In this Article Brian Morgan, Partner in Morgan McManus solicitors, argues that it is time to review the Registered Employment Agreements; or otherwise the Republic of Ireland Construction Industry will continue to stagnate, due to lack of competition.
CWPS LOGO
Recently it was announced by RTE Report dated 24th April 2013 that the Department of Education has ordered random audits of school building projects. The audit, it was reported, is an effort to ensure that contractors are complying with proper pay and working conditions on sites. Minister for Education Ruairi Quinn said that the vast majority of building contractors are fully compliant. However, he said he wants to ensure all workers on sites funded through the Department of Education are getting their proper entitlements.
Lately, it was reported, the building programme has been beset by problems, among them concerns that workers are being encouraged into the black economy by a minority of unscrupulous contractors and subcontractors. Now the Department of Education has appointed a private company to carry out random audits of sites. It will check pay and conditions, but also be on the alert for potential tax and social welfare fraud.
The Irish Congress of Trade Unions welcomed news of the random audits. In a statement, ICTU said it has been concerned that unsustainable tendering and procurement practices have been leading to hidden economy activity, runaway contractors and the exploitation of workers. It said the appointment of auditors will send the right message to would be non-compliant contractors. However, ICTU said it believes public bodies such as the Department of Education should go further and ensure than tender prices for contracts are sustainable.
One would have been forgiven for believing that this audit had been prompted by concerns about the black economy but a closer reading of this Report and subsequent commentary revealed that it applied to the Registered Employment Agreements which are applied in the Construction Industry in the Republic of Ireland. The writer also believes that the comment by ICTU that the Department should ensure that “tender prices for contracts are sustainable” is reference to the fact that Northern Ireland companies are managing to submit more competitive tenders than RoI based companies in many instances.
What is a Registered Employment Agreement?
Registered Employment Agreements (REAs) were first introduced under the Industrial Relations Act 1946. Part III of that Act makes provision for employment agreements to be registered with the Labour Court, provided certain criteria are satisfied. These agreements are entered into between trade unions, representing employees, and employers who are substantially representative of a particular industry. Once registered, the agreement becomes a legally enforceable statement of minimum rates of pay and/or conditions of employment that is binding on every worker and his or her employer of the type, class or group to which the REA applies, regardless of whether the worker and his/her employer are parties to the agreement. For more information on this subject and related issues concerning Northern Ireland Contractors, please refer to the Morgan McManus website page on REAs.
Are the Registered Employment Agreements justified in the current economic climate?
In the past the REAs were seen as a means of maintaining stability in the Construction Industry, and avoiding strikes. However, during the Celtic Tiger the Rates increased substantially. For instance (taking Rates of Pay per hour and not even considering the further cost of compliance with “Travel and Subsistence” Allowances and Pension Contributions) the rate of pay for a Craftsman was €18.60. It was reduced under the 2011 REA Agreement to €17.21. The Entry Rate for Construction Operatives is €13.77 per hour.
Last year the Construction Industry Federation sought a 27.5% decrease in the Rates of pay but this was rejected by the Labour Court, which recommended a cut of only 2.5%. See the “Irish Examiner” Report dated 21st November 2012.
In the meantime Northern Ireland companies continue to quote more competitively for RoI Contracts and the RoI Construction companies continue to lose out. Incidentally, in the “Camlin Electric” Labour Court Recommendation of February 2009 it was held by the Labour Court that Northern Ireland companies were specifically bound by the REAs in Ireland by virtue of the Posted Workers Directive and its application in Ireland under the Organization of Working Time Act, but the writer has since questioned whether this imposition is anti-competitive under EU Competition law.
A Wake-Up Call for Unions and the Irish Government?
If this Irish economy is to become competitive once again, how can one justify an hourly rate (over and above other obligations) of €17.21 for Craftsmen when the equivalent rate for UK companies (as of January 2013) is £10.67 (€12.69)?
Can this be justified by the comparative cost of living in each jurisdiction? Hardly, when one considers that the cost of living in Ireland has dropped considerably since the Celtic Tiger madness of the noughties!
The writer questions whether the move by the Government to audit the Construction Industry is to placate the Unions and whether the public support by the Unions of that move is an effort by the Unions to protect a position which can no longer be justified? Either some reality is brought to bear or the Construction Industry in Ireland will continue to stagnate.
Brian Morgan
Morgan McManus Solicitors
Web : brilliantreddev.co.uk/morganmcmanus
Email : bmorgan@morganmcmanus.ie
Phone No : 00353 45 51011