Labour Court Database __________________________________________________________________________________ File Number: CD87100 Case Number: LCR11163 Section / Act: S67 Parties: CONSTRUCTION IND. FEDERATION - and - ICTU;BWTU |
Claim, under the 26th wage round, for (a) wage increase. (b) an increase of #1.50 per week in meal allowance and 50p per week in tool allowance. (c) a reduction of one hour in the working week. (d) one additional day in annual leave.
Recommendation:
18. Claim (a) Wage Increase.
The Court, having regard to the general state of the building
industry at present and with particular regard to its employment
capacity recommends that pay rates be increased by 4 percent with
effect from 1st June, 1987 and that the agreement last until the
end of March, 1988.
Claim (b) Meal & Tool Allowance.
Having regard to the fact that these allowances have not been
increased since 1st January, 1985, the Court recommends that they
be increased by 10% with effect from 1st June, 1987.
Claim (c) Reduction in the Working Week.
The Court does not recommend concession of this claim.
Claim (d) Additional Annual Leave.
The Court recommends that this claim and the problems associated
with the change sought by the Federation in the system of
allocating annual leave be discussed jointly as an issue separate
from the 26th round for implementation in 1988.
Division: CHAIRMAN Mr Heffernan Mr Devine
Text of Document__________________________________________________________________
CD87100 THE LABOUR COURT LCR11163
CC8774 INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11163
Parties: CONSTRUCTION INDUSTRY FEDERATION
and
CONSTRUCTION INDUSTRIAL COMMITTEE
IRISH CONGRESS OF TRADES UNIONS
Subject:
1. Claim, under the 26th wage round, for
(a) wage increase.
(b) an increase of #1.50 per week in meal allowance and 50p
per week in tool allowance.
(c) a reduction of one hour in the working week.
(d) one additional day in annual leave.
General Background:
2. These claims concern approximately 50,000 workers, both craft
and general, employed in the Construction Industry. The 25th wage
round agreement expired on 31st December, 1986. That agreement
resulted from the acceptance by both parties of Labour Court
Recommendation No. 10289.
3. On 25th November, 1986 the Group lodged a claim for a 26th
wage round agreement. The Federation also put forward a proposal
for a change in the allocation of annual leave. No agreement was
reached through local negotiation and on 22nd December, 1986 the
matter was referred to the conciliation service of the Labour
Court. A conciliation conference was held on 13th January, 1987
at which the parties agreed to have further discussion on some of
the items claimed. However, the Federation rejected those claims
which are outlined in paragraph 1 above. On 11th February, 1987
those claims were referred to the Court for investigation and
recommendation. A Labour Court hearing was held on 24th February,
1987.
Claim (a): a 14% wage increase:
Background:
4. The last wage agreement for the Industry which expired on 31st
December, 1986 provided for a 5% wage increase from 1st January,
1986 and a 2% wage increase from 1st August, 1986. The present
basic rates of pay are as follows:-
Craftsmen: 360.54 pence per hour - #144.22 per week
General Operatives: 328.81 pence per hour - #131.52 per week
The Group is claiming a 14% wage increase. The Federation
rejected the claim.
Group's arguments:
5. (i) Since 1981 the earnings of the workers concerned
have fallen out of line with those of workers in
transportable goods industries. Over that period
earnings in the transportable goods industries
increased by 62% while in the Construction Industry
earnings increased by 44% for craftworkers and 40%
for general workers.
(ii) Provisional figures from the Central Statistics
Office published in January, 1987 show that
earnings in the Industry, excluding overtime
premia, decreased for craftsmen and general workers
by 2% and 1% respectively over those of the
previous June. Over the period other industrial
workers earnings were estimated to have increased
by 1.5%.
(iii) The Labour Court in LCR Nos 4903 and 9203 addressed
the question of the relationship between earnings
in Construction and Transportable Goods Industries.
In LCR No. 9203 the Court observed that in
September, 1983 the earnings in the construction
industry were 91% of those in Transportable Goods
Industries. The Court appeared to hold that this
relationship was fair. By December 1985 the
workers earnings were 82% of those in Transporabble
Goods Industries - this excludes overtime earnings.
It is clear that, since 1981, when industrywide
agreements replaced centralised pay negotiation,
earnings in the construction industry have been
eroded considerably relative to those in
Transportable Goods Industries.
