The Construction Leadership Council (CLC) has backed a report looking at the benefits of direct employment in the construction industry.
The report, published by the Joint Industry Board (JIB), is entitled Direct Employment – A study of economic, business and social outcomes. Authored by Howard Gospel, emeritus professor of management at King’s College London, it is based on the electrical contracting sector and highlights the negative impact which the growth in non-direct, off-payroll working is having on electrical contracting and construction.
The report draws on interviews with over 50 experts, industry materials, government reports, and peer-reviewed academic research. It also analyses the growth in non-direct, off-payroll working, the impact this has had on productivity, skills and safety, and the benefits which a directly employed workforce bring to the industry.
While it also acknowledges that subcontracting and self-employment remain “essential features” of electrical contracting and other parts of the construction industry, the report suggests that the balance has been allowed to “tip too far away from direct employment”.
The report warns that non-direct working has a negative effect particularly in the area of skills formation, leaving the future of apprentice training, career progression and the industry’s capacity to take up new technologies and techniques threatened. It also highlights research evidence indicating the negative effects on health, safety and well-being, and the undermining of industry standards and regulations. And it points out that non-direct working also reduces the tax receipts which fund public services.
In a foreword to the report, Andy Mitchell, co-chair of the Construction Leadership Council, and Gail Cartmail, Unite asst general secretary and president of the Trade Union Congress said: “The opportunity, for all, is to make sure that this report doesn’t sit on a virtual shelf but becomes a catalyst to action in the work we are all embarked upon to create a more innovative, productive, sustainable, and attractive industry.”
Gospel added: “The UK’s retreat from direct employment cannot be explained away as some sort of ‘natural’ phenomenon or the ‘inevitable’ consequence of increased market competition. It is the result of specific actions and decisions taken over many years by industry clients, contractors, and successive Governments – not least in the key policy areas of procurement, tax, social security, and employment law.”
"Clients and large contractors must act now and demonstrate leadership by awarding contracts to firms which directly employ their workforce."
Jay Parmar, chief executive of the JIB says: "Despite far higher levels of non-direct working in the UK than almost anywhere else in the world, and the well-documented negative effects on (among other things) construction productivity, skills and safety, the leadership and collective will to do something about this issue has long been lacking. This report therefore calls for a comprehensive and sustained campaign to reverse this trend, as a key part of current efforts to build a better, more productive, higher skilled and sustainable UK construction industry.
“Clients and large contractors must therefore act now and demonstrate leadership by awarding contracts to firms which directly employ their workforce and by enforcing direct employment and greater transparency throughout their supply chains. We must also join together to campaign for public policy changes which remove artificial incentives towards false self-employment and false direct employment through the tax system. Only by doing this can we hope to provide a better future for those working in the industry, both now and in the future.”
