Labour pains

With around 50% of employees seeking work through agencies, it’s no secret that the m&e business model is changing. Yet it’s fair to say that the JIB’s national agreement recalls a bygone era; one of direct employment and electrical-only firms.

The industry has become somewhat two-tiered. Whilst the majority of SMEs are still following the JIB’s recommended direct labour route, a large number of major contractors favour agency labour.

Steve Brawley, employee relations officer at the ECA, puts the industry’s reliance on top-up labour down to increasing client demand. “More projects are becoming fast-track and clients want things done yesterday,” he says. “The ability to rustle up, say, an extra four electricians from an agency makes eminent sense. You can’t get direct labour like turning a tap on and off.”

Jim Simms, industrial relations manager for labour agency Beaver Management Services (BMS), also sees major benefits for the employee, which reflect the current labour market. “We’ve got a flexible workforce, which is not transient,” he explains. “We can employ people continually. We don’t hire and fire because we have that many contracts. Our people have a degree of choice in what jobs they go on – if someone wants three months off to go backpacking they can.”

However, Amicus-Unite’s national officer Tom Hardacre believes employers have moved towards agency labour because they don’t want the liability of employing people. “They want to be able to maintain an extremely lean nucleus of employees and then be able to hire people at will in order to circumvent the statutory positions that employers are faced with,” he says. “I’m not sure the employees have the option – it’s the only means by which they can get the work.”

Employers and clients may provide the push for electricians, but the mobility factor is certainly a major pull. “If workers are on the books for a main contractor, they could be sent around the country, which just doesn’t suit some people,” says Brawley. “If they work for a labour agency in London, they can pretty much rely on staying in London. If an agency can’t find them work there, they can always move on to another that can.”

Legal loopholes mean that employees also view this method of working as an opportunity to lessen or avoid tax and national insurance payments. The loophole that legitimised the formation of composite, or managed service companies, where workers are paid a low wage with a dividend on top, was closed in April this year. However, when one loophole closes, another usually opens soon afterwards.

We’ve got a flexible workforce that isn’t transient. our People have a degree of choice in what jobs they go on.

Jim Simms, BMS

For some, being paid a direct wage without the inevitable reductions necessitated by insurance and other deductions is also a draw. “They may think, ‘if I work for an agency I get £600, but if I work for an employer I only get £500. The benefit’s worth £100 or more, but many would rather have the £600 in their hands,” explains Brawley. “It’s a short term way of looking at things and you are taking a risk. However, it’s a bit like pensions. You might think, ‘why should I bother taking a pension out? I’m only 22’. At 42 you’ll probably be thinking differently. But then, electrical contracting has traditionally been a young man’s game.”

Brawley acknowledges that Rule 17 of the JIB national agreement, which deals with labour agencies, does not work particularly well and that few are happy with it. “It says that agency labour should not be in the majority on a contract. It should be less than 50%. But you’ll easily be able to find sites where that isn’t being applied,” he says.

In the short term, top-up labour is extremely useful to a large number of companies. However, Brawley is uneasy about the lack of training. “Looking ahead, you don’t have a continuous input of labour coming into the industry, numbers will decline, which they have done. We still have 2500 recruits per annum coming into the sector, but it used to be more like 5000,” he says.

Hardacre shares his fears. “The only thing the agencies want to do is peddle flesh. They’ve no concerns about training,” he says.

The criticism is perhaps a tad unfair. Two years ago, labour agency BMS teamed up with the ECA, training provider JTL and firms in the ECA/HVCA Joint Major Contractors’ Group (JMCG) to take on a number of apprentices who moved between JMCG companies to experience different types of work. The aim was to offer trainees an apprenticeship with participating major contractors. The pilot scheme remains the only one of its kind in the country.

Hardacre distrusted it from the beginning. “To be quite frank, I think it was just a bit of tokenism,” he says. “And we don’t want apprentices to fall into that kind of culture at such a young stage in their developments. We would rather have them employed properly so that way of working becomes their futures.” Brawley is also dubious about the scheme. “JTL had no reservations concerning the quality of the training, but the numbers were too low. They managed to get 15 onto the scheme, which is only equivalent to the intake of one company out of the 16 in the JMCG,” he says. But Simms says it’s wrong to blame the agency approach for this. “If it was up to us, we’d take 200 apprentices. It’s the clients who find it too costly and time consuming.” Simms claims that the ECA wound the scheme up due to internal disagreements with BMS over unrelated subjects. He adds: “But we’re still starting apprenticeships outside of that scheme. I’ve just started one this morning in the Midlands. We have 240 clients and we have a seamless supply chain. We just move people around to get the best training.”

Simms also refutes claims that the safety and welfare of employees are always compromised by the agency model. “We’re affiliated to the ECIA and we’re members of Welplan, so we can provide welfare benefits to any client who wants them. We believe that clients and trade associations should make that a priority,” he says. “That’s where Amicus-Unite has it wrong. Instead of attacking the concept of labour agencies, they should make agencies provide welfare benefits.”

The only thing the agencies want to do is peddle flesh. They’ve no concerns about training.

Tom Hardacre, Amicus

Perhaps what’s actually needed is more dialogue between the ECA, the union and the labour agencies. The idea is a sound one, but easier said than done. It’s been more than a year now since the ECA revealed plans to set up an Employment Business Forum to instigate formalised discussions with agencies over common issues.

“We didn’t quite get there with the forum,” admits Brawley. “But it certainly hasn’t gone away. It’s a thorny subject and it might have been a bit of a surprise if people had managed to get an agreement first time. Perhaps it’ll be something we can come back to when we’ve completed the wage agreement this year.”

Certainly, first time round the plan came under attack from contractors who did not wish to see agencies legitimised to such an extent that they could become competitors pricing for work rather than mere suppliers of top-up labour.

Yet Brawley sees agencies in an altogether more positive light. “In terms of the industry as a whole, they are significant, so it makes sense to explore how we could bring them into a more formal relationship with the ECA so they start to contribute to the industry,” he says. “If you did have a forum, you could contemplate issues such as agencies providing apprenticeship opportunities.

“Also, there’s a big distinction between agencies being involved in some kind of forum and having a situation where agencies are in the ECA,” says Brawley.

One thing’s for certain, there’s no turning back the clock. So perhaps by welcoming labour agencies into the fold, the ECA can ensure operatives have the same skills and wage rates as JIB electricians, creating a more level playing field for all.