The warning follows claims that the unions involved in talks with the Olympic Delivery Authority (ODA) are split on the issue of 100% direct labour and are preparing to back down.
On a major job like the Olympics, about one-third of the total budget is allocated for labour costs. This would mean about £3bn of the overall £9.3bn Games cost is affected by the demands for direct employment.
One expert told Personnel Today’s sister title Contract Journal: “You are talking about an extra 20% at least on the wages bill when you take into account the additional cost of employers’ National Insurance contributions and benefits like holiday and sick pay.”
Negotiations between the ODA and unions about employment are ongoing. Building work on the Games is due to begin next year, but unions have warned failure to use direct employment would result in the excessive use of cheap foreign labour, and lead to increased health and safety risks on site.
A spokesman for construction union Ucatt insisted there was no divide among the unions on the issue, and they remained committed to the use of direct employment.