The Construction Industry Federation (CIF) has threatened to withdraw from the sectoral wage-setting mechanisms which decide pay rates for about 100,000 construction workers if Minister for Enterprise Richard Bruton's reform plan fails to bring down pay costs for building firms.
In a letter to the Taoiseach and several other ministers, the group's director general Tom Parlon warned the Government that wage rates in the Republic were 40 per cent higher than those in Northern Ireland and 25 per cent higher than in England.
Mr Parlon said the CIF's continued support for registered employment agreements (REAs) was "predicated" on the introduction of radical reforms which would give construction employers the breathing space to stay in business.
“The industry cannot continue to support the operation of an REA, at a time when construction companies account for over 50 per cent of all company failures in the Irish economy on an ongoing basis, unless it can be made fit for purpose,” he said.
In his letter, Mr Parlon also complained the current system had not been able to respond to the economic turmoil and loss of jobs in the sector, now represented an impediment to stability in construction.
He also pointed out the State was the main investor in the economy at present and the current high rates under the REAs limited the number of projects and the level of employment that can be supported from that investment.
“More generally, construction costs feed into costs and wage expectations in the wider economy so this issue is directly relevant to the Government’s own competitiveness agenda,” he said.
The latest Ulster Bank Construction Purchasing Managers' Index, published today, showed activity levels have now fallen in every month since June 2007.
A recent report by the European Construction Industry Federation suggested a further 60,000 people could lose their jobs in construction this year.
The report, published last month, said the total value of the Irish building industry slumped from €36 billion in 2006 to €12 billion last year.
The report estimates that by the beginning of 2007, when the industry hit a record peak, it employed 400,000 workers. This fell to 140,000 by the end of 2010, and warns this figure is likely to drop to 80,000 by the end of this year.
