Using subcontractors and outsourcing work on projects has been standard for construction projects for the years, but has reliance become too much in recent years?
With an increase in self-employment, casual labour and off payroll working, many in the industry see this as a bad thing and are calling for more direct employment.
But is direct employment really the answer to improving productivity and skills and keeping people in jobs?
In this article, we’ll be looking at direct employment in construction and the arguments for and against it.
What is direct employment?
For those who aren’t aware, direct employment (also known as direct labour) is when a company will hire and employ workers instead of using subcontractors or self-employed operatives.
An example of direct employment would be a company hiring bricklayers themselves instead of outsourcing to subcontractors.
Currently, most construction companies do not have all of the personnel required to carry out all of the work on a project, so subcontractors are called in for specialist tasks/jobs.
The UK is currently showing higher levels of non-direct working than almost anywhere in the world, and many are calling for this to change.
What is the argument for direct employment?
The main argument in favour of direct employment is that it aims to build a more productive, higher skilled, sustainable UK construction industry.
While many have agreed that subcontracting and self-employment is essential for construction, the over-reliance on outsourcing has tipped the scales too far in the opposite direction.
With more direct employment, there will be a healthier balance that will see improvements in safety, quality, efficiency and innovation, and a more skilled workforce overall.
A lack of skilled workers has become a serious concern for many in recent years, with an ageing population and a lack of young people interested in construction. With direct employment, we can invest in people and secure a better future for the industry.
Direct employment is essential for apprenticeships, as a secure job at the end of the scheme is a huge incentive for getting more people into construction. We’ve seen countless cases of companies using apprentices as cheap labour, only to let them go once they are fully qualified.
Another positive to direct employment is the ability to monitor quality control directly.
By relying on subcontractors and self-employed personnel, there is a certain loss of control over quality and the timescale of the work, and more time needs to be spent assessing and reviewing the work.
What is the argument against direct employment?
While there are plenty of people arguing the case for direct employment, there are some that hold a different opinion.
One of the strongest arguments for using subcontractors over hiring is simply the cost, with it usually being cheaper to outsource than bring in your own people, resulting in lower overheads.
As we’ve spoken at in length in previous articles, project margins are at an all time low recently so it shouldn’t be a surprise that companies are looking for any ways to cut costs and try and retain a slither of profit.
Some also have the mindset that it doesn’t make sense to hire for a specific job/task on a project, only to lay them off on the next as they are no longer needed. Subcontractors are used to carrying out these specialist tasks, and their one-off use comes in handy on a project to project basis.
Another reason that some choose to use subcontractors is the tax advantages, mainly avoiding employer national insurance contributions.
Industry Skills Plan for the UK Construction Sector 2021 – 2025
In March 2021, the Construction Industry Council published a skills plan for the industry that identifies more direct employment as a necessary precursor to a better trained construction industry.
This plan outlines methods for working together to solve core skills needs by ensuring high-quality training and development to “build an industry that is a great place to work, with clear routes of entry and progression to attract and retain talented people”.
If you’d like to read the full 39 page skills plan, click here.
So now that we’ve looked at both sides of the argument, where do you stand?
Shouldn’t we are all be in favour of direct employment and the development of personnel? By securing more jobs and investing in staff, the construction industry is going to be a much better place to work in for all involved…
COVID-19 has highlighted the downsides to over-reliance on non-direct working, so its time to look to direct employment to build a better construction industry…
Want to get involved in the conversation? Feel free to tweet us @utilitysearches and let us know your thoughts.
Brought in to help take the business to the next level, Jim’s role is to improve lead generation and customer satisfaction from over 3,500 registered clients. Jim loves interacting with potential and existing clients and has a wealth of marketing and sales experience through his previous roles at O2, the RAC and TalkTalk. Jim holds a BA (Hons) Business Studies degree majoring in Marketing. He has also become a regular visitor to the UEFA Champions League final of late 😉