(iv) Earnings in Construction are now over 16% out of
line with what the Court previously considered to
be a fair relationship in the earnings of workers
in both sectors. Full concession of Group's claim
would not redress the anomaly which has arisen in
relation to building workers' pay during past wage
agreement unless account is also taken of any
adjustment that will be made in the pay of other
Industrial workers during the current wage round.
(v) According to figures published by the Central
Statistics Office it can be seen that in 1979
twenty four out of thirty one industrial groupings
had higher earnings than the Construction Industry
and that in June 1986 twenty seven of those
industrial groupings had higher earnings than the
construction industry. This is further evidence
that earnings in the Construction Industry have
fallen out of line with those in the Transportable
Goods Industries.
(vi) Increases in basic pay provided by the last four
industry agreements have not been reflected in
average earnings. The cumulative increase in basic
pay provided by each of the industry agreements
since 1982 was 48%. The cumulative increase
negotiated in the industry over the period should
have adjusted earnings upwards by 50% in the case
of general workers and 51% in the case of craft
workers. Earnings in the Industry increased
broadly in line with the increase in basic pay
between 1982 and 1985, however, in 1986 the 7.1%
increase in pay provided by the 25th wage round had
no impact on earnings in the industry.
(vii) The 25th wage round increase was completely offset
by a reduction in other payments which make up the
workers' gross earnings and which have always
been taken into account in determining wage levels
in industry.
(viii) In each of the pay rounds since 1982 the employers
engaged in contracting recovered the full amount
paid under the agreements. As earnings did not
increase over the 25th wage round it can be assumed
that the employers recovered the amount provided
for twice, once from the client and from the
workers by reducing extra payments by an amount
corresponding to the increase in basic rates.
(ix) The earnings of workers in the Construction
Industry have also worsened relative to increases
in consumer prices since 1981. Between then and
the third quarter of 1986 the Consumer Price Index
increases by 54% while the earnings of workers in
the Construction Industry had an average weighted
increase of 39% over that period.
(x) Since 1979 the level of pay of craft workers in
Local Authorities, Health Boards and Government
Departments is determined by reference to the
position of craftsmen in analogous employments.
Traditionally there was parity in pay levels
between the State sector and the Construction
industry, however since 1979 a wide disparity has
developed between basic rates of crafts workers in
the construction industry and in the state sector.
The situation now is that average earnings in the
Industry are out of line with rates paid in Local
Authorities and Health Boards (details supplied to
the Court).
(xi) Productivity in the Industry has risen while at the
same time pay levels have decreased in relation to
other industrial workers. From 1980 to 1986 output
decreased by 32% while the numbers employed in the
Industry decreased by 52%. It would appear
therefore that productivity increased by 42% over
this period. Furthermore increased output per
worker was the main factor contributing to this
increased productivity. It is clear that the rates
of pay in the Industry only increased by 19% in
real terms over this period after account is taken
of the increased productivity. The Workers have
not benefitted from the increased productivity.
(xii) The Group does not accept that the Industry has
become less profitable as building prices have kept
pace with the combined increase in labour costs and
the cost of materials.
(xiii) Up to 1982 the rate for electricians was identical
to the construction Industry craft rate. Since
1982 a disparity has developed between the craft
rate in the Industry and the rate for electricians.
At present the basic rate of electricians in the
Industry is #14.19 per week more than the basic
rate of other craft workers and is #13.06 more than
the average earnings of other craft workers in the
Industry. There is no other industry in which the
pay of electricians is any different to that of
other craft workers and the argument that workers
in the civil trades achieve higher real earnings
through bonus earnings is no longer sustainable.
(xiv) In the 23rd, 24th and 25th wage rounds the increase
paid to building workers was less that that paid to
other industrial workers. An analysis of 426
settlements under the 25th wage round carried out
by the Irish Congress of Trade Unions, shows an
annualised average increase of 7.4% and that the
duration of agreements was mainly in the twelve to
fifteen months range. The 25th wage round for the
Construction Industry provided an annualised
increase of 5.6%. The results of the I.C.T.U.
survey show that 90% of workers in industries
covered by the survey had a higher rate of increase
than Construction workers. They also show that
workers in 298 of the 426 employments surveyed had
a shorter agreement than in the case of the
construction industry.
Federation's arguments:
6. (a) In addition to high unemployment the Industry is also
suffering at all levels from massive emigration and an
increasing number are working in the 'black economy'.
