Memorandum by the Construction Confederation
EXECUTIVE SUMMARY
1.1 The Construction Confederation welcomes
the opportunity to submit evidence to the House of Lords Select
Sub-Committee G on the European Working Time Directive. This is
an important piece of social legislation for the construction
industry, particularly as it also focuses on the health and safety
protection of workers. Our submission covers in detail the specific
areas of the Commission's review that are of concern to our members.
1.2 In summary, the Construction Confederation
would like to highlight the following:
— The individual opt-out facility is
an essential mechanism for labour flexibility in the UK. The removal
of the opt-out would have adverse economic consequences on construction
companies, especially SMEs.
— A Construction Confederation members'
survey shows that the opt-out is genuinely necessary for the construction
industry. Therefore, the industry must not be penalised by its
removal due to the abuse in other sectors of the economy.
— For the construction industry, the
arguments for retaining the individual opt-out fall into three
categories: employment, the economic implications of the removal
of the opt-out and the skills shortage within the industry.
— In view of the existing skills shortage
in the industry, we believe that the removal of the opt-out would
create additional pressure on construction capacity, which in
turn could jeopardise further the delivery of the Government's
capital spending programme.
— Labour markets differ across Europe
and some member states have obtained flexibility through alternative
routes to the opt-out, which for cultural reasons are not available
to the entire UK construction sector.
— If in the worst case, the UK was
unable to retain the opt-out, alternative measures must safeguard
the labour flexibility currently provided by the opt-out mechanism
and industry must be given time to adapt.
BACKGROUND
2.1 The Construction Confederation is the
main trade association for building and civil engineering contractors
in the UK. We represent over 5,000 contractors, which deliver
75 per cent of the total construction turnover in the UK.
2.2 The construction industry, like the
majority of sectors across the UK economy utilises the individual
opt-out facility under the European Working Time Directive. The
industry employs some 1.8 million people, which is equivalent
to one in 14 of the working population. Therefore, the construction
industry is very concerned by the current review of this directive
and any potential legislative changes that could lead to the removal
of the opt-out facility.
2.3 Last year, in advance of the publication
of the review, the Construction Confederation surveyed members
to determine how the potential removal of the opt-out would affect
their business. Over 600 responses were received. This is a significantly
greater response rate than usual and highlights members' concern
on this particular issue. The findings of this survey were presented
to Government officials and to the European Commission. We were
very encouraged that the Commission acknowledged our survey findings
in the communication document (Section 2.2.1.4, page 13) showing
that, far from abusing the opt-out, the facility is genuinely
necessary for the construction industry. The key themes and concerns
expressed by members in our first survey are outlined in the next
section of this paper.
2.4 Following the publication of the Commission's
communication in January, the Construction Confederation has undertaken
a further survey to seek members' views on specific measures that
could be alternative options for further discussion if, in the
worst case, the UK was unable to retain the opt-out in its current
format. In considering various options, our primary objective
is to ensure that any changes arising from this review must safeguard
the labour flexibility currently provided by the opt-out mechanism.
The results from this second survey are currently being collated
and will be presented in our final submission to the European
Commission's consultation next month.
RETAINING THE
INDIVIDUAL OPT-OUT
FACILITY
3.1 On the basis of our first member survey,
we believe the arguments for retaining the individual opt-out
are best considered under three headings: employment, the economic
implications of the removal of the opt-out and the skills shortage
within the construction industry.
3.2 Employment
The nature of the construction industry means
that unlike other sectors, the fluctuating workload and the differing
locations of employment requires the workforce to be mobile and
be able to adapt to various working hours. Employees are often
required to work and live away from home. In these circumstances,
employees often elect to maximise their earnings in the short
contractual period.
3.3 Employees must be given the right to
decide how many hours they work. Any reduction in the potential
earning power of employees, particularly in the current economic
cycle, is likely to result in discontentment and may lead to greater
numbers turning to the black economy to boost earnings. By the
Government's own reckoning the "informal construction economy
has an annual turnover of £4.5 billion that is some 10 per
cent of construction GDP. Already a considerable percentage we
cannot risk further increases through the loss of flexibility
with the opt-out.
3.4 Contractual work in the construction
sector is often time-constrained and without working time flexibility
financial penalties may be levied by the clients if deadlines
are not met. This may be further exacerbated if working hours
are limited and contractors are then subject to seasonal pressures
including the UK weather. Furthermore, within the construction
industry there are often scenarios when work once started must
be completed (eg concrete pouring, highway maintenance, rail works
and annual shutdowns including oil refineries and power stations).
Labour flexibility is key in these circumstances.
3.5 Economic
In surveying our members one of the key concerns
if the UK were no longer able to use the opt-out is the increased
cost for businesses. The construction industry employs approximately
1.8 million employees, the majority of which are employed by SMEs,
businesses that generally do not have large enough workforces
to reallocate labour between projects. Therefore, either they
would have to incur increased recruitment costs and in some cases
increased wage costs or become more selective of contracts, inevitably
reducing the industry's already stretched capacity.
3.6 Skills Shortages
Assuming that the Government's commitment to
capital investment is met we already require over 80,000 new skilled
people in the industry each year. Yet the current skills shortfall
already places a limit on construction capacity. If the opt-out
is removed capacity will be reduced even further which we believe
will inevitably threaten the Government's public sector programme
which is already behind schedule.
OTHER EU MEMBER
STATES
4.1 Labour markets differ across Europe
and inevitably the interpretation of the European Working Time
Directive has varied in Member States. For instance, the UK is
the only Member State to have implemented the individual opt-out
across all sectors of the economy. Other EU countries have obtained
flexibility through different routes that enable companies to
manage their resources and maintain their competitiveness. For
instance, the reference period may be extended to 12 months, instead
of 17 weeks, by collective agreements. The German construction
industry relies heavily on this extension.
4.2 The European Commission acknowledges
that the use of collective bargaining varies across Member States.
In the UK the use of collective bargaining is very low, only 22
per cent of private sector employees are members of a union. Whereas
in France, Germany and Italy the proportion of workers whose pay
and working conditions are agreed by collective agreements is
over 65 per cent. In some Member States it is even as high as
100 per cent. The lower use of collective agreements in the UK
effectively means that the UK is denied this alternative route
of flexibility. However, it is important to note that this difference
under the current regulations it not due to the legislation. It
is a consequence of cultural differences in the labour market
and these differences must be taken into account when reviewing
the opt-out.
CONCLUSION
5.1 The Construction Confederation recognises
that the European Commission's review may lead to further proposals
to amend the European Working Time Directive. However, the individual
opt-out facility is an essential mechanism for the UK construction
industry. Therefore, the Government must be firmly committed to
ensuring that the opt-out is retained in this review and if, in
the worst case the opt-out derogation is amended, the alternative
measures must safeguard the labour flexibility currently provided
by this derogation.
Construction Confederation
February 2004
| 
