In this article, Nigel Bryson reviews some of the recent agreements covering construction workers and identifies the significant issues.
At the end of November 2013 it appeared that pay negotiations covering a significant number of construction workers had been concluded. The Construction Industry Joint Council (CIJC) agreed to a 3% increase in pay rates from June 2014, then another 3% increase in June 2015. Around 500,000 construction workers are covered by some aspect of the CIJC agreement.
Currently, the rates for a General Operative are £8.03 an hour (£313.17 per week) with differing rates dependent on skills levels, up to the craft grade of £10.67 an hour (£416.13 per week) for a 39-hour week. There are also various payments, such as coverage for loss of tools, subsistence allowance and sick pay.
The agreement made under the Building and Allied Trades Joint Industrial Council for the year beginning 17 June 2013 until 16 June 2014 has an Adult General Operative rate of £8.20 an hour (£319.80 per week) and top craft rate of £10.94 an hour (£426.66 per week) for a 39-hour week. It needs to be appreciated that such rates provide a minimum and that bonus schemes and overtime can significantly increase an individual worker’s earnings.
According to a number of analysts, the construction sector is experiencing a boost in growth. A recent report, published by the Chartered Institute of Purchasing & Supply in January 2014, recorded that the UK construction industry had “seen output grow for eight months in a row”. It was reported that commercial building work was now “rising at the fastest pace since August 2007”.
Reflecting this growth, it was noted that the “industry has also seen jobs increase for seven months in a row”. While this is undoubtedly a welcome development, coming after a number of years of a depressed economy, the industry will now have to address some key problems. There is concern in the construction industry that continued growth could lead to a skills shortage. In the past few years, experienced older workers will have retired. Some will have left the construction industry for jobs outside the sector and be unlikely to return, and some will have left the construction industry permanently through injury or ill health. This creates a demand for new workers to come into the sector.
According to research published by the Construction Industry Training Board, 47% of the construction employers surveyed were “struggling to recruit workers with the right skills”. Indeed, around 5% of those surveyed indicated that a lack of skilled workers was putting their business at risk. Figures from the Office of National Statistics (ONS) indicate that in the next 10 years, 19% of construction workers will retire — 400,000 workers.
It seems critical that two things happen.
The industry ensures that existing construction workers remain within the Sector.
New workers are brought into the sector either by training young workers through apprentices, etc or by recruiting workers with suitable skills that can be adapted to the construction industry.
It follows that pay and conditions are a key incentive for both of the factors identified above.
Pay rates extended
The recent pay settlements covering the next few years have consisted of a number of measures. As indicated above, the CIJC has settled on a two-year deal, thus stabilising pay up to June 2015. However, it is not alone in this move. Those working under the Electrical Contractor’s Joint Industry Board in England and Wales and Scotland agreed a two-year pay deal covering 2013 and 2014 in December 2012. Going one step further, the Engineering and Construction Industry National Joint Council established a three-year agreement in December 2012, which runs from January 2013 until the end of December 2015. So, in some of the key agreements covering a significant number of construction workers, the pay and conditions have been set for longer periods.
However, there is still concern among trade unions that pay is generally too low. In relation to public service workers, the situation is particularly difficult. Workers engaged in construction work for local authorities are covered by the Joint Negotiating Committee for Local Authority Craft and Associated Employees. The agreement is often referred to as the “Red Book”. In the trade union submission to the employers in 2013 it is pointed out that, due to the Government pay freeze, wages have not increased since 2009.
Also as a result of the pay freeze, the “hourly minimum rate of pay for a JNC labourer is now 18% lower than a labourer” covered by the CIJC agreement. In contrasting the minimum labourer’s rate for local authorities with the Building and Allied Trades Joint Industrial Council (The Federation of Master Builders and the trade union UNITE), it was stated that the JNC rate was 20% lower. This is likely to put pressure on local authorities to keep staff who may be rewarded with significantly higher pay in private companies, as the increase in construction output grows.
Of course the information above relates to organisations that are covered by the respective collective agreements. Some organisations will not be covered by the collective agreements and they will set pay rates themselves. While some will pay high rates for workers with key skills, there are also employers who will set low pay rates. In the latter circumstance, the National Minimum Wage will apply: this currently stands at £6.31 an hour (£246.09 per week for 39 hours worked).
It is also likely that construction companies will continue to attract construction workers from outside the UK, particularly from the extended EU countries. While this may to some extent be controversial, employers need to be clear about the employment status of workers, particularly in relation to agency and self-employed workers.
Recently, a small group of construction workers won an industrial tribunal case that revolved around their employment status. Originally they were hired onto the construction of the Southern General Hospital Project in Glasgow. They were recruited by the contractor Dunne, a company they had previously worked for. On first starting at the site, they were asked to sign a contract. However, it was realised some weeks later this was with a company called Marnock Formwork, and the construction workers were engaged as self-employed workers.
Over a period of several weeks they received no pay slips, did not have tax deducted at source and received no holiday or sick pay. When their employment finished in August 2012, they submitted a claim to an Industrial Tribunal, supported by their union UCATT. In December 2013 the Tribunal found in favour of the workers and the Tribunal judge made the following points:
“I find that the substitution clause did not reflect the reality of the relationship. The claimants were not businessmen in business on their own account. They had no control over the way in which they carried out their work. They were required to clock in and out. They were subject to the direction and control of Dunne employees on site. Importantly, the fact that they signed the contract accepting they were self-employed subcontractors did not mean they actually were self-employed contractors.”
This reinforces the point that the employment relationship between contractors and workers will be determined by what is done in practice.
With pressure to get workers for construction projects, employers will need to be more creative about how to attract workers.
Last reviewed 9 January 2014