The Construction Industry Federation (CIF) has rejected the national pay deal and has sought a 10 per cent pay cut across the sector.
CIF director-general Tom Parlon said the deal, negotiated by the social partners in September, “ignores the reality of where the Irish economy and the construction industry are today”.
“The bottom line is the industry cannot afford the deal”, he added.
“The pay deal bears no resemblance to the reality of either the economy or the construction industry today. Jobs are being lost,” Mr Parlon told a press conference this afternoon.
“Contracting companies are now tendering at up to eight to ten per cent below the cost of particular projects. The housing market is in disarray. House prices have fallen by up to 30 per cent. The market is dead. Jobs are being lost and the executives within building firms are being laid off or are taking substantial pay cuts."
Mr Parlon said the CIF was taking the example of the Government is seeking a 10 per cent pay cut from building workers in order to "protect the viability of companies and the jobs that are still in the industry".
The executive body of the CIF rejected the deal unanimously.
The agreement provides for pay increases of 6 per cent, phased over 21 months, for most workers. Low-paid would will receive an additional half per cent rise. It allows for a three-month pay pause in the private sector, although this will run to 11 months in the public sector.
The proposed agreement would cover 600,000 workers in unionised employment although other employers frequently follow the terms of national pay agreements. However, the deal does contain inability-to-pay provisions which employers can invoke - although this involves an external validation process.
Trade unions and employers' body Ibec have backed the new pay deal.
Last week Siptu president Jack O'Connor called on the Government not to award "lucrative contracts" to companies which did not pay increases under the new deal. He said any attempt to renege on the deal would represent "nothing short of national sabotage at this critical moment for our economy".
Mr Parlon said today that Mr O’Connor "needs to come into the real world".
"He is concerned about standing over his deal. He seems to have little concern for the jobs that are being lost for his members," Mr Parlon added.
Asked if the pay deal was now dead, Mr Parlon said: "I do not know. We are one sector of the employment pillar and a big sector in terms of jobs. WE are employing more than 200,000.
"The deterioration of the economy and the global situation since September has been quite severe and I think it does need some very active consideration. It needs remedial action."
Fine Gael leader Enda Kenny has called for the suspension of the pay deal next year to protect jobs. In his keynote address to the Fine Gael national conference in Wexford on Saturday night, he called on the Government and the unions to suspend the deal.
"The country cannot afford the national pay deal. It is as simple as that. This deal must be suspended for 12 months and reviewed after that. It was negotiated in a different context with different expectations," he said.