The construction industry is under growing pressure. Across the world, prices, material costs, and project risks are rising faster than ever, but so are salaries. What used to be steady, predictable wage growth has turned into what some now call “salary inflation”. Companies are struggling to keep projects profitable, while engineers and site staff are fighting to keep their real income from shrinking.

This tension has reshaped how both sides think about work and value. For employers, it’s no longer just about finding enough people – it’s about keeping them without breaking the budget. For engineers, it’s about knowing their worth, adapting to new market realities, and making strategic career moves to stay ahead.

What we mean by “salary inflation”

“Salary inflation” means wages rising faster than they used to (in nominal terms) and often faster than productivity gains – which erodes project margins and changes hiring/retention dynamics. Overall inflation reduces the purchasing power of money, meaning that even as nominal wages rise, real earnings can fall if they don’t keep pace with price increases. As the cost of living rises, many workers find their pay no longer covers everyday expenses, eroding their standard of living. In construction this shows up as faster hourly wage increases for workers and site staff, and rising salary expectations for engineers and supervisors.

The real drivers behind the salary inflation in the construction industry

Persistent skills shortage and tight labour markets. Even where shortages eased slightly in 2025, a clear structural gap remains between supply and demand for craft labour and experienced staff. This is a core reason employers have to push wages up to attract/retain people. This becomes even more evident in regions affected by strong brain drain, where local companies are forced to raise salaries continually to keep employees from moving abroad for better-paying opportunities.

Inflation and cost-of-living. General inflation in 2022-2024 pushed all-sector wage expectations up; employers in construction raised pay to prevent turnover and to keep nominal wages closer to real purchasing power.

Low productivity growth in construction. Construction productivity historically lags other sectors. When productivity doesn’t compensate for wage increases, unit labour cost rises; owners and contractors feel this directly as higher labour cost per delivered unit of work. Improving productivity is often cited as the only sustainable way to absorb wage rises without eroding margins.

What engineers are actually saying

These are some real sentiments we’ve heard (that we can relate with):

• Inflation & cost of living are rising faster than raises. Even if the nominal wage goes up 2-3%, the real purchasing power may go down if inflation is 5-6%. So a “raise” can sometimes just be to catch up, and not a reward.
• Frustrating mid-career stagnation. Once you’re no longer “junior/entry level”, the big jumps become rare. Employers tend to give only small percentage increases unless you move up significantly in rank or responsibility and then many people hit that “mid-senior plateau.”
• Promotion vs switching companies. Inside the same company or a team, promotions may offer titles but not enough pay bump. A full team change, different employer, or relocating may be practically the only way to get a large raise.
• Oversupply, outsourcing, and globalization. Engineering work has become more common than before. Foreign engineering labour, standardization, prefabrication, software tools, all reduce what was once unique specialist knowledge, which increase supply and shift negotiating power.
• Management rigidness. Managers/owners stick to their budgets, assuming turnover is just a part of business. Some companies prefer replacing the departing employees instead of offering higher salaries to retain them.
• Disconnect between budget owners and engineers. Managers with spreadsheets are failing to understand what’s going on at ground level. The people making compensation decisions are sometimes quite removed from the real day-to-day work, site issues, and morale.

What companies can do (to be more fair)

If we were advising companies who are frustrated by high turnover, cost pressures, etc., here’s what they should try to do. Some of this costs money; some just requires shifting mindset.

