New wage rises could push up cost of building an average home by €10,000
Construction workers are expected to receive a pay rise of more than 9pc that could push up the price of housing and hamper the Government's huge infrastructure plan.
The construction industry is bracing itself for a 3pc pay rise each year for three years, according to sources.
This would add €10,000 to the price of building an average house and add €5bn to the cost of building roads, rail, hospitals and other key infrastructural projects.
Two new Labour Court recommendations on pay in the sector are now being considered by Employment Minister Pat Breen, the Department of Business & Enterprise confirmed to the Sunday Independent.
The expected pay increase follows a mandatory pay rise of 10pc when a new sectoral employment order (SEO) for the construction sector was issued in October 2017.
Breen must examine whether the Labour Court followed correct procedures when arriving at its recommendations - one for construction, the other for electrical contracting.
"One of the factors that the court must consider in its deliberations is the potential impact on competitiveness in the economic sector concerned," the department said in a statement. Trade unions are seeking pay rises of 4pc each year for three years, as well as the return of lucrative travel allowances, but informed sources expect a lower 3pc hike per annum over the three-year period.
But sources said this would still hit the sustainability of the building sector, particularly outside of Dublin and in low margin activities such as housebuilding.
The average price of a house in Ireland stood at just under €250,000 at the beginning of this year. It is estimated that 40pc of the cost of building a house - €100,000 on average - is accounted for by labour.
A more than 9pc wage hike over three years - when cumulative increases are taken into account - would see the labour cost of building the average home rise to €109,273.
The increased labour costs in the sector are also set to drive up the price the Government will have to pay out for building badly needed infrastructure under its huge €116bn Project Ireland 2040 plan.
Projected labour costs could rise by €5bn, said sources. For example, pay rises could push up the cost of the new €900m Cork to Limerick M20 motorway - for which a long awaited design contract was signed last week - by more than €30m, according to sources.