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Self-employed subcontractor rates fall below full-time staff wage level

Competition for work during the recession has driven down wage rates to the extent that some self-employed workers are being paid less than equivalent employees, it has emerged.

Research compiled by contract and payroll provider to construction freelancers Hudson Contract found self-employed subcontractors were working for as much as 50 per cent less than in 2008.

The minimum weekly rate for a skilled employed worker is £401.70 before bonuses and overtime, according to the Construction Industry Joint Council Working Rule Agreement. This sets rates of pay for about 600,000 workers on major building and infrastructure sites.

Hudson Contract managing director David Jackson said the wider economic climate and the forthcoming public spending cuts made further cuts in self-­employed tradespeople’s wages likely.

“Everybody wants more for their buck,” Mr Jackson told H&V News.

“Winning work comes at the price of lower tender values. All subcontractor businesses are being squeezed to offer their ­services at lower rates, and where they have a freelance workforce then that freelance workforce also takes the work at lower rates.”

He added: “In some instances you can see a 20 to 25 per cent drop from two years ago. In some extreme instances that I know of first-hand it is 50 per cent.

“Freelance operatives’ pay used to outstrip direct wages by as much as 50 per cent, but you won’t find that anywhere these days.”

The Hudson study, which compared the weekly wages of 13,670 subcontractors in October 2010, found plummeting freelance subcontractor rates.

In many areas, self-employed workers are earning similar wages to their employed equivalent - but without the associated ­benefits.
However, Leadbitter chief executive Bob Rendell said a fall in freelance rates would not encourage his firm to use more self-employed subcontractors.

“We would always prefer to have people employed, mainly ­because we feel we have better control of delivering quality by having employed staff,” Mr Rendell said. “A drop in rates wouldn’t cause us to change our policy.”


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