Construction prices more than doubled over the past ten years according to new 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; rising 60% from 1995-2000 in the early years of the national development plan, and by 47% since then.

Between 1995-2000 tender prices increased by 60% while construction costs went up by just 24% and labour costs rose 50% on average.

But while prices have seen greater increases than costs and wages, the slowdown in the housing sector has tightened profit margins.

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Over the entire period the statistics show that labour costs have risen 186%, almost keeping in line with the 236% rise in tender prices. The cost of materials went up by 154% in the same period.

The report claims that unless labour costs are contained "profitability will fall sharply".

A recent call from the CIF for reduced wages for construction workers sparked anger from trade unions, who claimed that a reduction in wages would lead to building site battlegrounds.

Yet, the report claims that Irish building workers' wages are substantially out of line with other western European countries - 26% higher than in Germany, and 19% higher than Spain.

And, according to the report, for unskilled workers the difference is even more pronounced.

DMK predict that any growth in this new phase in construction, as a result of the slowdown, is likely to be much more modest and possibly negative in some years.

It concluded that the construction industry now has a pivotal role to play in restoring competitiveness to the market.

(VB/JM)