Socialist Worker

Subcontracting: companies are the problem

Issue No. 2137

Companies say they use subcontracting firms to carry out specific parts of a project to try and reduce costs. This is opposed to direct labour – workers being employed directly by the main contractor.

The companies behind subcontracting aren’t small operations – they are huge multinationals.

Jon, a steel erector, told Socialist Worker, “The building bosses always make a fuss about costs on projects.

“In reality one thing that raises total costs and lowers pay is to have subcontractors hiring other subcontractors.

“The subcontractors take people on as self-employed, which means they have no period of notice and workers can be laid off at the drop of a hat.

“I have a problem with what is going on though. By picking up on Brown’s rubbish about British jobs, the union has turned a good campaign that let us organise people into one that encourages the worst elements and divides people.”

A good indication of how this can pan out was revealed this week.

Some 200 Romanian workers were removed from the Olympics site in London for being “illegal workers” – they were all allegedly self-employed.


At the same time, the bosses on the Olympics are trying to cut wages. The removal of the Romanian workers has not made fighting that attack any easier.

As many as 40 percent of the 2.2 million building workers employed in Britain are falsely defined as “self-employed”.

These workers hold a CIS4 card, which means they and their employers pay reduced tax and National Insurance contributions.

Companies using this labour don’t operate apprenticeships or provide training.

It is deliberatedly used to deny workers basic employment rights. Many migrant workers and agency workers are treated as self-employed.

Peter, an electrician, told Socialist Worker, “We are not opposed to migrant workers – I’ve worked abroad. It’s about bosses taking workers on at lower rates.

“It’s not the foreign lads that are the problem – it’s the subcontracting.”

The real aim of subcontracting is to produce a multi-layered economy. As the number of participants in the market increases, so the opportunities for squeezing workforce costs are enhanced.

Wages are forced down, and the responsibility for paying for training, holiday, sick leave and pension rights is displaced onto the workers themselves.

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