Direct labour threatens to add £240m to Olympics

Demands for direct employment on the London 2012 site could add £240m to the cost of the Olympics, industry experts have claimed.

One employment expert warned the move would send the wage bill soaring. “You are talking about an extra 20% at least on the wages bill when you take into account the additional cost of employers’ National Insurance contributions and benefits like holiday pay and sick pay.”

On a major job like the Olympics about a third of the total budget is allocated for labour costs, which means about £3bn of the £9.3bn overall cost is affected by the call for direct employment.

CJ understands that on a typical major project about 65% of the workforce is directly employed in the initial stages, falling to around 50% as the job nears completion.

One major contractor said: “A lot of the big boys have taken on their people direct so the number is higher at the start before the smaller firms start coming on to the job.

“If you take six out of ten workers as an average for the level of direct employment on other big sites then the 20% extra cost of taking the rest of the Olympic workforce on the books works out at £240m on a £3bn wage bill.”

The warning comes as negotiations on an industrial relations agreement between the construction unions and the Olympic Delivery Authority (ODA) have reportedly reached a stalemate (CJ 11 July).

The unions are united on their insistence that self-employment should not be allowed on the job.


A UCATT spokesperson said: “It is a myth that so-called flexible working is cheaper. Wembley stadium and Holyrood were built on the backs of so-called self-employed workers. These projects were massively late and horrendously over budget. The direct employment model would have alleviated many of the problems experienced by these projects.

“Even if direct employment costs more, decent people and decent companies may decide that is a price worth paying in order to prevent workers being exploited and an increase in deaths and accidents that are all too often major features of bogus self-employed sites.”

An ODA spokesperson dismissed the CJ figures. “These are ill-informed back of the envelope calculations. The ODA has always maintained we are committed to ensuring high standards of employment and we’re confident of achieving this within our given budget. We have always said that the appropriate National Working Rule agreement will form the basis of employment on site.

“We are also currently discussing the final points of a Memorandum of Agreement with construction unions and it is our intention that it will include an agreement on maximising direct employment.”

from www.contractjournal.com