Alicja: The Cranes Are Back, but Working Conditions Aren’t

The Irish construction industry is recovering: it grew by 15 percent in 2016 and is expected to grow by 20 percent in 2017.

The number of people working in this sector has also been increasing over the last four years. It reached the level of nearly 140,000 by the end of last year. This is good news, considering how badly the industry was hit by the recession. Nevertheless, working conditions have deteriorated.

This can be mainly related to recent changes in employment relationships, which included a shift towards outsourcing. The percentage of trade workers who are self-employed has risen since the crash, while many general operatives now work through employment agencies.

Jobs in the Irish construction sector were regarded as good during the boom. Work was physically demanding, but the sector was relatively safe, in comparison to some other European countries.

Wages were higher than the national average, and until 2013 they were secured through Registered Employment Agreements (REAs). Due to the demand for skills and labour, employment was easy to find.

At the peak in 2007, there were 270,000 people working in construction across Ireland. Following the crash, this number dropped dramatically to 96,000 in 2013. It has since recovered, reaching 138,200 in the fourth quarter of 2016.

There has been, however, a notable increase in the proportion of people working in construction who are self-employed. Before 2008, around 25 percent were self-employed; last year, the figure was 35 percent.

The relatively high level of self-employment in this sector may be related to the nature of work, as it requires the involvement of different subcontractors. This is significantly above the national average: for the past decade, the level of self-employment in Ireland oscillated between 16 and 17 percent.

There are different phases involved in the construction of any building. These require different skills, equipment and expertise.

There is usually one main contractor responsible for the overall delivery of a project (and the project management), but specific phases are completed by more specialised companies. In other words, one company builds the walls, while another takes care of the roof; then a different firm delivers and installs the windows.

The same happens with the interior work, as the painters likely to work for a different company than the carpenters. Not all of categories of workers are present at the site throughout the entire project. Workers move from one site to another, and sometimes from one company to another.

General operatives, who operate cranes and other machines are the only exception from this rule. They often stay on-site from the beginning to end. They were traditionally employed by the main contractor.

The nature of work has not changed over the years. The nature of the employment relationship, however, did. With very few projects around the country after the crash, competition in the Irish construction sector became fierce.

Main contractors were forced to cut their costs as much as possible. With the REAs still in place for the first few years of the recession, this could not be done through lowering the wages. Instead, companies moved towards outsourcing and engaged more self-employed people and agency workers.

The proportion of self-employed people who do not have any paid employees increased. Up until 2008, roughly half of all self-employed people were solo workers; now that figure has grown to 75 percent.

In the Working Conditions Project, which we completed last year in the Dublin-based think tank TASC, where I work, we found that many workers at the end of the chain are forced into this situation. They often are not risk-taking entrepreneurs looking to start their own company and expand it over time.

In fact, there is strong notion of bogus self-employment spreading throughout this industry as sub-contractors increasingly force their workers to register as so-called “relevant contractors”.

Revenue sets strict criteria to determine who is, and who is not, a relevant contractor; these criteria are frequently not met. For example, a relevant contractor cannot be under direct control of another person. They also have to supply their own materials.

According to those we interviewed for our Working Conditions Project, many self-employed trade workers do not fit into this description.

Registering trade workers as self-employed benefits the companies. They do not have to adhere to the regulations that protect normal employees, including the minimum wage. Labour cost is also lower, as the company does not pay the employer’s PRSI and will not be liable for any redundancy payment in the future.

This, however, also has consequences for workers. As they have to be competitive, they also need to cut their cost, namely their hourly rate. While data on wages for self-employed workers is not available, there is evidence of trade workers earning below the minimum wage.

There are also other “benefits” that PAYE employees take for granted. These include holiday pay, Job Seeker’s Benefit entitlements and paid sick leave. None of these are available to the self-employed.

According to our sources, bogus self-employment mainly applies to trade workers. General operatives, on the other hand, now often work through agencies.

In the past they were directly employed by the main contractor; for the last few years, however, this work has also been deployed to subcontractors (which are increasingly likely to be agencies).

Agencies provide the work “on-call” and only pay around €10 per hour. This provides the contractor with yet another savings, as the rate is lower than before, and they only pay for the work that is done.

These workers have very limited job security. There is no guarantee they will get any work after a project is finished.

Like those on the if-and-when contracts in the hospitality sector, they also don’t have any security in terms of their income. They don’t get paid when the work stops during bad weather, and we do get a lot of bad weather in Ireland.

The cranes around Dublin are moving again, and that’s a very positive sign. However, as the industry recovers from the crash, employment conditions should also improve.

[UPDATE: This article was updated on 28 March at 11:35 am to correct an editing error around the list of benefits that PAYE employees take for granted.]