The Reality of Labor Disputes in the Construction Industry (And Some Possible Help)

Even in an era where layoffs are common, the shortage of skilled labor continues to be a top concern for companies in the construction space. While the growing skills gap is one of the major reasons for this shortage, labor disputes also have an impact. Disagreements regarding conditions of employment, benefits, hours of work, tax concerns, and wage calculations can bring construction projects to a standstill.

Labor Disputes Can Be Devastating for Organizations

Finding people to fill open positions and then ensuring they stay engaged is a growing concern. When you add labor disputes to this already rampant challenge, the repercussions are extremely far-reaching. From strikes to costly settlements, regulatory fines to long judicial procedures – labor unrest can be devastating for organizations worldwide.

In February 2023, hundreds of flights were canceled due to strikes by German airport workers following disagreements over pay hikes. In a similar incident, over 100,000 UK public servants took strike action on February 1 over pay, pensions, redundancy terms, and job security. Healthcare workers in the UK are “absolutely shattered” by the inadequacy of the government in addressing staffing and training concerns. Soon-to-be chief scientist of the World Health Organization, Prof Jeremy Farrar, warned that healthcare workers would not be ready should another crisis hit.

The picture isn’t very different in the construction industry in the USA as well, with the sector witnessing a sharp rise in disputes due to inflation, war, and other crises. For example, last year, construction workers supported by the Laborers’ International Union of North America (LIUNA) protested Maryland’s Purple Line project in the wake of agreement discrepancies.

While grievances and conflicts are an inevitable part of the employee-employer relationship, when untended, they can cause irreparable damage. In the construction sector, labor unrest is known to:

• Disrupt business operations, bringing critical projects to a halt and resulting in delayed schedules.
• Lead to a loss of market share while tarnishing a company’s image and reputation in the market.
• Result in time and cost overruns along with delayed payments and rework of large and complex projects.
• Risk safety of personnel and facilities and impact the continuity of essential functions.
• Put the company’s facility, equipment, and systems at risk of damage and sabotage.
• Impact workers’ mental and psychological health and affect their productivity and efficiency levels.

Managing Labor Disputes in the Construction Industry

Construction contracts are extremely time sensitive. Any delay in projects can cause owners, contractors, subcontractors, and suppliers to miss critical milestones or finish dates. Not only do such delays cause inconveniences to parties, but they can also result in more serious problems, such as the assessment of liquidated damages and contract disputes. Given that labor disputes can lead to poor execution, reduced profit margins, and budget escalation, they must be resolved as soon as possible to avoid ill effects.

Technology can play a huge role in addressing these concerns. While it is impossible to bridge the skills gap, having the right systems in place can do wonders for construction companies struggling with labor disputes.

For instance:

• A modern Construction Payroll Solution that is designed with the specific nuances of Union Payroll and Certified Payroll in mind can help keep many payroll disputes at bay. Through efficient and real-time tracking of hours and payroll across different states and unions, such a solution can calculate and distribute prevailing wages for workers – thus keeping labor disputes at bay.
• A good Applicant Tracking System with access to data on previous hires can assist construction companies in connecting with people with specific skills, hiring them quickly, and onboarding them painlessly. By attracting and maintaining a strong and dedicated workforce, a construction-grade system can help save time, avoid mistakes, and quickly onboard qualified skilled craft – without unnecessary hassle. Through seamless onboarding and offboarding of labor, as projects begin and end, the system makes it simple and easy for managers to have the crew they need to get the job done in time.
• A robust ERP system can help maintain complex construction projects end to end. Through timely delivery of invoices and continuous tracking of payments, an integrated solution can fulfill contractual obligations. It can also help construction companies accurately maintain books and records, provide accurate, timely, and reliable reports on financial and operating results, and augment their ability to process orders.
• A Project Management Software that is built for the construction industry can make assigning and tracking every task onsite a breeze. Equipping your field crews with intuitive and user-friendly software can ensure projects are completed on time – without any dispute. Such software can also enable workers to stay connected with schedules, checklists, and daily reporting while equipping managers with better visibility into every aspect of projects.
• An intelligent Document Management System allows construction companies to maintain an updated repository of important documents. Offering seamless access to scope documents and change orders, such a system can maintain an accurate and up-to-date digital trail of documents with version control. This can streamline the usage and sharing of project documents while nipping reasons for any kind of dispute in the bud.

The Way Forward

Establishing and maintaining sound labor relations is a top priority for today’s construction C-suite. But with violations of workers’ rights happening everywhere, from recruitment to training, wages to working hours, and working conditions to social security protection, it is important to nip disputes in the bud.

If you want to effectively manage labor disputes, you need to leverage the capabilities of modern technological systems. Having the right technology in place can ensure there are clear, documented regulations on employment terms and conditions that are accessible to workers and their managers. The right systems can also deliver much-needed visibility and transparency into union concerns and ensure that different taxation rules, hourly rates, and various other moving parts are taken care of, 24/7. Schedule a demo to learn more.