Since the last wage round increase was before the Court
the Industry has gone into even further decline with
activity in most sectors of the Industry falling
substantially. Recent budgets have also had negative
effects on the Industry.
(b) The 'black economy' is and will continue to be a major
problem for the Industry. It accounts for 10% to 15%
of total output and represents a yearly loss to the
Industry of #250 million. Legitimate builders are
under severe pressure due to operations of the 'black
economy'. Nothing should be done at present to
exacerbate the problems which bona fide contractors
face from the 'black economy'.
(c) It is anticipated there will be a further real
reduction of 5% in activity in 1987. When this is
taken into account along with the decline in the
Industry since 1981 it must be accepted that any
significant increase in costs during 1987 will result
in a corresponding increase in unemployment.
(d) The yearly cost of concession of the Group's wage claim
would be #70 million. It is probable that the Industry
will have to bear most of this cost. Contract costing
is now so competitive that the possibility of a
building firm bearing even a part of the cost of a wage
increase is out of the question. Many sectors of the
Industry will even have difficulties recovering the 1.25%
increase in labour costs which is already due to take
place in 1987 over 1986 levels.
(e) The Federation must have regard to the guidelines on
pay which were issued by the Department of Finance.
These guidelines anticipate a pay pause followed by a
wage increase in line with inflation for 1987 less the
carry over wage increase from 1986. Because of the
size of the Group's claim the Federation is effectively
prevented from proposing any wage increase at all
during 1987. Since the rate of inflation for 1987 is
anticipated to be 3% and the carry over wage increase
from 1986 will be approximately 1.3% during 1987 the
sacrifice the Workers are asked to make to try and
prevent job losses is marginial.
(f) The current state of the Industry is the single most
compelling reason for the rejection of the Group's
claims in their entirety. The Industry is in the worst
recession in its history. Figures from the CSO for
December, 1986 show the numbers employed in the
Industry is 45.4% of 1980 levels. It has previously
been accepted by the Court that an increase in the
relative earnings of construction workers would lead to
an increase in unemployment. Even partial concession
of the Group's claim would result in unemployment for
even more building workers.
(g) Earnings in the industry will rise by about 1.25% this
year as a result of the 25th wage round settlement. It
appears that the Government will not approve more than
that. Many firms will not be able to receover even
that amount.
(h) The Federation accepts that in seeking the Group's
agreement to no wage increase at all during 1987, it is
asking for a sacrifice from the workers. However,
having regard to the projected rate of inflation for
1987 of 3% and the fact that during the year earnings
will increase by 1.25%, and taking account of the effects
of PAYE and PRSI on the difference the Federation
believes that the Trade Unions could agree to a wage
freeze for the whole of 1987 at no great cost to their
own members.
(i) At the present time of high unemployment the priority
must be to preserve the few jobs that remain.
Concession of the Group's claims will result in further
job losses of over 3000 during 1987 alone. All means
of preventing further job losses must be considered
therefore a wage freeze should be recommended for the
Industry for 1987.
Claim (b): an increase of #1.50 per week in meal allowance and
50p per week in tool allowance:
Background:
7. At present the meal allowance is #1.50 per day and the tool
allowances are #2.50 per week. The last increase in these
allowances was effective from 1st January, 1985. The meal
allowances is paid to all workers while the tool allowance is not
paid to General Workers or Apprentices. The Group is claiming an
increase of #1.50 per week in the meal allowance and 50p per week
in tool allowance.
Group's arguments:
8. (i) Since the meal and tool allowances were first
introduced in 1979 there has been an informal agreement
whereby they are reviewed in every second wage round.
They were last increased in the 24th wage round.
Concession of the claim would add 1% to wage costs
based on average earnings at September, 1986. The meal
allowance which the workers concerned would receive if
the claim were conceded in full is #9 per week and is
liable to all taxes including PRSI and levies. This is
not sufficient to cover the difference between
obtaining a meal in a commercial establishment and
eating at home or in a subsidised canteen. In the
present circumstances full concession of this claim is
justified.
Federation's arguments:
9. (a) These allowances were increased just two years ago.
The cost of concession of this claim, which is
effectively a wage increase, is too great for the
employers to bear at present.
