Contractors with direct workforces lose out as pay rates plummet

Contractors with directly employed workforces are losing jobs as the recession sees labour rates plummet.

Firms that backed the government’s push to take workers back on the books are losing out to rival firms which are flooding sites with self-employed labour.

One leading contractor said: “We feel we are being punished for doing things the right way.

“Pay rates for workers are dropping like a stone, but because our people are directly employed we can’t reflect that.

“Just as an example, the going rate for skilled carpenters has dropped from £180-a-day in London to £120-a-day in the past few months.

“If you’re using self-employed labour your costs come down, but we can’t do that. We can drop rates a bit but nowhere near the amount rival firms can.

“If you then factor in the extra cost of direct employment, our quotes on the labour side come in much higher.”

Latest figures show there are now 922,000 officially self-employed workers among the 2.2m-strong construction workforce.

But industry experts believe the figure is much higher.

One contractor said: “On most jobs you go on now, the number is nearer seven or eight out of 10 who are self-employed. And there are only about 250,000 people registered with the B&CE holiday pay scheme.”

The government said it had no plans to regulate on the issue or help firms with directly employed staff.

A BERR spokeswoman said: “There is a perfectly proper place for self-employment in construction. It has never been government policy to favour firms with a direct workforce for contracts, but I can’t speak for the rest of the public sector.”

Another contractor said: “When push comes to shove, the government is like all other clients and it wants a cheap deal.

“Look at the Olympics. All the talk was of only using direct labour, but now there is just some vague promise in the terms and conditions and the 2012 park is crawling with people working via labour agencies.”