Wage inflation hampering National Development Plan

Rising wages and falling productivity in the construction sector are increasing the cost of infrastructural projects, the managing director of the largest construction company in the State, Sisks, warned today.

Mr Tom Costello, told the Institution of Engineers' annual conference in Cork today, that despite the worseningpublic finances the Government must implement the National Development Plan.

He said a 90 per cent surge in construction wage costs since 1997 and a considerable reduction in productivity had left the industry with a legacy of high costs and low productivity.

Mr Costello was sharply critical of the industrial relations policy of the brick and block-laying union BATU for exacerbating these problems.

Unofficial action and disruptive practices had raised costs and placed uncertainty over the ability of construction companies to deliver projects, he told delegates.

A continuation of this policy would be disastrous for an industry already facing lower volumes of work and narrowing profit margins. He urged the Government rein-in BATU as a prerequisite to any new national wage agreement.

Mr Costello also urged the Government to fulfill its commitments to infrastructure projects under the €30 billion National Development Plan. The economic slow-down would benefit the NDP because construction activity was falling and this was leading to competitive project bids.

Mr Costello's comments follow days after the Minister for Transport, Mr Brennan, said he was consideringbundling together infrastructural projects to attract non-national corporations.

The minister said 25 per cent less road was being built because of construction inflation, rising land costs, and redesign problems and that attracting non-national corporations could increase competition in the tendering process.

To avoid cost overruns like that being experienced by the National Roads Programme (€9 billion allocated to it has risen to €16 billion for the same amount of road), Mr Costello suggested a partnership between all parties to ensure better predictability of the projects' final cost.

Mr Costello said Public Private Partnerships had been slow in coming on stream because the Government was not committed to them.Bidding consortia would be attracted if the Government's commitment to the NDP was clarified by following through on the planned projects, he said.

When contacted after Mr Costello's speech, the BATU secretary general Mr Paddy O'Shaughnessy, refuted the claim that construction wages had increased dramatically. Sector wage increases were about 7 per cent a year, he said, and had been awarded in return for productivity increases.

Mr O'Shaughnessy also disputed the claim that BATU's industrial relations policy had delayed or inflated infrastructure costs. He pointed to the rising cost of motorway projects which do not involve bricklayers as proof that rising costs are not based on wage inflation.