Are Excessive Construction Wages Killing Victorian Jobs? 10

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Wednesday, September 30th, 2015
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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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10
  1. Edwin

    With wages blowing out with the EBA who has job security, what is Job security today.
    Each worker today does not have any security in employment it is only job by job or contract by contract.
    Wage growth does not give security it gives you loss of employment to those with lesser skills and with slight disability’s, look around you will soon see people living on the streets similar to the USA years back with their collapse on the economy, we are heading there now.
    It is passed time to stop the high wage growth with the uncontrollable EBA’s by not signing them with this wage push of 18% our economy is not growing at this pace we will have no employment and no income to be able to pay any one.
    My business has a good team of sub contractors workers of all trades and three employees who rely on me to be Honest to find work and pass on the word as to their quality of work they produce and be proud of them. With this come Loyalty, Respect, Quick Payments and hard work when time is tight.
    We have had to change direction in our approach from Shop fitting back to construction an area that I would have sooner stayed away from to keep the work up to them, Retail has basically slowed to almost in my opinion, stalled with rentals to high wages through the roof and slow sales, shops are collapsing going broke.
    Shopping centres are not doing full re-fit out’s of tenancy’s instead opting to use the old tenancy with a new name.
    This tells you how things are going “Bad”.
    My employees are on Salary weekly rate plus 5 Hrs overtime per week if we have work or not, they can at time have up to 4 weeks off between jobs but this work for me and gives them security of full time employment able to get a loan should they require it. We also pay Bonuses on the larger projects from the profits to the employees.
    I will not Sign an EBA with an 18% wage increase to see our country collapse.

  2. Jamie

    Put simply, the unions EBA in the construction industry is a rort. The sad thing is that every-one knows it, yet little is being done about it.
    The industry rates haven’t grown to an unsustainable level, they started at an unsustainable levels and are now just ridiculous.
    It’s basic economics, your costs have to be lower than your income. You can’t set wages and try and build industry around it. An unskilled labourer being paid $130,000 pa. Ridiculous!
    This EBA is just not in line or in tune with our industry or the economic climate.
    We sign to six day work weeks,12 day fortnights, yet the employees are contracted to work 9 days. Consequently, programs can’t be met and overtime is mandatory. How, in a recessed marked where employers struggle to meet budgets paying normal time, can they make money paying double time?
    I pay industry rates to all my employees and regularly get beat on projects by up to 35%. This difference can sometimes be largely due to inclusions of inclement weather and penalty rates. If I am doing a 4 month project, my penalty rates and inclement weather down time could be $40,000.
    The EBA incentives and basically creates it’s on demand for overtime adding hundred

  3. SafeTgo

    Did anyone realise that recruitment agencies have devalued the wages of the health and safety industry? I could earn more as a dogman/rigger than a safety officer!!! why?

  4. Bea

    Recently the CFMEU EBA in Queensland mandated wages increases without ANY productivity trade-off.
    We also have a situation where we can't get enough people to start or finish building trade apprenticeships, which is hardly surprising an unskilled labourer can expect to earn around $120k under the CFMEU's EBA. The average young person doesn't look far into the future so what incentive do they see for years of training to gain a trade qualification?
    This of course sets of a self-defeating cycle. The union response is pay apprentices more to compete with unskilled labourer wage rates completely ignoring and degrading the value and fulfilment of obtaining a qualification, the training and mentoring that the employer puts in and making it much less likely that a firm can afford to take on apprentices in the first place.
    Builders on average pay well above the award anyway because of the incentives to finish jobs early/on time and because of the shortage of skilled trades. So what is the incentive of unions to use industrial muscle to infinitely jack wages rates that of course increases the costs of building which is passed on taxpayers and consumers?

  5. Brendan

    It's an absolute joke that the unions have been able to increase the pay rate for unskilled labourers to $49. In my opinion it has stemmed from the unions creating well paying "jobs for the boys". What other jobs could the bikie enforces and stand over men be given! We have recently had a qualified boilermaker resign to take up a job as a labourer so that he could earn more money. How many labourers do we need and what are they all going to do when the work drys up? No wonder there's a shortage for qualified bricklayers, plasterers and other trades, they have all become labourers earning considerable more money to clean toilets, sweep, and to fill coffee and sugar jars!

  6. Don

    To all those who say construction workers get paid too much, I say you cannot cherry pick one particular sector in order to improve productivity . Cost of living has increased dramatically too, housing costs thru excessive speculation, energy costs thru gold plating of networks, and general cost of living. Australia has created unsustainable economic bubbles everywhere. You have to examine the whole economy and some of the tax perks some sectors get.

  7. Joe Loden

    I would like to know where the numbers come from. I worked on the CFMEU EBA for years on a Carpenter rate. I did a lot of overtime and worked at least 3 Saturdays a month. I never made any where near the amount stated above. The facts are, if you are pooling in that money you are working a minimum of 56 hours a week, every single week. Its hard work, its highly skilled and its dangerous. Nothing is stopping you from earning big money. Go out and do a 4 year apprenticeship, wake up at 5 am everyday, try not to get hurt, work close to 60 hours a week in cold/hot environments.

    • greg

      spot on brother joe im a welder and have worked oil and gas mines and recently started working construction in the cbd and the cfmeu eba simply does not pay the amoount of money per year stated above infact this is the weakest i have ever seen the unions and the real crooks are the builders tier1 to 1000 and these labour hire middle men who do nothung ans skim $50 per worker to supply him overalls once a week.what a joke. Safety is at an all time low and morale is non exsistent between the boys to be honest they need a good old fashioned 3 months on the grass to relize that our conditions werent just given to us by companies ,men actually fought tooth and nail for rdo's,safety reps and all the other conditions we have today yet 90% of these so called militant uniom members who are under 40 years of age sadly havn't taken the time to do there homework ,school themselves up on true union activists like cummo and craig johnson whos workers first faction acheived rilliant conditions for the metalworkers and actually paved the wy for a lot of the more recent benifits we enjoy today.Sadly only the etu remain strong and led by a bloke as solid ,intelligent and staunch as Troy Gray i expect them to be leaps and bounds ahead of the rest of the unions soon,hopefully we can ang on there coat tails.the mainstream media and its continuos smear campaign which is completly fabricated ,this bikie controlled myth that they trot out is so funny that it makes me burst out laughing all the time although i do find it dsad that everyone seems to swallow the story hook line and sinker because it was on the news or in the paper so it must be true…talk about a brainwashed bunch of morons..sad state of affairs if ppl are so brainwashed

  8. Cassie

    The EBA Rates are an absolute joke! Labourers are supposed to be at the bottom of the trade yet they are earning twice as much as most who have the real responsibilities such supervisors, managers and directors.

  9. Matti

    Cassie, EBA's ensure that the workers who put their body on the line and work unsociable hours are rewarded. In addition, I suggest that managers, supervisors and directors should get organised and ask for a bigger slice of the pie from developers and builders if you feel you are underplayed.
    It is unwise to try to attack labourers and carpenters on EBA rates. If builders were successful in eliminating EBA rates, We would almost certainly see a downfall in salaries across the entire construction industry including managers, supervisors and directors. I hardly think developers and publicly listed companies are going to pass on the cheaper costs of labour to their engineers and construction managers.
    EBA rates are good for everyone.