Mixed messages for the construction industry

Last week the manufacturing sector was highlighted as the leader on the UK’s road to recovery (see the blog for more information), but today the construction industry comes into the spotlight.

Articles in this mornings papers paint very different pictures for the sector, which has often been seen as the worst affected by the recent economic issues.

The Sun reports 1,500 news jobs are to be created in the sector as a result of manufacturing growth in Northern Ireland. IDA Ireland says “ten firms need over 1.5million square feet of premises, mostly for manufacturing, that will lead to the jobs over two years.”

In contrast the Financial Times warns that the industry is shrinking further. It says “Construction will continue to decline this year, according to industry forecasts, as spending on public sector projects including the repair and maintenance of schools and hospitals falls sharply.”

Looking at the overall picture, it is a very mixed bag. Whilst public sector cuts continue constructions and repairs will obviously be lower down the list. However, as seen in Ireland, recovery in the manufacturing market and the retail sector will prove fruitful for construction firms.

Last week the Office for National Statistics reported a 1.8% rise in retail sales month on month. This follows plans to boost spending on stores from many of the larger supermarket chains.

Extending the Gangmasters License to the Construction Industry

Introduced in 2004 after the Morecambe Bay cockle picking disaster, the Gangmasters Licensing Bill currently applies to the agricultural and food processing industry. However, since 2009 there have been calls to extend it to the construction industry.

The Bill was meant to have it’s second reading at the beginning of the year, this didn’t happen and there is no set date for when it will happen. But, as the second time the Bill has been proposed now, it is likely that a debate will take place.

The construction industry has had a hard time of it during the recession as, arguably, one of the worst hit sectors. Whereas the agricultural and food processing industry is cyclic and recession-proof (we’ll always need to eat), the construction industry isn’t as robust and when times get tough funding for building projects gets cut.

That said, in last weeks budget the construction industry did receive a welcome boost with the announcement of further funding for new homes, however the construction industries response to this has been a mixed one.

So, should the licensing come into effect what impact would it have on the construction industry?

As a large user of temporary agency labour Gangmasters Licensing is likely to be felt significantly in the sector. Employers would see increased administration and associated costs for their workforce as well as regular inspections to ensure the license is being adhered to.

In a time of economic recovery the legislation could prove to have a negative impact on the growth of the industry.

Preparing for the Agency Workers Regulations in the Construction Industry

The construction sector is expected to be one of the worst affected industries by the Agency Workers Regulations (AWR), as there is a large difference in pay between workers, due to hiring many ‘blue collar’ agency staff.

Keith Sammons, Operations Director of Advanced Resource Manager observed: “There is likely to be more of a pay differential and if they have high contracts use then it could make a real difference for them.”

Additionally, there is the problem of construction temps regularly working beyond the 12-week qualifying period.

A spokesman for union Union of Construction, Allied Trades and Technicians (UCATT) stated: “The agency workers legislation is an important step forward. However, the 12-week qualifying period remains problematic, particularly in the construction industry.”

Looking at de Poel’s own client data, construction agency staff on average worked far beyond the 12 week point. With this in mind, many agency staff across the board will be entitled to the benefits provided by the AWR.