Bid to share the spoils

Posted On Friday, 17 July 2009 02:00 Published by Commercial Property News
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SA's construction industry sector has, over the past four years, experienced a sustained boom that is expected to endure until at least 2020.

Construction IndustryWorkers feel they’ve missed the boom

Talks have not been acrimonious

Though the construction industry around the world has suffered severely from the global economic downturn, in SA the sector has over the past four years experienced a sustained boom that is expected to endure until at least 2020.

Construction is expected to contract by 16% this year in the UK, for example, but the SA industry, which grew by 13,3% in 2006, is likely to record its highest profits in history in this period.

Yet despite employment in both the formal and the informal sectors of the industry having grown, workers complain that they have benefited little from the boom — a key reason behind the strike that has halted work on 2010 soccer World Cup stadiums around the country.

The strikes have drawn wide local and international media coverage amid concerns that it could affect deadlines for strategic tournament projects, but they have also cast the spotlight on an industry that has flourished almost wholly on the strength of the informal work force.

The fact that the largest SA construction companies have benefited handsomely from 2010 contracts and a multibillion-rand government infrastructure development programme has also fuelled much of the anger that drove more than 70000 workers to strike last week.

“We love the 2010 spectacle, but our workers won’t be sacrificial lambs in the process of building the stadiums and ensuring that the World Cup comes to SA,” says Bhekani Ngcobo, an organiser with the National Union of Mineworkers (NUM) which, together with the Building, Construction & Allied Workers Union, has led the industrial action.

According to Eddie Cottle of the Cape Town-based Labour Research Service (LRS), 24 wildcat strikes at World Cup projects have been recorded since August 2007, all of them led by workers, not the unions.

“But we have not seen a strike like this one, and with these numbers, in the construction sector,” says Cottle. “It’s unprecedented and very significant.”

Few doubt that the unions have used the 2010 deadlines as a bargaining chip in the wage negotiations, but labour commentators say that when measured against the recent profits of construction companies and executive salaries, the 13% demand is not unreasonable.

According to a report reviewing the civil engineering sector and which was submitted to the department of labour in March this year, the total net profit before tax in the construction industry was R9,64bn in 2007. The largest profits were earned by “enterprises engaged in the construction of buildings” (R3,3bn or 34,5%), followed by civil engineering structures (R2,3bn or 24,6%).

Since 2004, when SA won the bid to host the 2010 World Cup, profits of all seven of the largest construction companies have rocketed.

For example, the Aveng Group’s profits soared by 1854% from R170m in 2004 to more than R3,3bn in 2008; those of Murray & Roberts by 516%, from R415m to R2,6bn; and at WBHO by 745%, from R128m to just over R1bn.

But whereas records show that executive salaries have grown in tandem with increased profits, workers’ benefits in the sector have increased little.

According to figures from a report on directors’ fees in the construction sector published in May (see table below), the average remuneration of executive directors last year increased by 6%, those of nonexecutive directors by 10% and those of chief executives by 13%. The average minimum wage for workers increased by about 12,5%.

But when measured against real numbers, the figures are stark. The 6% for executives is an average increase of R240000/year, whereas the 12,5% for workers is a rise of R3113/year.

Figures compiled by the LRS show that some general workers in the building industry earned as little as R6,68/hour last year, which amounts to R300,60/week or R1301,60/month.

Salaries of skilled artisans in the industry could be as low as R14,10/hour or R2747,39/month.

“The demand by striking workers for a 13% increase in wages was completely reasonable,” says Cottle. At the time of going to press, unions were expected to settle for between 11,5% and 12%.

Workers in the construction industry have been difficult to organise in the past, mainly because it is divided into a civil engineering sector and a building sector. In the past, the Construction Workers’ Union, which was affiliated to the Congress of SA Trade Unions (Cosatu), represented workers in the sector. But plagued with administrative and organisational problems, Cosatu asked NUM to take over the sector.

According to Cottle, just 10% of workers in the construction industry are unionised and at any given project or construction site, at least 50% of workers are casual labourers. “At most, construction workers are on a three-month contract, making them among the most vulnerable of any sector,” says Cottle.

According to figures drawn from Stats SA and the Labour Survey Report, employment in the industry grew from 642000 in March 2001 to a little over 1m today.

In 1982 about 450000 construction workers were employed in the sector. But by the 1990s 200000 jobs had been lost, halving formal employment in this sector as the construction industry faced long term decline due to economic recession and high interest rates.

Employers turned to labour brokers and subcontractors, so that there is now a small core of skilled construction workers employed in relatively secure jobs and a huge layer of casual or temporary workers hired on short-term contracts.

It is against this history that the current round of negotiations were conducted, in an atmosphere that both sides say has been surprisingly free of rancour.

The strike has been a public relations nightmare, but CEO of the 2010 Fifa World Cup Local Organising Committee Danny Jordaan was surprisingly generous to striking workers. “Their hard work has ensured that we are on track to meet our deadlines and that our stadiums will be among the best in the world next year,” he said last week.

It is believed that much of the magnanimity was earned when unions met with the organising committee and Fifa president Sepp Blatter in March last year, when broad agreement was reached to support any campaign for better working conditions.

At a separate meeting last year, workers were offered attractive incentive bonuses if projects were brought in ahead of time, which meant that almost all the deadlines were moved forward.

For example, the Green Point stadium in Cape Town, which was scheduled for completion in March 2010, will now be delivered in December this year.

Last modified on Monday, 08 July 2013 19:46

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