Employment prospects for small and medium-sized enterprises (SMEs) in the construction sector are continuing to deteriorate, according to figures from the UK's largest construction trade association.

The Federation of Master Builders' State of Trade Survey found that in the second quarter of 2012, lower employment levels were reported by 37% of builders, and 30% of construction SMEs expected to reduce employment levels over the next six months.

FMB chief executive Brian Berry said: "The results from the latest survey are particularly depressing. After four years of continuous recession in the SME construction sector we would hope to be seeing signs of a return to growth and new job creation, not on-going heavy job losses.

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"The problems affecting the construction sector pose real problems for the wider economy, not just because of the direct cost of unemployment but because of the impact on the industry's skills base. Evidence from past recessions shows that when people leave the construction industry they tend not to return when the economy recovers. This leaves the construction industry short of skills which in turn delays projects and forces up prices when demand returns to the market."

"The Government needs to be making bolder policy decisions on a range of policy issues such as reform of the current procurement rules, incentives to promote the forthcoming Green Deal retrofit initiative and a targeted drive to increase house building.

He said more should be done to save small businesses, which "typically use local materials, local labour and promote the development of local skills".

He said: "Both central and local government need to recognise that value for money is not just about the lowest cost."

(NE)