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Contractors Fear 35% Labour Cost Increase

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Construction industry labour costs will increase by 32-35 per cent if proposed Employment Act amendments are passed, the Bahamian Contractors Association’s (BCA) president yesterday warning the changes would “have a far-reaching, negative impact” on the sector and wider economy.

Disclosing the results of the industry’s ‘number crunching’, Godfrey Forbes said the Government’s plans would “kill a number of contractors” at a time when many were “trying to get out of a hole”, and discourage the sector from new hires.

That would be a major setback to the Government’s aim of reducing an official 15.9 per cent unemployment rate, particularly since the construction industry is a major employer of semi-skilled and unskilled labour.

Mr Forbes cited as major concerns the proposed Employment Act reforms requiring paid lunch hours and a subsequent reduction in productive time from 40 hours per week to 35 hours per week.

Apart from increasing labour costs, he explained that this would create potential havoc for contractor profits and margins on existing jobs, since these had been bid/priced according to the existing Act and work environment.

Questioning whether the Government would ‘grandfather’ in the reforms, if it decided to proceed with them, in to allow contractors to complete existing jobs, the BCA president also focused on proposals to pay employees a full day’s pay for holidays they did not work.

Given that Bahamian construction industry workers were typically hourly paid, Mr Forbes told Tribune Business that paying them for every public holiday not worked would effectively give each man two weeks’ extra pay per year - on top of their personal vacation pay.

Disclosing that the BCA had “taken a position on it” and had written to Shane Gibson, minister of labour, outlining their concerns and seeking a meeting, Mr Forbes said: “Our entire business is based on hourly wages.

“When we look at it, we already have contracts in place which are based on the amount of man hours put into the project. Those man hours are based on working 40 hours a week at the project.

“When we reduce that 40-hour period by five hours per week, you’re losing 12.5 per cent off the top.”

And the BCA president revealed to Tribune Business: “When we [the BCA] looked at it, when we calculated it, we’re going to have somewhere in the vicinity of a 32-35 per cent increase. It’s going to be a significant increase in our labour costs.

“There’s going to be more man hours required, and we’re also going to find ourselves being subjected to paying for all public holidays. We’ll be paying for public holidays and lunch hours.”

Explaining that all the Public Holidays effectively added up to two weeks, Mr Forbes added: “That’s two extra weeks we’re paying each man. We’re paying them two weeks every year; an extra two weeks for hourly workers. That’s separate and apart from vacation pay.”

Pointing out that these Employment Act reforms were not factored into existing contract/bid prices, Mr Forbes said if the amendments were enacted it would be almost legally impossible for contractors to renegotiate terms with their clients.

“What the Government intends on doing is going to have a far-reaching, negative impact on the construction industry and the whole economy.” Mr Forbes told Tribune Business.

“People would have to scale back, because they’re losing 32-35 per cent on labour costs, and you’re going to find they can’t take on or employ any other people.... We cannot hire anyone else.

“The economy is beginning to turn around, and to hit the construction industry with this kind of setback, you’re pushing it that much further back. We’re just trying to get out of a hole now, and for this to be put on, it’s going to kill a number of contractors.”

Mr Forbes also questioned whether the Employment Act reforms would apply to foreign contractors, as they were usually based outside the Bahamas and only came in to do specific jobs. The implication being that Bahamian contractors could be put at a further competitive disadvantage compared to their foreign counterparts.

The BCA told Tribune Business that if the Employment Act reforms were passed as is, construction costs in the Bahamas would inevitably increase. And these increases - potentially significant would be passed on to residential and business consumers.

“I don’t understand what the Government is trying to do,” he said.

“The average consumer looking to have construction work done, they’re going to really feel it as the costs will be passed on to them. Are you [the Government] really trying to stimulate the economy and get things moving, or setting things further back?”

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