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Structure of The Construction Industry: How Construction Is Different

This document discusses the structure of the construction industry and labor relations within it. Construction projects take months or years to complete, requiring groups of tradespeople to come and go from job sites as their skills are needed. General contractors hire subcontractors to complete specialized work. Union hiring halls provide stability by dispatching members to jobs based on seniority and collecting dues for benefits. This reduces costs for contractors by eliminating hiring and benefits administration. Hiring halls also standardize wages, reducing incentives for violating contracts or labor standards. Some non-union contractors believe they are more competitive with lower costs.

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Ronald Glenn Rosada
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29 views

Structure of The Construction Industry: How Construction Is Different

This document discusses the structure of the construction industry and labor relations within it. Construction projects take months or years to complete, requiring groups of tradespeople to come and go from job sites as their skills are needed. General contractors hire subcontractors to complete specialized work. Union hiring halls provide stability by dispatching members to jobs based on seniority and collecting dues for benefits. This reduces costs for contractors by eliminating hiring and benefits administration. Hiring halls also standardize wages, reducing incentives for violating contracts or labor standards. Some non-union contractors believe they are more competitive with lower costs.

Uploaded by

Ronald Glenn Rosada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Alberta Labour Relations Board Chapter 25(a)

Effective: 1 December 2003 Structure of the Construction Industry

STRUCTURE OF THE
CONSTRUCTION INDUSTRY

HOW CONSTRUCTION IS DIFFERENT


The organization of labour in the construction industry is fundamentally different from most
worksites. Building a large project may take months or years. During this time, groups of
tradespeople come and go from the job site as their skills are needed. This differs from most
industrial sites where a constant group of employees works together over a longer period of time.

For example, an owner will hire a general contractor (via a tendering process) to construct a
building. The general contractor may have his/her own employees or may subcontract some of the
work to other trade contractors to complete portions of the work (e.g., wiring, plumbing, site
preparation, etc.). The subcontractor(s) may then hire additional workers and send them to the job
site along with their permanent staff to complete their portion of the work.

This manner of organizing labour is necessary because construction work is erratic and keeping
large numbers of employees on the payroll is uneconomical.

LABOUR RELATIONS IN CONSTRUCTION


The transient nature of construction work means employees move between companies as work is
available. This would normally mean companies are always hiring and laying off workers and
employees are constantly looking for work. Union hiring halls provide an alternative. Union
members may go to a hiring hall and place their name on a list of members looking for work.
Unionized employers call the hall and request workers. Those workers who have been unemployed
for the longest are dispatched. The hiring hall also receives money from employers to cover
members’ pensions and benefits and is involved in the apprenticeship system.

The use of hiring halls stabilizes wage rates. That is, unionized employers pay a single rate for a
particular trade. This makes labour costs a non-competitive element of any bid by a contractor. This
reduces the incentive for employers to violate the collective agreement or the Employment Standards
Code.

Contractors also find hiring halls to be advantageous. Normally, a contractor need simply request a
particular number of workers from the hiring hall. This reduces the cost to contractors because they
do not have to advertise for and screen applicants to determine if they have the required skills.
Further, the company is not responsible for maintaining its own benefit and pension plans—a
particularly difficult job with a transient workforce.

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Alberta Labour Relations Board Chapter 25(a)
Effective: 1 December 2003 Structure of the Construction Industry

Some employers (particularly those in commercial and institutional construction) operate non-union
because they believe the lower, non-union labour costs make them more competitive. Many of these
companies belong to the Merit Contractors Association that tries to offer its members some of the
benefits of operating in the unionized regime such as employee training and multi-employer benefit
plans.

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