Are construction industry wages, especially EBA rates, sustainable?

At the end of 2014, the Masters Builders Association of Victoria (‘MBAV’) commissioned Deloitte Access Economics to undertake a range of independent research relating to the Victorian construction industry. Specifically, Deloitte looked at wages under enterprise bargaining agreements (“EBAs”), construction costs, flexible working arrangements, industrial disputes and productivity, and profitability in the industry.

This report showed that our pattern union EBA entry-level labourers are now being paid far more than our nurses, defence force members, fire fighters, police and teachers. The EBA rates are also nearly three times higher than non-EBA workers doing similar work.

Graph as outlined in the Deloitte report, Chart 3.10, Page 26

With an average salary in Victoria currently sitting at $68,479, is it in balance that construction workers earn nearly double this? We all agree our construction guys do great work and work in an industry that is quite dangerous, but is it more dangerous than that of our police and firefighters?

The latest mass meeting of CFMEU members on 25 May 2016 endorsed support for a proposed EBA for only five large breakaway builders which will see increases of 5% per annum or 15% over the next three years. It is well known that wages, that are much more in excess of inflation, may start to affect investment in Victoria as the cost of building important infrastructure projects like schools, hospitals and roads resulting in a reduction in jobs. It is interesting to note that these five builders are not the big employers in the industry, but generally the head contractors who only employee a few employees that will be covered by the EBA.

More recently, the Fair Work Commission handed down a decision to increase the Minimum Wage by only 2.4%, yet this agreement is proposing to provide wage increases of 5% per annum over the next three years?

There are further concerns that the proposed agreement would not be compliant with the new Commonwealth Building Code if the existing coalition government remains in power come the election on 2 July 2016. If the EBA is ruled non-compliant, these employers will have difficulty tendering for, and working on, government projects.

Wage increases that are unsustainable, like the ones proposed are not only going to cost investors for building and construction projects, but will end up costing all Victorian taxpayer for the key infrastructure projects urgently required. There is also another casualty in a deal like this, and that is the many construction companies that simply can’t afford the continual wage increases.

Let me know your thoughts. Are you in support of such a large wage increases for such an important part of our economy? Are you concerned about the imbalance in pay rates?

If you are unsure of your rights and obligations, or whether you wish to explore your options regarding the proposed EBA, Workplace Wizards can assist. Please contact us at Workplace Wizards support@workplacewizards.com.au or 03 9087 6949