Extending social security to construction workers
Construction is one of the economic sectors with large social security coverage gaps and a high prevalence of informality and undeclared work. Employing about 7 per cent of the global workforce, the construction sector in many countries is characterized by complex employment arrangements and high labour mobility, a high prevalence of temporary and casual employment, subcontracting and unclear employment relationships as well as migrant labour.
This module stresses specific challenges for the extension of social security to construction workers and explores some policy options, based on international experience and guided by ILO social security standards
- What are the specific challenges with regard to including construction workers under social security legislation?
- How can construction workers be included under social security legislation?
- What else needs to be considered when aiming at including construction workers under social security legislation?
- Legal exclusion: Labour and social security legislation may exclude some categories of construction workers, such as self-employed workers. Minimum thresholds with regard to the size of the enterprise, duration of employment, working time or wage may effectively exclude certain workers who do not meet these minimum requirements, such as temporary, seasonal and casual workers.
- Complex contracting and employment arrangements: The existence of complex contracting and employment arrangements in the construction sector constitute a challenge for social insurance schemes built around the notion of a worker in a clear and stable employment relationship, a long-term contract and regular wages.
- Complex and burdensome administrative procedures and services: Given the characteristics of the construction sector, both employers and workers tend to have limited capacities to deal with complex and burdensome administrative procedures. These challenges are compounded if construction workers move between sectors of the economy. Such high labour mobility could prevent them from receiving benefits even if they contributed in the past, especially if the administration lacks capacity to record these changes.
- Low earnings: Unless adapted mechanisms are in place, construction workers with very low earnings cannot afford to pay the required social security contributions. In addition, the earnings of construction workers are often volatile due to seasonal variation of construction activity and economic downturns which makes it difficult for to contribute the same amount at the same time every month, as required by many social security administrations.
- Lack of enforcement and control: Labour administrations often have difficulties to locate workers, to follow up their membership and ensure compliance with the scheme due to high mobility. In addition, the complex subcontracting arrangements make it difficult to detect an employment relationship.
- Lack of information and uneven degree of organization: Uneven degree of organisation weakens collective bar-gaining. While construction workers in large enterprises may be organized, most construction workers in MSEs are not organized. In addition, Many construction workers are not aware about their rights and entitlements, particularly those with a lower level of education or migrant construction workers
Extending legal coverage
- Extend legal coverage and adapt the legal framework to the needs of both employers and workers in the construction sector
- Reduce minimum thresholds set out in national legislations with regard to working hours, duration of employment or earnings to facilitate coverage of construction workers
Facilitating access to social protection by removing administrative barriers
- Simplify registration and other administrative procedures, for example through mobile technology and digital services, and increasing the access to social security for workers and employers in the construction sector
- Develop integrated service delivery mechanisms to improve the access to social protection for construction workers, particularly in rural and remote areas
- Facilitate access to social protection through partnerships with community-led organisations or trade unions. that can act as aggregators by facilitating the registration of workers and the collection of contributions.
Facilitating contribution collection and payment and alternative financing mechanisms
- Determine contributions not on earnings but on the overall value of the construction project, so as to address the complex relationship between contractor and different levels of subcontractors, and the difficulties associated with covering workers who work for a short period of time with the same employer
- Provide income protection for workers in the construction sector during periods of work interruption
Enhancing compliance and facilitating inspections
- Adapting the legal and operational framework to sectoral characteristics, such as adapting the legal framework governing inspection services in the construction sector, allocating more resources to inspection services and providing specific training to inspectors to carry out inspections in the field of undeclared work, for example how to detect persons without an employment relationship.
- Raise awareness and promote compliance through prevention measures
Raising awareness and sharing information
- Raise awareness among workers and employers in the construction sector on the importance of social protection and inform them about available schemes and benefits as well as the relevant procedures.
- Disseminate information through mass media and other means, such as information centres, helplines, brochures and websites and adapt them to the situation of workers and employers
Strengthening incentives for formalization through linkages with other policy areas
- Linking social protection to other areas of intervention, such as enforcement of labour law and occupational health and safety law, and employment guarantee schemes and public works programmes.
- Promote the transition of informal construction enterprises to the formal economy by simplifying business registration procedures and reducing transaction costs
- Provide access to finance and entrepreneurship training for MSEs in the construction sector
- Extending legal coverage to construction workers is a crucial step, however a range of additional measures is needed to ensure that the legislation is applied in practice, such as adapting the modalities for facilitating registration and other administration procedures, increasing access to social protection, adapting labour inspection mechanisms to construction sector and informing workers and employers in the sector about the importance of social protection, existing schemes and how to access them.
- Design schemes in a way that takes into account the specific characteristics of the sector, namely the complex subcontracting arrangements and casual nature of the work relationships, such as through flexible financing arrangements.
- Linking social protection policies with different policy areas to promote the transition to formality: This includes enforcement of labour law and occupational health and safety law, and development of employment guarantee schemes and public works programmes.