Lump it and like it

BUSINESS VIEWPOINT MARTIN J. GRAFTON

Martin J. Grafton is the Director of the National Federation of Building Trades Em- ployers.

A few minutes on television and some news- paper articles can create an alarmingly super- ficial view of an immensely complex industry like building. Everybody seems to have heard of 'The Lump,' a system supposedly encourag- ing -gangs of itinerant building workers willing to work in appalling conditions for quick returns and no taxes. Though the term was barely recognised by many in the industry, it created a particular view of the state of labour relations in building just at a time when major advances were in prospect.

There has been only one major stoppage of work in over forty years, even though the industry employs 1,700,000 people and is work- ing on literally hundreds of thousands of sites at any one time. The disputes at the Barbican, for example, were quite untypical. The industry is now in the middle of important negotiations on a new wages-and-conditions agreement. They turn on the employers' offer of a fully guaran- teed forty-hour week, with weekly instead of hourly wage rates, in return for changes to increase productivity and to aid planning. A new agreement would replace the current three- year agreement, but its conclusion is being held up by the Government's reference of the union's wage claims to the Prices and Incomes Board.

Nevertheless, 'The Lump'—more commonly known as labour-only sub-contracting—has already been publicly examined and put into perspective by the long and careful inquiry of the Phelps Brown Committee. Perhaps it should be explained that under the labour-only practice men hire themselves to a sub-contractor, who in turn hires this labour in gangs to contractors. Alternatively, men are regarded as self-em- ployed, hiring their labour directly to the con- tractor but retaining personal responsibility for taxation and insurance liability. (Altogether the practice covers some 200,000 of the industry's labour force.)

The first illusion to be dispersed by the Phelps Brown Committee was that building is a pecu- liarly casual industry. High levels of labour turnover, as the committee found, affect only a minority. Turnover is highest among the largest firms, which operate on a national basis on major building and civil engineering contracts. When they have finished on these jobs, men often prefer to seek other employment rather than to move to new sites with the same con- tractor. But even these firms retain up to 50 per cent of their labour force on a stable basis.

Most of the movement of labour in building is, in fact, voluntary, and it is probably outside the ability of the industry itself to reduce it. Moreover, the mobile section of the labour force tends to be highly productive. So, labour- only sub-contracting has a part to play in build ing, particularly where the existence of so many uncertainties makes flexibility of working arrangements vital. After a comprehensive assessment of the pros and cons of labour-only sub-contracting, the committee inevitably con- cluded that, were it possible to outlaw this system, the effect would, on balance, be disad- vantageous.

Professor Phelps Brown's own summing up of the situation was: 'Labour-only can provide the advantages of a specialised work force for a contractor and continuity of employment for specialists, a simple and effective payment by results system, high morale and therefore high productivity, greater flexibility of working, and give the enterprising workers a chance to set up in business.'

His committee did feel, however, that some reduction of labour-only sub-contracting is desirable. With this view, the National Federa- tion of Building Trades Employers has always been sympathetic. In fact, many of the corn- mittee's recommendations were already being pursued by the federation. But the difficulties of achieving continuity of working in building must not be underestimated. Apart from the fact that some tradesmen are simply not in- terested in it, building sites cannot be equated with factories. They are always temporary, and there are many of them. There are few sites where one contracting firm employs more than 200 men at any one time. A labour force has to be brought together for each job. Sometimes the contractor is able to use his regular employees, sometimes be must recruit men specially. Often there is a combination of the two.

A further complication stems from delays in the work sequence which are beyond the, con- tractor's control. His programme is frequently thrown out of gear by the non-arrival of essen- tial drawings, information or instructions on time. A smooth flow of work is commonly disrupted by changes in the design of buildings while work is in progress. Some changes are unavoidable as the special difficulties of the site or delays in deliveries of materials may produce unforeseen snags.

There is also a strong feeling in building that the industry bears more than its fair share of the burden of controlling the economy. With more than half the industry's output committed to the public sector, building is seriously affected not only by changes in credit policy and interest rates, but also by physical cuts in public expenditure.

The very nature of the building industry, therefore, poses serious obstacles in the pursuit of continuity. It would seem that if productivity is to go on increasing, there will always be a ii need for labour mobility, both between sites and between firms. Admittedly the trend in building is towards larger firms, but the industry still has some 80,000 separate enterprises. (Inci- dentally, this phenomenon of numerous build- ing firms is international and not peculiar to Britain.) -The number of firms alone should ensure that the industry remains highly competi- tive and, hence, always seeking means to keep activity as high as possible.

The Minister of Public Building and Works, Mr Robert Mellish, recently acknowledged that the building industry `has the best record of any industry in the country for productivity.' The maintenance of this record has been in the federation's mind in approaching the current wage negotiations. A rapidly changing industry, with growing industrialisation of techniques and increasing standardisation of components, needs changes in the traditional work force. For this reason, the federation has put forward proposals to escape from the present over-rigid and over-simplified classification of workers into craftsmen and labourers.

Soundly-based incentive schemes which add bonuses to the nationally-agreed wage rates can also improve productivity. These bonuses may add as much as 50 per cent to the basic rate, but all too often they bear little relation to extra output. Still, the diversity and uncer- tainty of building work means that properly measured incentive schemes cannot be univers- ally applied. But considerable improvements can be made.

Under present schemes it has not been possible to fix bonuses fora large part of repair and maintenance work. Yet this work represents one third of the industry's total work-load. As a result, highly skilled craftsmen operating on repairs and maintenance largely on their own initiative are unable to command the high' earn- ings of craftsmen and labourers on sites where bonus schemes are more feasible.

Clearer national guidelines should assist firms to introduce incentive schemes and bring greater uniformity and fairness into bonus payments. Rates would have to take into account local conditions, but basic principles, like basic wage rates and conditions of service, must be nego- tiated nationally.

It is true that, following the Donovan Com- mission's report, present thought tends to favour plant bargaining in industry. In the building industry, this would be quite inappro- priate. Indeed, it would lead to chaos. Separate wage rates would have to be negotiated on thousands of individual sites. There would be an almost continual power struggle at local level. In such conditions, 'The Lump' might thrive. Each gang would wish to bargain for the best deal it could obtain. The continuation of wage negotiations on a national scale is a prerequisite for reform of the wage structure and the many other improvements in labour relations now under consideration in building.