Extending social security to construction workers
The construction sector sees some of the largest gaps in social coverage with a high degree of casual and undeclared work. While employing nearly 7 percent of the global workforce, the construction sector is often characterized by complex employment arrangements, significant labour mobility, a high degree of temporary and casual employment, plus subcontracting and badly defined labour relations to which can be added migrant workers.
This module highlights the specific challenges of extending social security to construction workers and explores some policy options, based on international experience and guided by ILO social security standards.
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- What are the specific challenges with regard to including construction workers under social security legislation?
- What else needs to be considered when aiming at including construction workers under social security legislation?
- What other elements should be taken into account in order to include construction workers in social security legislation?
- Legal exclusion: construction workers might be explicitly excluded from labour and social security legislation as a category (for example, the self-employed). In addition, legal frameworks contain minimum thresholds regarding company size, duration of employment, working hours or salary, which can effectively exclude workers who do not meet these minimum requirements, including seasonal or casual workers.
- Complex contract and employment arrangements: the existence of complex labour contracts and agreements in the construction sector poses a challenge for social security schemes. These are traditionally built around the notion of a worker with a clear and stable employment relationship, a long-term contract and a regular salary.
- Administrative barriers: given the characteristics of the construction sector, employers and workers do not have sufficient capacity to cope with complex and cumbersome administrative procedures. These difficulties are exacerbated when construction workers move between different sectors of the economy. Such labour mobility risks depriving them of benefits despite previous contributions, particularly if the administration does not have the capacity to register these changes.
- Limited contributory capacities: construction workers often have very low incomes, which limits their capacity to make social security contributions in the absence of appropriate mechanisms. The incomes of construction workers also often fluctuate due to seasonal variations in activity and economic downturns. This makes it difficult to pay the same amount each month, as required by many social security administrations.
- Lack of enforcement and control: It is often difficult for labour administrations to locate workers, follow up on their membership and to ensure compliance with the scheme due to their high mobility. In addition, the complexity of subcontracting arrangements complicates the recognition of an employment relationship.
- Lack of information and organization: an inconsistent level of organization weakens collective bargaining. While construction workers in large companies are organized, most construction workers in MSEs are not. In addition, many workers in the construction sector are unaware of their rights, especially those with a lower level of education or migrant workers.
Extending legal coverage
- Extending legal coverage and adapting the legal framework to the needs of employers and workers in the construction sector.
- Reducing the minimum thresholds set in national laws concerning working hours, duration of employment or remuneration to ensure construction workers are covered.
Removing administrative barriers
- Simplifying registration and other administrative procedures, for example through mobile and digital services, and improving access to social security for workers and employers in the construction sector.
- Developing integrated service delivery mechanisms to improve access to social protection for construction workers, particularly in rural and remote areas.
- Improving access to social protection through partnerships with community organizations or unions that can act as aggregators by facilitating the registration of workers and the collection of contributions.
Facilitating contribution collection and financing mechanisms
- Determining contributions based on the overall value of the construction project rather than on income. This takes into account the complex relationship between the contractor and the different levels of sub-contractors, as well as the difficulties related to covering short-term workers for a single employer.
- Providing income protection for construction workers during periods when they are not working.
Enhancing compliance and facilitating inspections
- Adapting the legal and operational framework to the characteristics of the sector, for example by adapting the legal framework governing inspection services in the construction sector, allocating more resources for inspections and providing specific training for inspectors to be able to detect undeclared work (how to detect people without an employment relationship).
- Raising awareness and promoting compliance through preventive measures.
Raising awareness and sharing information
- Raising awareness among workers and employers in the construction sector on the importance of social protection. Informing them about the schemes and benefits available as well as the relevant procedures.
- Providing information through intermediaries, such as information centres, hotlines, brochures and websites, and adapting it to the workers and employers.
Strengthening incentives for formalization through links with other policy areas
- Linking social protection to other areas of intervention, such as the application of labour law and legislation on occupational health and safety, as well as employment guarantee schemes and public work programmes.
- Promoting the transition of informal construction companies into the formal economy by simplifying business registration procedures and reducing transaction costs.
- Allowing SMEs in the construction sector access to training in financial management and entrepreneurship.
- The extension of legal coverage to construction workers needs to be complemented by additional measures to ensure effective application of the laws in practice. These additional measures may include adapting registration methods and other administrative procedures, improving access to social protection and adapting labour inspection mechanisms in the construction sector. It is also necessary to raise awareness among the sector's workers and employers on the importance of social protection, about existing schemes and how to access them.
- Schemes need to be developed that take into account the specific characteristics of the sector, and particularly the complexities of subcontracting and the casual nature of the working relationships, for example by implementing flexible financing options.
- Establish a link between social protection policies and different fields of action in order to promote the transition to formality: application of labour law and legislation on health and safety at work, development of employment guarantee systems and public works programmes.