47% of small business owners and managing directors in the construction sector admit they’ve had to stop their own pay due to the impact of unfair payment practices by their buyers, according to a survey by ECA and BESA
Shockingly, three-quarters of business owners within the construction industry revealed they had made sacrifices due to unfair payment practices, including 37% reducing their own salary and 23% cancelling company training and learning activity.
Over one in three (36%) say they have struggled to pay business taxes due to payment issues.
Almost 1 in 10 employers were forced to pay their own staff late – an action which can have devastating effects on employees, who may then miss mortgage or rent payments as well as other vital overheads.
ECA director of legal and business, Rob Driscoll, commented: “This ground-breaking data shows the truly devastating effects late payment has on the lives of business owners, their staff, their children, and their wellbeing.
“With a lack of fair payment directly causing widespread mental health issues, abusive payment practices fundamentally remove the capacity for individuals to feel purpose or value in a sector which enables £540bn GDP within the wider UK economy. The data lifts the lid on the industry’s self-harming commercial behaviour.”
The impact of unfair payment practices
The impact of unfair payment practices also had further knock-on effects to businesses. Nearly 28% said it caused staff morale to drop, while 15% said it led to a fall in productivity.
One in five said they were unable to replace broken equipment as a result.
Over 92% said their business had faced payment issues. Almost 65% said they were paid late frequently or very frequently.
BESA director of legal and commercial services, Debbie Petford, said: “These figures are a timely reminder that unfair payment practices place significant and unnecessary burdens on owners of construction SMEs and their employees.
“Urgent reform is required to prevent companies inappropriately using retentions money owed to smaller businesses down the supply chain to prop up their cash flow. The status quo is both economically unsustainable and detrimental to the wellbeing of hardworking people in our industry.”
The survey also revealed that, as a direct result of late and unfair payment, over nine in 10 business owners in construction are suffering from a range of mental health issues, including anxiety and depression, linked to the actions described above.
Survey supporters cover a range of construction activity, including electrical, plumbing, building, scaffolding, roofing, civil engineering, fire safety, painting and decorating, and interiors.