Foreword

This Inquiry is rooted in our acknowledgement of the importance of the construction industry to the Scottish economy and Scottish society and our concerns about the nature of some construction employment and work in Scotland. The industry is responsible for building our homes, schools, hospitals and workplaces and the quality of the built environment impacts on us all. It creates highly skilled and labour intensive jobs in the private and public sectors, employing 130,000 workers in 2020 and generating 11% of Scotland’s economic outputs in 2019.

The core issue under investigation in this Inquiry is the experience of fair work by the construction workforce and how fair work practice can be improved, with an emphasis on the role of public sector procurement.

Fair work is fundamental to the future growth of the construction industry and its ability to meet the challenges of automation and climate change. Recent research has shown that construction work can be insecure, lacking the contractual and income security and stability that workers need. We are aware that direct employment is declining in the industry and that the use of subcontracting, agencies and umbrella companies creates uncertainties in the supply chain that impact on how construction work is overseen as well as on health and safety and the provision of training and upskilling. Effective oversight of construction works requires a workforce with an effective voice, yet the use of collective agreements in the industry is less robust than in the past, with negative consequences for worker voice, especially for those on non-standard contracts. There is also evidence of concerns over how problems and disputes are resolved. The industry has an ageing workforce with implications for skill supply. We know also that more needs to be done to improve diversity in the industry in order to combat the challenges of skill shortages particularly in the context of the transition to a net zero carbon economy and the likely impact of automation in construction.

Addressing fair work in construction now is crucial to how the industry develops to face future challenges. Skill shortages are both a challenge and an opportunity to bring new talent into the industry. The need to transition to a net zero carbon economy and undertake large scale retrofitting on existing building stock raises significant new challenges around skills and investment but also offers an opportunity to transform ways of working and offer high quality work to a greater range of people across Scotland and beyond. Existing and well-developed structures of collective bargaining in the industry work well in addressing standards, skills formation and terms and conditions and provide key learning on how the multiple stakeholders in the industry can engage collectively to address the needs of all stakeholder groups.

Public sector procurement has the potential to play a key role in shaping the industry and is responsible for around 50% of construction spend in Scotland – hence our focus on public procurement practice. We have investigated and made specific recommendations regarding the role and potential of public procurement in driving better fair work practice in construction.

The construction industry recognises its challenges and opportunities and has developed some strategic responses. We note in particular the establishment of the Construction Leadership Forum and the inclusion of aspects of fair work in its action plan alongside its social partnership approach and the engagement of employers, unions and policymakers to address the particular challenges of the pandemic. Structures of this kind have huge potential beyond the immediacy of the pandemic. At a UK level, the Construction Leadership Council Report into Future Skills calls for higher levels of direct employment, recognising the relationship between providing fair work and realising the future ambitions of the industry.

Conducting this Inquiry was a significant task undertaken over two years by the Construction Industry Inquiry Group (CIIG), made up of a range of stakeholders from construction businesses, trade bodies, trade unions, local authorities and the Fair Work Convention. The CIIG gave generously of their time, expertise, insight and ideas. They were individually and collectively constructive in their engagement with a range of difficult issues, and all members have been a huge support to the understanding of the Fair Work Convention and the Inquiry Co-Chairs in particular. We are immensely grateful for their participation and contribution.

This Report calls for action from The Scottish Government and other public agencies in procurement, skills and investment strategies to align their activities to the provision of fair work in construction. A crucial part of this is clearly signalling commitment to social dialogue and constructive engagement across key stakeholders, including through the expansion of industry agreements. Government in particular has a crucial role in creating the conditions and structures for better collaborative working in construction.

The construction industry has an important role to play in our future economy and society, particularly in delivering a net zero carbon future. Wider adoption of fair work can underpin a high quality, high value, responsive construction industry, adept at facing known challenges such as modernisation and automation and other as yet unknown challenges. Our collective priority is to ensure that the construction workforce benefits from these and other developments and that fair work becomes a more common experience for employees and workers. The Fair Work Convention and its Construction Industry Inquiry Group urges all relevant stakeholders to adopt our recommendations.

Mary Alexander

Co-Chair, Deputy Regional Secretary for Unite the Union Scotland & Fair Work Convention member

Professor Patricia Findlay

Co-Chair, Director of the Scottish Centre for Employment Research & Fair Work Convention Co-Chair