median total package of $125,925 received across all sectors.

Engineer remuneration and wage growth– by responsibility level

Source: Professionals Australia, Professional Engineer Employment and Remuneration Report: 2017

From a growth perspective, engineers in construction reported moderate results, with wage growth over the past year falling in line with the average for engineers more broadly at 2.4%. Growth in salaries across the engineering profession is closely linked to the performance and strength of each industry. Strong-performing industries with a rising revenue base and ongoing demand tend to deliver solid salary growth for their engineering employees, with staff recognised for their contribution to growth. Conversely, the weaker performance of other industries is reflected in relatively modest wage increases, as organisations seek to drive profit through cost controls rather than revenue growth.

Growth of 2.4% represents an outperformance of the Wage Price Index (WPI), which rose at 1.9%. Overall, this growth is a good sign for the engineers in construction, as it points to rising demand for engineering skill and recognition of the importance of technical expertise. Salaries also outperformed the consumer price index (CPI) over the past year, which increased by a modest 2.1%. While the past year has been marked by weaker wage growth across many professions, this outperformance points to growth in real wages across the road sector.

The economy

The Reserve Bank has maintained the official interest rate at a record low of 1.5% since August 2016. While the RBA has faced some pressure to increase the cash rate to push house prices down, they have so far refused to do so, preferring instead to stimulate economy-wide growth. Ongoing low interest rates have been welcomed by the construction industry, and while low interest rates aim to encourage economic growth, overall, the economy remains in solid health.

The most immediate consequence for many households and investors will be the lower cost of debt, and higher disposable income as less money goes to servicing loans. Low lending costs are likely to encourage prospective developers to borrow to fund new construction, with individuals building new homes or improvements to existing buildings. Developers and businesses will also be keen to take advantage of cheap credit, capitalising on ideal investment conditions brought about by low interest rates and high price growth. While an increase in Interest rates is not out of the question over the year ahead, rates are expected to remain at historical lows over the foreseeable future, providing opportunities for growth in the sector.

Cities and growth

As Australia’s population expands, and as the economy moves into the future, capital cities are becoming increasingly the focal points of our society. The majority of population growth is occurring around major capitals, with the majority of jobs located in these areas. Additionally, the rural population is increasingly being forced to move towards major cities, as many of the traditional rural or regional industries slow down, and major services industries grow rapidly.

As a result, our cities are expanding, and the urban sprawl is growing. This is necessitating major new investment in infrastructure, housing and commercial buildings. While rail lines are being extended to meet the new fringe suburbs, road remains the primary means of servicing new areas. Growth corridors require major arterials, duplications of existing roads, local roads, and regular maintenance. They also necessitate the improvement of many roads leading towards the city in order to prevent the development of bottlenecks.

New communities also require services and commercial centres, and major retailers have been quick to meet demand. New markets mean new opportunities for businesses, driving growth in construction. Improving transport infrastructure will ensure that this growth continues, making the outer suburbs of most capitals more liveable.

The trend towards urban living and the continuing urban sprawl show no sign of slowing, and it is likely to impact all capital cities over the coming five years. According to the ABS, Australia’s population reached 25 million at the end of 2018[4]. If Infrastructure Australia’s projects come to fruition, this figure will rise to 30.5 million by 2031, requiring massive new road investment.

Opportunities for engineers are likely to rise accordingly, as the profession grows to manage both major new investment, and the massive new stock of infrastructure requiring maintenance. Engineers with suitable qualifications are will likely find new employment opportunities easy to come by over the coming years.




[4] ABS Catalogue 3101.0