Purpose ‐ The purpose of this paper is to show how internal and external labour markets operate in the construction sector, associated with different strategies taken by firms in recruiting and retaining particular groups of employees. It draws on research of the house
building sector which aims to discover how far firms develop human resource policies, recruitment and retention strategies, and training and development activities in response to skill shortages. Design/methodology/approach ‐ The paper is based on a questionnaire survey of skills
shortages, recruitment and retention in house building firms, drawn from databases of social and private housebuilders and a detailed investigation of firms. Findings ‐ The results show worsening skill shortages and hard-to-fill vacancies, particularly for site managers and tradespersons.
These shortages are especially bad for house building firms, above all those with higher levels of direct employment in the social housing sector. Despite this, firms rely for operative recruitment on traditional and informal methods and procedures, on experience ‐ not qualifications
‐ as the main criterion, and on "poaching" ‐ all symptomatic of a craft labour market. For managers, there is some evidence of retention measures, in particular through training and promotion, implying the development of internal labour markets. And for professionals there are
indications of occupational labour markets with their dependence on institutionalised systems of training and qualifications. Originality/value ‐ The paper shows that firms take little responsibility themselves for resolving skill shortages and establishing training needs, though
national training policy is reactive and driven by employer demand. Obligatory skills certification and an institutionalised industrial training system would facilitate a move from this deadlocked situation, from craft to occupational labour markets.