Costs cull contractors

INSURANCE and wages costs from the Construction Forestry Mining and Energy Union’s latest enterprise bargaining agreement are causing some sub contractors to close their doors and others to consider baling out of the top end of the commercial construction industry.

At least two companies working in the commercial construction industry have closed their doors in the past month, citing the rates they were forced to pay their labourers after signing on to the EBA as the main reason.

WA Business News has spoken to the owners of those companies, who asked to remain anonymous, and both said the EBA rates had been too high and took the control of their businesses out of their hands.

WA Business News has been made aware of another company operating in the commercial construction area that is considering closing its doors once it completes a job for a major Perth builder.

Other companies are complaining that the new EBA has considerably increased wages costs and the requirement to have income protection, trauma and top-up insurance is proving too expensive.

Master Builders Association industrial relations manager Kim Richardson said sub contractors were reporting increased insurance premiums of between $50,000 and $100,000, forcing them to consider working for non-EBA builders.

“A lot of sub contractors are closing their doors or looking to work for non-EBA builders,” he said.

“Besides the wages, the union is asking employers to pay for trauma, income protection and ‘top-up’ insurance. It’s a double dip on workers’ compensation insurance.”

Mr Richardson said the top-up insurance meant that an injured worker would be getting paid the same as a worker on the highest paying construction site in Perth – whether he had been on that wage before or not.

CFMEU secretary Kevin Reynolds said the union had just conducted a “purge” on the industry because some companies, including larger builders, had signed the EBA but not provided the insurance cover.

He said sub contractors that signed onto the union’s EBA were doing it tough because other companies that “were not paying the workers properly” were undercutting them.

“Those that signed the EBA did it of their own free will,” Mr Reynolds said.

He denied the EBA insurance cover was double dipping on workers’ compensation, saying such insurance had been in the industry for the past 25 years.

“The income protection insurance is applied to a whole range of different industries,” Mr Reynolds said. “The trauma insurance is provided for workers because, quite frankly, the amount paid to the wife or family of a worker killed on the job is inadequate under the workers’ compensation system.

“The top-up insurance ensures the worker remains on his full wage while injured instead of the 85 per cent they would get under the workers’ compensation system.”

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