More than 1,500 jobs have been lost across Victoria since 2000 as excessive wage rises under enterprise bargaining agreements have seen labourers in the construction sector paid almost double their counterparts in other sectors and have costed Victorians much needed social infrastructure, according to a building industry lobby group.

Releasing a report prepared by Deloitte Access Economics, the Master Builders Association of Victoria said wage rises and EBAs were out of proportion to productivity gains or the remuneration earned by non-managerial staff in other sectors of the economy.

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“Union EBA carpenters and entry-level labourers are now paid far more than nurses, defence force members, fire fighters, police or teachers,” Master Builders Association of Victoria CEO Radley De Silva said.

“Victorians should be collectively concerned about these excessive costs being faced in the construction industry. This isn’t just a windfall gain being received by union EBA employees, it is a cost borne by the community as a whole.”

According to the report and Master Builders:

  • On average, an average carpenter working under an EBA earns more than double that of a professional accountant or auditor
  • Whereas unskilled labourers in other sectors earn an average of $26 per hour, those in the building sector take home $49 per hour.
  • EBA carpenters and entry level labourers earn $53 and $49 per hour respectively – a 56 per cent and 44 per cent increase compare with the average wage for non-managerial employees of $34 per hour.
  • Whereas construction selling prices have risen by an annual average of 1.8 per cent per year and labour productivity has risen by an annual average of around one per cent per year, EBA construction wages have increased by 5.2 per cent per year – 2.4 per cent above what Master Builders says is justified by productivity and price increases.
  • EBA wage increases have cost Victorians around 1,550 jobs in the construction industry in the last 14 years.
  • The price of these wage increases is adding significantly to the cost of building infrastructure; the higher cost associated with what Master Builders considers to be excessive labour costs amounts to between $83 and $97 per square metre for multi-story units of between 20 and 40 storeys and between $80 and $97 per square metre in the case of low rise public hospitals with major operating theatres.
  • If EBA wage increases were to continue at the same levels over the next four years, around $737 million in lost public construction would occur, equating to around 40 new schools or around six new hospitals.

Master Builders also says Victorian EBAs suffer from a lack of flexibility.

De Silva says costs associated with continued wage rises under EBAs were unsustainable, and that it was the collective responsibility of all parties involved to ensure EBAs delivered outcomes which were consistent with a sustainable and productive industry.

“If EBA wages continue to rise excessively, construction companies may be better off putting their money in the bank,” he said, referring to the notion of return on assets within the building industry being lower than or equal to risk free bank returns. “It is time to take the opportunity of the upcoming round of EBA negotiations, to act responsibly for the future of Victoria and to ensure sustainable costs in the construction industry can be achieved.”

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