How Spain can teach us a thing or two

Zak Garner-Purkis, news editor, Construction News - 12th, April 2018.

SPAINs construction sector was one of the hardest hit in Europe when global recession struck a decade ago.

Fuelled by cheap debt in the noughties, municipalities across the country had embarked on huge developments, until the financial rug was suddenly pulled from under their feet. But amid the chaos and confusion of the financial crash, something very significant happened to the Spanish construction market in the form of a new law on subcontractors. The Spanish government introduced measures to limit the number of subcontractors working a project to three, not including the main contractor. Work could be subcontracted to self-employed workers, but self-employed workers were not able to subcontract. The law also banned the use of subcontractors whose main task was the provision of labour, effectively removing employment agencies from Spain’s construction sector. One of the main drivers behind this pretty stringent regulation was safety. Prior to its introduction, Spain had been responsible for 20 per cent of all workplace accidents in the EU. The new rules insisted companies within the supply chain be registered, with registration dependent on carrying out health and safety training. In that regard it was successful, with Spain now ranking amongst Europe’s safest nations to work. The change in the law a decade ago also aimed to tackle insolvencies in the sector, the results of which are harder to gauge.  The economic difficulties of the past decade make it hard to say whether the legislation led to fewer firms going bust, or if it was just because the sector had shrunk so dramatically. The real question though is: could such rules on subcontractors work in Britain? Well, the UK market is certainly not in as dire a place as the Spanish market was when the last recession began to take hold, but the theory is an interesting one. On paper, the biggest loser under such a system in the UK would be main contractors: deprived of a large supply chain, tier ones would either have to bring expertise in house or downsize the way they manage projects. This could be a beneficial trend. If large projects were broken up into smaller, cheaper lots, the market could open up to lots of smaller contractors who could compete on price. Labour could be sourced locally, and there would be a clear benefit to training in-house labour. Maybe that’s imagining it in an overly optimistic way. But it’s definitely a model worth considering. ******