(b) When these allowances were first introduced in 1979
there was no committment that they would be increased
in line with inflation, the basic rate or anything
else. Allowances such as these have been improved when
the Industry felt it could afford to do so. This is
clearly not the time to consider such a review.
Cliam (c): a reduction of one hour in the working week:
Background:
10. The present basic working week in the Industry is 40 hours.
The Group is claiming a reduction of one hour. The Federation
rejects the claim.
Group's arguments:
11. (i) The last reduction of working horus in the Industry was
in 1964 when weekly working hours were reduced to 40.
Concession of the claim for a reduction in working
hours would add 2% to basic hourly rates.
(ii) It is appropriate that workers in the Industry should
work shorter hours than those in other employments as
their work is of an arduous nature. There is also a
trend throughout Europe towards reducing working hours.
(iii) The introduction of a reduced working week in the
construction industry would cost less than a similar
introduction in other employments. Having regard to
the high level of productivity among building workers
in recent year a reduction in working hours would be
compensated by increased output per worker. Concession
of reduced working hours would be compensated by
increased output per worker. Concession of reduced
working hours would also have the beneficial effect of
reducing the rate of job losses.
(iv) Clerical and administrative workers in the Industry
have in general a 36 hour working week. However, they
do not have the same physical demand on them as manual
workers in the Industry who have a 40 hour working
week. It is unfair that manual workers have to work
longer hours than other workers.
Federation's arguments:
12. (a) This is effectively a claim for a wage increase and the
cost of its concession to the Employers would be #12.6
million per year. The cost to Employers of a reduction
of one hour is prohibitive even without taking account
of the extra costs of overtime.
(b) The nature of the industry means that a certain amount
of overtime will always be required. A reduction in
the basic 40 hour week will not change that. The only
effect of such a reduction would be to increase the
cost of overheads to contractors and the earnings of
building workers who still have jobs.
(c) A reduction in working hours will not reduce
unemployment. The resultant increase in labour costs
would increase the number of unemployed building
workers.
(d) No large scale labour intensive industry in the country
has conceded such a claim. The Court has rejected
similar claims in the current wage round.
Claim (d): one additional day in annual leave:
Background:
13. The present annual leave entitlement is 20 days. The Group
is claiming this should be increased by one day. The Federation
rejected the claim.
Group's arguments:
14. At present workers who complete a full year with an employer
get 20 days annual leave. In reality, few workers complete a full
year with the same employer and rarely qualify for the full annual
leave entitlement. Concession of the claim for increased annual
leave would increase the opportunity for workers to receive 20
days annual leave in cases where they do not complete a full years
work. Concession of the claim would mean a minimal increase in
wage costs.
Federation's arguments:
15. (a) The present annual leave entitlement is in line with
most labour intensive industries in the country and is
in excess of legal requirements.
(b) It is not opportune to concede such a claim at present.
The cost to the Employers would be about #2 million a
year and no increase in jobs will result.
Group's arguments concerning change in annual leave:
16. The Employer's proposal to allocate four of the twenty annual
leave days for a week at Easter are regressive inflexible and
unsuitable to the Industry. They have already been rejected by
the workers and nothing has changed in the interim to alter the
workers' decision on these proposals.
Federations arguments concerning change in annual leave:
17. (i) The re-arrangment of annual leave in the industry as
requested by the Employers could be done without any
cost to the workers. This would be a small concession
on their part which would have a beneficial impact on
the industry. In many cases the suggested holiday
arrangements would be to the benefit of the employees
concerned.
RECOMMENDATION:
18. Claim (a) Wage Increase.
The Court, having regard to the general state of the building
industry at present and with particular regard to its employment
capacity recommends that pay rates be increased by 4 percent with
effect from 1st June, 1987 and that the agreement last until the
end of March, 1988.
Claim (b) Meal & Tool Allowance.
Having regard to the fact that these allowances have not been
increased since 1st January, 1985, the Court recommends that they
be increased by 10% with effect from 1st June, 1987.
Claim (c) Reduction in the Working Week.
The Court does not recommend concession of this claim.
Claim (d) Additional Annual Leave.
The Court recommends that this claim and the problems associated
with the change sought by the Federation in the system of
allocating annual leave be discussed jointly as an issue separate
from the 26th round for implementation in 1988.
~
Signed on behalf of the Labour Court
John M. Horgan
Chairman.
8th May, 1987.
T.O.M./U.S.