LCR19847

Introduction

These claims came before the Court against the background of what is acknowledged to be the worst downturn in construction activity and employment levels that the Industry has experienced in recent times. The CIF contend that the proposals contained in their claim are intended to reduce labour costs to a more sustainable level so as to stimulate demand and create more employment in the sector. In their submissions the CIF also pointed to significant competitiveness issues affecting the industry particularly from contractors located outside the jurisdiction where rates are significantly lower than those contained in the Registered Employment Agreement (REA).

For their part the Unions acknowledge the depressed state of the industry and accept the need for measures which will lead to a recovery in employment. They do not accept that the measures proposed would achieve the result envisaged by the CIF. They also contend that the measures proposed go further than is reasonable and would result in significant hardship for their members.

Conclusions of the Court

In considering the submissions of the parties the Court has noted that historically wages paid to construction workers were in excess of the negotiated rates. This was due to the combined effects of buoyancy in the sector and skill and manpower shortages. The latest data available from the CSO’s Construction Earnings and Hours Worked survey, which relates to December 2008, show that the average hourly rate paid to craft workers in the industry was €21.22. For general operatives the average hourly rate was €17.65. This compares to a negotiated rate of €18.60 in the case of craft workers and rates for general operatives at €14.88 (Class D operative), €16.37 (Class C Operative), €16.93 (Class B Operative) and €18.04 (Class A Operative).

The data furnished to the Court on earnings in the industry indicate that between the years 2002 and 2006 the rates actually paid rose faster than the negotiated rates but the rate of actual increase was consistent in 2007 and 2008. Nonetheless the average rate paid to most workers was significantly greater that the rates to which they were entitled under the REA. It is to be assumed that the decline in the economic circumstances of the industry, and the consequential reversal of market forces in the interim, has operated to reduce the incidents and extent of enhanced discretionary payments and associated wage costs to employers. Thus, in reality, the real wage income of construction workers will have already declined significantly.

The Court has previously taken the view that retrenchment in basic pay can only be justified where this is demonstrably necessary so as to protect employment. Moreover, the level of reduction should remain within the bounds of what is reasonable and proportionate in achieving that objective. Having regard to the confluence of factors which has led to the collapse in construction activity, the Court is not convinced that the implementation of the full range of wage related reductions proposed would produce a proportionate increase in the numbers employed in the sector.

Nevertheless, the Court is satisfied that, in the light of the economic circumstances of the industry and other relevant factors, some reduction in rates is necessary and appropriate.

Recommendations- Pay

It is noted that the basic rates in construction have increased faster than the corresponding increases in industry generally. This has been due to the application of ‘catching-up’ increases with the rates paid to corresponding categories employed by Local Authorities. This indicates that while no formal linkage exists between the pay of construction workers and those employed by Local Authorities, the rate in Local Authorities has been used as an agreed reference point in determining construction rates.

Following the enactment of the Financial Emergency Measures in the Public Interest (No 2) Act 2009, the pay of corresponding grades employment in Local Government has been reduced. Having regard to all the circumstance of this case, including the circumstance of the industry and the relevance of public sector pay movements to that of basic rates in construction, the Court recommends that similar adjustments should be made in the rates prescribed by the Construction REA.

Accordingly the Court recommends that the basic rate of Craft Workers should be reduced by 7.5% with effect from a date four weeks after the date of acceptance of this Recommendation. The current differentials in the case of the various grades of General Operative should be maintained with the reduced craft rate. Likewise, allowances, which are related to the basis rate, should be reduced in line with the reduction in the basic rate. Enhanced rates, including those provided for by bonus, incentive or peace-work schemes, are a matter for local agreement but where they continue to exist the general principles enshrined in this Recommendation should, at a minimum, be applied.

The Court further recommends that the reductions should be regarded as a temporary measure or derogation from the current REA rates and their continued application should be reviewed in January 2012 and in each subsequent year. Those reviews should have full regard to the prevailing circumstances of the industry and other relevant considerations, including any adjustments in the pay of corresponding grades covered by the recently concluded Public Service Agreement 2010-2014.

Compliance

In their submissions to the Court the representatives of the CIF laid considerable emphasis on the difficulties caused by contractors from outside the State operating in this jurisdiction on rates of pay established in their place of origin. This Court has previously taken the view that the terms of the REA are applicable to all construction firms operating within the State regardless of their place of origin. The Court has also taken the view that the REA is enforceable against such entities pursuant to Directive 96/71/EC on the Posting of Workers in the Framework for the Provision of Services which is transposed in this jurisdiction by section 20 of the Protection of Employees (Part-Time Work) Act 2001.

In the Court’s view the issues regarding non-compliance by contractors based outside the State relate to enforcement of the REA. The Court recommends that the parties should jointly raise this matter with the appropriate authorities responsible for employment law compliance with a view to ensuring that effective mechanisms are put in place to address this problem.

Matters Agreed at the Joint Industrial Council.

The Court further notes that substantial agreement was reached between the parties at the National Joint Industrial Council for the Construction Industry on other measures discussed in the context of the proposals which formed the subject matter of this investigation. These measures relate to improved provisions on compliance, training and apprentices and the criteria on the selection for redundancy.

The Court recommends that these measures, as agreed, be regarded as an integral part of this Recommendation and that they be incorporated in the REA by way of an application to vary the Agreement so as to incorporate the other aspects of this Recommendation.



Signed on behalf of the Labour Court



Kevin Duffy
29th June, 2010______________________
JFChairman



NOTE

Enquiries concerning this Recommendation should be addressed to John Foley, Court Secretary.