Cash and Contractors – Part One - Wages in the Supply Chain

The recently enforced Public Contracts Regulations 2015 demand that everyone in the supply chain abide by a 30-day payment period for government contracts. So, whether you're the principal contractor or a subcontractor at any tier, you should be paid quickly but sometimes getting paid on time is just half the battle.

When is a wage a fair wage?

The highest paid contractors live - unsurprisingly - in London, but there are contractors who find themselves at the opposite end of the scale. This was shown last month with the stand-off between a large housing developer and their contractors, where Ucatt (Union of Construction, Allied Trades and Technicians) demonstrated outside the developers London head office.

“This is a serious issue, there are a lot of people not earning a living wage."

Jerry Swain, Regional Secretary for Ucatt London

Union officials claimed that workers on some of the developers’ sites were paid just £7 an hour – well below the London Living Wage of £9.15 an hour.

Jerry Swain, Regional Secretary for Ucatt London and the South East, said: “The London Living Wage is the minimum that workers need in order to live in London.”

At the time a spokesperson for the developer said: “We pay Living Wage to our directly employed staff and London Living Wage to full-time service partner staff in our London managed office portfolio.

“London Living Wage is not currently a compulsory part of our tender process, but we work closely with our contractors to raise awareness of the Living Wage as standard.

“In partnership with our contractors we’re making positive progress – for example, during the construction a development in the North we monitored wages against

Cash flow remains one of the biggest concerns for contractors both big and small. In the first part of a two part article we’ll look at how cash flows – or doesn’t – in the contracting world.

The recently enforced Public Contracts Regulations 2015 demand that everyone in the supply chain abide by a 30-day payment period for government contracts. So, whether you're the principal contractor or a subcontractor at any tier, you should be paid quickly, but sometimes getting paid on time is just half the battle. When is a wage a fair wage?

The highest paid contractors live - unsurprisingly - in London, but there are contractors who find themselves at the opposite end of the scale. This was shown last month with the stand-off between a large housing developer and their contractors, where Ucatt (Union of Construction, Allied Trades and Technicians) demonstrated outside the developers London head office.

Union officials claimed that workers on some of the developers’ sites were paid just £7 an hour – well below the London Living Wage of £9.15 an hour.

Jerry Swain, Regional Secretary for Ucatt London and the South East, said: “The London Living Wage is the minimum that workers need in order to live in London.”

At the time a spokesperson for the developer said: “We pay Living Wage to our directly employed staff and London Living Wage to full-time service partner staff in our London managed office portfolio.

“London Living Wage is not currently a compulsory part of our tender process, but we work closely with our contractors to raise awareness of the Living Wage as standard.

“In partnership with our contractors we’re making positive progress – for example, during the construction a development in the North we monitored wages against National Living Wage rates and were pleased to find that most workers both on and off site were paid above that level, and we rectified the few instances where this wasn’t the case.”

Safecontractor spoke to Jerry Swain recently and asked him if the dispute with the developers had been resolved.

“No. We wrote to them and they made noises about getting in touch, but nothing so we will continue to demonstrate outside their sites this summer. This is a serious issue, there are a lot of people not earning a living wage. The developers in question are probably not the only ones doing this but they are certainly one of the biggest.”

Jerry Swain has been contacted by employees caught in a wage rut.

“We have logistics and security workers complaining that they have to work 70+ hours a week just to survive. When we wrote to them before they replied that they have ‘robust checks in place’ and referred to Trinity Leeds which is not a fair comparison when you consider the price of living in London. We see developers like Crossrail, Argent and Canary Wharf who pay a living wage. We want to see Land Securities make a profit but not if it means slave wages.  All it takes is one contractor to take a £7 an hour contract and it goes down to the lowest common denominator.”  

What can individual contractors do?

“Short of the withdrawal of labor not much.” 

We contacted the developers for a comment but so far have not received a reply.

In the second part of this article, we’ll look cash flow for contractors, why they struggle with it and what can be done to guard against it.

 

Post date: 07 Apr 2015

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