The Labour Court has rejected proposals by the Construction Industry Federation that the official pay rates for workers in the building sector should be reduced by 10 per cent.
Pay scales for tens of thousands of construction workers are set out in a registered agreement between unions and employers which is lodged with the Labour Court.
However the Construction Industry Federation (CIF) rejected the national wage agreement reached last autumn and argued that given the downturn in the economy and in particular in the building sector that the rates should be reduced by ten per cent.
Trade unions sought the increases under the agreement – 3.5 per cent in the first phase - to be applied to the official rates.
The construction industry committee of the Irish Congress of Trade Unions (Ictu) argued in the Labour Court that the increases would not affect competitiveness in any one company as they would apply across the whole sector. It also contended that the survival of the sector required measures such as improving access to credit rather than pay cuts.
The CIF said that falling interest rates and deflation had resulted in such a dramatic reduction in the cost of living that a pay cut and not an increase was warranted.
It also argued that the registered employment agreement was “anachronistic and inflexible restriction on the construction industry”.
However in its ruling, published today, the Labour Court said that during the property boom the official registered employment agreement rates “tended to operate as a floor rather than a ceiling”.
“This is borne out by the CSO quarterly statistics on average earnings and hours worked which reveal that in early 2008, the hourly rate for skilled workers in the construction industry stood at €21.28 per hour for an average 43.3–hour week, compared with the REA craft rate which was €18.60 per hour."
“The figure supplied to the Court for the whole of 2008, when rates had begun to drop, was €20.91 per hour. This was still 12.4 per cent about the REA rate," the court said.
It said that as industry contracts and pay rates dropped – which both employers and unions agreed was happening – they would logically bottom out at or near the official REA rates.
“Given the amount by which the market will naturally reduce the rates, the court does not feel that a further reduction, as claimed by the CIF, is justified nor would it necessarily, of itself, create or maintain employment in the industry. The court does not therefore recommend concession of the CIF’s claim," it stated.
The court said discussions on the 3.5 per cent increase under the first phase of the national agreement had been “perfunctory” and largely obfuscated by the demand by employers for a 10 per cent pay cut.
It urged both sides to “re-engage meaningfully as a matter of urgency with a view to reaching an accommodation regarding the terms of the agreement”.
“As implementation of the terms has already been delayed by some nine months, the Court is of the view that this engagement, which would be most appropriately entered into at the Joint Industrial Council for the industry, should conclude within one month, at which stage, failing agreement, the parties may revert to the Court for a definitive recommendation on this part of the claim," it said.
The CIF said that it would be considering the Court finding with its members.
However Siptu national organiser Noel Dowling welcomed the Labour Court recommendation and said that it vindicated the Ictu’s position.
“We particularly welcome the fourt’s recommendation that both sides ‘re-engage meaningfully, as a matter of urgency’ through the existing industry structures. We are, and always have been, ready to engage in negotiations with the employers. Hopefully the posturing by Tom Parlon on behalf of the Construction Industry Federation will now end. While his delaying tactics may secure some short term gains for some of his members it is at the enormous cost to tried and trusted industrial relations structures that have served the country well for decades."