The rates of pay, as well as terms and conditions in the construction industry, are set by a Registered Employment Agreement (REA).
The construction sector has been decimated by the impact of the recession with activity shrinking to a fraction of its high in 2007. In tandem the numbers employed have dropped by as much as 100,000.
In response to that the Construction Industry Federation (CIF) initially pushed for a cut of up to 20% in the pay rates set by the REA.
However, it dropped that to 7.5% and, after some negotiation and a level of dissent in some quarters, the construction group of unions within the Irish Congress of Trade Unions voted to accept the cut.
The 7.5% reduction brings pay levels for the 120,000 people still employed in the industry back to almost 2005 levels.
For example, the pay of a construction operative drops from a pre-cut hourly rate of €18.04 in January 2008 to €16.69. That compares to a 2005 rate of €16.34.
The rate for a craftsman drops from €18.60 to €17.21. The rate in 2005 was €16.85.
It is estimated that the industry will benefit to the tune of €300m — €400m as a result of the reductions.
“It is a small step towards achieving the competitiveness that is needed within the industry,” said Martin Whelan, director of policy and research at CIF.
Dissenting voices have also emerged in the construction industry to the cut.
It is understood the National Building Council of Ireland, a new group of small to medium sized building companies, is considering mounting a High Court challenge to the Labour Court’s variation order.