1. Listen and see the true cost of not raising. Turnover is expensive. Losing a good engineer means months (or years!) of training new ones, knowledge loss, possible mistakes, lower morale. Sometimes paying more now is cheaper in the long run.
2. Provide accurate salaries and real-time benchmarks. Don’t rely on gut feeling or outdated reports; check what the market is actually paying for your roles and locations. OROOK gives you fresh, relevant data so you can compare, spot gaps, and react before competitors hire your people away.
3. Transparency and more frequent reviews. Instead of “once a year raise of 2-3%”, do quarterly or semi-annual checks: What are competitors paying? What are new hires commanding? If you see people leaving because other companies offer 15-20% more, you need to know and react.
4. Flexible promotion and role changes. Allow engineers to take cross-team moves and special projects, or stretch roles with matching pay increases.
5. Reward performance in ways beyond base salary. Bonuses, profit sharing, project completion incentives, equity (if applicable), or extra perks (remote work, training, leadership exposure). Sometimes these are cheaper for company budgets than permanently increasing base salaries.
6. Create internal growth and skills development programs. If the company invests in engineers’ growth (digital tools, high-value specialties, leadership, cost management), engineers are more likely to stay. Plus, they gain skills that justify higher pay.
7. Improve HR/leadership and communication. Say what you value and give real feedback. If you do performance reviews, let it be more than just formality. Say what’s needed for someone to move up/get higher compensation.
8. Boost productivity to balance out higher wages. Instead of cutting corners on salaries, focus on working smarter – improve organization, streamline workflows, and invest in software that helps teams plan, communicate, and deliver faster. Better tools and clearer processes can make a big difference in keeping projects on schedule and profits steady, even as salaries rise.

What engineers can do to push their own salary higher and fight the stagnation

Build skills that give leverage

• Digital tools (BIM, data analytics, project controls) – being able to cross the line from “Design this” to “Help me reduce cost, time, waste” gets rewarded.
• Specialization: certain engineering specialties (e.g. MEP, complex structures, sustainability, infrastructure) or cross-domain skills often pay better.
• Commercial insight: understand budgeting, contracts, claims, change orders. Engineers who speak money are more likely to get paid more.
• Leadership/mentorship: supervising people, running crews, taking ownership of parts of projects, safety leadership etc. These roles often come with more responsibility and higher compensation.

Short term / immediate tactics

• Negotiate with evidence. Bring up what the alternatives are, what people in other companies are getting, what you’ve delivered. If you have measurable improvements (faster schedules, cost savings, fewer defects, etc.), document them and present them.
• Learn bonus/equity negotiation. Sometimes the base is fixed, but bonus, profit share, stock (if the company offers) or other perks are more flexible.
• Change teams (or companies) if needed and possible. If you stay in your same position/team, expect 2-3% raises. To get 10-20%, you often need to be recruited, get an offer, or move to a new employer.

Longer game

• Build a solid track record and make it visible: successful projects, especially ones that are delivered under constraints (budget, time), make your resume stand out.
• Consider shifting to roles with higher reach (project manager, director, principal engineer), rather than technical individual contributor. These often have bigger pay ceilings.
• Be geographic/industry flexible. Moving to regions, cities, or companies/sectors where pay is higher can be risky but more beneficial than slow local increases. Sometimes the inflation of cost of living means you need to move to higher cost-of-living areas, but the trade-off can be positive if compensated well.
• Keep upskilling: continuous learning in new technologies, sustainability, regulatory frameworks, etc.

What to think about when deciding whether to push for more or move on

Here are things that help you decide when enough is enough, or whether you should leave vs push:

• Is your total compensation able to keep pace with inflation and your career progression? If not, you’re falling behind.
• Are you being given clear paths to promotions/increased responsibility? If you ask what’s required and you get vague or shifting answers, that’s a red flag.
• Do you have external offers (or at least interest)? Even if you don’t take them, knowing market value gives you power when negotiating.
• Consider whether the company culture truly encourages employee growth, or if it prefers to keep everyone in their current roles with little opportunity for advancement.
• How important is stability vs earning more? Sometimes moving gives a salary boost, but comes with risk (new location, different management, etc.). Make sure you weigh both.

Conclusion (with a touch of realism)

Yes, salary inflation in the engineering profession is real, yet many companies are slow to adjust, partly because of rigid cost structures, budget constraints, or simply not seeing what’s happening on the ground.

For many engineers, staying in one place won’t cut it. To really get ahead (financially and professionally) they will likely need to be proactive: move companies, pick up high-leverage skills, and show measurable value.

For management to retain people, it’s not enough to say “we can’t afford more.” The cost of losing people is far higher than many realize. Good companies will wake up to this – those that resist risk losing more staff and knowledge than they think.