Contractors rush to reduce payroll costs as recession puts pressure on wage agreements

Construction unions are preparing to resist employers’ plans to slash pay in 2009.

The news follows union Unite’s threat to take legal action against concrete contractor PC Harrington after the firm asked workers to accept a 15% pay cut or risk losing their jobs.

Byrne Brothers, another concrete specialist, is understood to be discussing pay cuts with its employees. A spokesperson for the firm declined to comment.

The concrete firms’ actions seem to be part of a growing trend in the contracting sector of the industry. A spokesperson for union Ucatt said it was aware of a number of companies instigating pay cuts, and Edward Goodwyn, a partner in lawyer Pinsent Masons, said he had had “an extremely large number of enquiries” from employers seeking advice on cutting workers’ pay.

He said: “It’s a way of retaining cost and maintaining a skills base. It helps to keep companies in better shape for when things pick up.”

Recruitment agencies have also reported a drop in the wages of their workers. John Lynch, divisional manager of ESS Engineering Recruitment said employees at his firm had taken a 15% cut after clients slashed wages in October.

Industry leaders warned that employers locked in pay deals would come under pressure, after pay rates agreed before to the recession came into force on 1 January.

Rudi Klein, chief executive of the Specialist Engineering Contractors’ Group said the recession could threaten the deals. “Firms are under tremendous pressure. Pay deals were revoked in the early nineties. If it happened then, it can now.”