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Work arrangements on large capital city building projects

Labour market research report

This report was released on 24 August 1999. The study examines the relationship between work arrangements and workplace performance on large capital building sites.

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There has been some improvement in a number of the highly inefficient work arrangements that existed on large capital city building sites in the late 1980s, according to a report – Work Arrangements on Large Capital City Building Projects – released by the Productivity Commission today.

However, the report finds that not all changes have been positive and progress has varied among cities, with work arrangements in Melbourne being generally less flexible than in Sydney or Brisbane. Also, while building completion times have reportedly fallen, the rate of dispute related delays remains much higher than the economy-wide average.

The Productivity Commission's Chairman, Gary Banks, said 'the high cost of delays, combined with the complex contractual arrangements and blanket union coverage on large capital city building projects, makes sites vulnerable to industrial action. This has led to unproductive work arrangements in the past, and has affected progress in reforming them'.

The report found that the severe downturn in building activity during the early 1990s recession acted as a catalyst to increase efficiency. Workplace change was also facilitated by greater use of fixed price building contracts, reduced inter-union rivalry due to union amalgamations and, in New South Wales, the Gyles Royal Commission and subsequent actions.

Compared with the late 1980s, there is now better coordination on sites, fewer cases of one-out-allout, and improvements in inclement weather practices. However, there has been little or no progress in various other work arrangements, including some allowances, restrictions on performance related pay, and limits on self-employed and labour hire contractors.

The Commission found that, unlike other sectors of the economy, there are few enterprise agreements that are predominantly negotiated within individual firms. Subcontractors, who can employ up to 90 per cent of workers on a large building site, have limited influence over work arrangements with their employees. The report argues that there are grounds for head contractors having control over some work arrangements, in order to coordinate tasks on building sites.However, this should not extend to remuneration of subcontractor employees.

Achieving further workplace change ultimately depends on the actions of many parties with different, and sometimes competing, interests. They include head contractors, subcontractors and unions. The Commission observed that the economic forces which enable these parties to influence work arrangements limits the capacity to achieve change solely through regulation. However, proposed changes to legislation to improve the timeliness of penalties against unprotected industrial action and to address de facto compulsory unionism would facilitate further change.

Further information

02 6240 3330

Cover, Copyright, Foreword, Contents, Abbreviations, Glossary, Key findings, Overview

1 Introduction
1.1 Overview of output and employment
1.2 Focus of workplace level analysis
1.3 Research methods

2 Market characteristics
2.1 The contractual chain from clients to producers
2.2 Vulnerability to industrial action
2.3 Contractor characteristics
2.4 Workforce profile
2.5 Role of governments and collective organisations
2.6 Work arrangements in the late 1980s
2.7 The reform process of the early 1990s
2.8 Changes in performance
2.9 Summary

3 Negotiation processes and outcomes
3.1 Institutional framework
3.2 Overview of agreement structure
3.3 Industry/trade level negotiations
3.4 Project level negotiations
3.5 Enterprise level negotiations

4 Workplace communication, training and safety
4.1 Workplace communication
4.2 Skills and training
4.3 Workplace health and safety

5 Work hours and hiring arrangements
5.1 Work hours
5.2 Types of employment
5.3 Recruitment, termination and redundancy
5.4 Performance effects

6 Wages and on-costs
6.1 Direct remuneration
6.2 on-costs
6.3 Performance effects of direct remuneration and on-costs
6.4 Alternative pay schemes
6.5 Performance effects of alternative pay schemes

7 Conclusions
7.1 Overall assessment of work arrangement changes
7.2 Scope for further improvements
7.3 Role of the parties in further workplace change

A Organisations visited

B Responses to research issues brief and work-in-progress report