Construction firms could go under if pay claim agreed

The CIF said the survival of many building firms could be threatened if the industry did not face a number of serious challenges, including pay rises, properly.

Its warning follows the recent request by the Irish Congress of Trade Unions’ (ICTU) Construction Industry Committee for a revised Sectoral Employment Order (SEO) which fixes pay, sick pay and pension contributions for the sector.

ICTU has called for the first of three annual pay increases of 4pc to be implemented from October, while also seeking a guaranteed 39-hour week to address the practice of workers being sent home without pay when building work is curtailed by bad weather.

The unions claim such increases are affordable against a background of a rapidly expanding construction sector with rising house prices and expectations of high profitability.

The existing SEO, which came into effect in October 2017, has an hourly rate of €19.96 for all craft workers with lower rates for general operatives.

In a submission to the Labour Court, the CIF said it was supportive in principle of a new SEO for the construction sector as it provides a level playing field for contractors when tendering for work and helps attract new workers into the industry.

However, it said it was essential that pay and pension contributions were set at realistic and sustainable levels given the challenges posed by the Covid-19 pandemic, Brexit and a global shortage of building materials with associated cost increases.

“There is a grave concern amongst our members that the trade union side is ignoring these very serious challenges in pursuit of substantial increases in hourly rates,” the CIF stated.

It warned that inflationary pressures combined with the disruption caused by Covid-19 could threaten the survival of construction firms that were locked into fixed-price contracts.

The CIF claimed average weekly earnings in the construction sector at the end of last year were 4.8pc above the national average as construction workers had seen their hourly pay increase by a minimum of 15.4pc over the past four years.

“Construction workers are now well-paid individuals and increases of this magnitude going forward are simply not sustainable,” it added.

The CIF has proposed an hourly rate increase of 1.6pc from April 2022 with a similar increase again in April 2023.

It has also called for corresponding increases to pension contributions over the same time frames but for no changes to death in service and sick pay contributions.

The CIF also voiced strong opposition to the union’s proposal for payment of a travel allowance to workers. Unions have called for a minimum of one hour’s basic pay per day in recognition of time spent travelling to construction sites.

The CIF also said a guaranteed payment for a 39-hour week to mitigate against inclement weather as sought by the unions could not be included in the new SEO.

The CIF has urged the Labour Court to allow a lead-in time for any new SEO to allow its members factor in any additional labour costs into tender prices. The Labour Court will conduct a hearing on the issue on September 2.