CONSTRUCTION prices more than doubled over the past ten years, rising 60pc from 1995-2000 in the early years of the national development plan, and by 47pc since then.

The figures are contained in a report by economic consultants DKM for the Construction Industry Federation (CIF). The report claims labour costs in construction are rising at an unsustainable rate.

Although prices charged by construction firms rose faster than either costs or wages from 1995-2000, the report says the slowdown in the housing sector has squeezed margins. "profitability will fall sharply, unless labour costs are contained," it says.

Trade unions reacted angrily to recent suggestions from the CIF that there would have to be a wage freeze in the industry, with SIPTU saying such a proposal would turn building sites into battlegrounds.

The latter half of the 1990s was a boom time for builders, according to the figures compiled from different sources by DKM. While able to increase tender prices by 60pc, construction costs went up by 24pc and average labour costs by 50pc. In the past six years, costs have risen by 49pc, labour by 47pc and prices by 47pc.

Tender prices for house-building went up by 66pc in the five years to 2006. Over the whole period from 1995, labour costs have kept pace with the 236pc rise in tender prices, while costs have risen by 186pc. The cost of materials went up by 154pc in the same period.

The report claims that Irish building workers' wages are significantly out of line with other western European countries. "In 2006, the agreed wage rate for craft workers was 26pc higher than in Germany, and 19pc higher than Spain. For unskilled workers, the difference was even more pronounced."

The building boom has also seen wages move ahead of those in manufacturing. From a similar base in 1997, hourly earnings in construction now average €18 per hour -- 20pc more than the €15 per hour in industry. Skilled workers earned more than those in the financial sector, with weekly wages of €906, versus €880.

The sharp fall in house building this year, "may represent the start of a new phase of the construction cycle, during which growth is likely to be more modest, and could be negative in some years", the report says. The industry has a role to play in restoring cost competitiveness to the economy, especially given the size of the public capital programme.

The Irish Independent, By Brendan Keenan, 18 March 2008