Isn’t the point of the European Union’s single market to increase the flows of goods, services, capital and labour, and thereby increase economic efficiency?
If so, why is a labour agency that is offering to import skilled eastern European craftsmen creating such a stir (pages 24-26)?

The answer is threefold. First, the basis of the operation is unclear. Is Montbretia, the firm in question, a conventional agency, or is it the representative of a group of eastern European contractors? Second, there is the issue of pay. Montbretia says wages will be lower for eastern European subcontractors than British ones. At a time when skills shortages are driving up rates, not many contractors are ideologically opposed to that – but the unions are. Fervently. And finally, firms are uneasy about employing foreign labour. Language barriers and different working practices make site life more difficult, and can fatally compromise safety. Montbretia is attempting to allay concerns by guaranteeing that workers come with a construction skills cards, safety training and an English-speaking foreman. Contractors are sceptical.

Construction has been avoiding facing up to the issues of immigrant labour for years. The truth is that workers from east and central Europe – many of them illegal – have saved the industry over the past decade. Like the NHS and a million coffee shops, construction needs foreign labour, but it doesn’t necessarily want them. That’s not an attitude born out of xenophobia, but the difficulty of making it all work. Without internationally recognised qualifications, internationally recognised safety signage or a test for linguistic competence, it is all rather a struggle.

Workload is increasing. There is no cavalry of newly qualified apprentices coming over the hill – although there could be 40,000 economic immigrants coming into Britain each year after enlargement. Construction needs to establish how best to harness this opportunity while ensuring the welfare of the migrants. As Barry Stephens of the National Federation of Builders says in his letter (page 32), there is a desperate need “for a clear strategy of welcoming foreign workers into the industry”. Like it or not, construction is now part of the global marketplace.

Something to worry about

Just how healthy is the industry? Hardly in tip-top condition, according to the medical from PricewaterhouseCoopers (see Construction Finance, which starts on page 71).

It finds turnover up, but margins no rosier than 2002 levels. More worryingly, it has detected that the rate of return on capital employed is falling. That eats at the bedrock on which the business is based. Margins may be low, the theory goes, but contractors generate cash because money comes in more quickly than it goes out. The costs of PFI bidding and partnering contracts have stymied this flow. A cause for even more concern is the state of the market – about as good as it gets. If contractors can’t make hay now, when will they ever?