I have tried to provide some background to the industry and try to put the Bill in the context of the industry. It is a sizeable industry estimated at 800 firms, 12,000 employees and an annual turnover of €250 million. It is very labour intensive and so provides high levels of employment. There is a wide spectrum of services, not just the uniformed guards, which is a large part of the industry both from an employment and turnover point of view. More value lies in some other elements including the movement of cash, the installation of electronic systems, etc.
The proposed private security authority will sit as a support mechanism that we believe the industry requires. In 1995 we came together to try to put together a series of supports to improve conditions for employees within the industry, improve the quality of service delivered by the companies involved and allow the clients, the end users, know better what they are actually buying. We sat together and designed a standard for the manned operating industry: IS 999. This is an industry led standard that was negotiated with SIPTU and was put to the National Standards Authority of Ireland as the recommended minimum standard operating procedure for the manned guarding industry. That has now been accepted.
We have IS 199 for the alarm industry, which defines precisely the technical requirements for the installation of an alarm system. Only IS 199 systems can go through the entire system and receive Garda response. IS 199 goes into IS 228 monitoring stations and gardaí are quite happy to respond to that type of alarm system. IS 228 is a 1999 standard but only came into effect fully from December 2002. It controls the type of receiving sensors for alarm systems.
Although the security sector has grown to be a major contributor to industry and the economy in general, there is very little regulation or inspection of its operations and conduct. This has led to an ever-increasing plethora of incarnations and reincarnations of companies that have no regard whatsoever for the quality of service and employment provided or the legal and moral obligations of a company operating in this field. The minimum terms and conditions of employment are flouted at a certain level within the industry. In the larger companies, and certainly in unionised companies, there is full compliance. We have had some difficulty in achieving inspections from the Department responsible for labour issues, due to difficulty in identifying some of the security companies involved. It is difficult to investigate those for which there is only a mobile telephone number or somebody's private address.
The net effect is a reduction in the potential value of the industry. The end users are losing money because they have systems which may be inappropriate or poorly installed. The State is losing substantial sums in revenue and that situation is getting worse. With the downturn in the economy, the anecdotal evidence is that many companies are reducing the quality of what they regard as the required level of security and are doing so at a lower price. The biggest problem, by far, is in the State and semi-State sector. We have anecdotal evidence of contracts being awarded at ridiculously low prices. As a result, not only is there a loss of business and income to respectable companies operating to IS 228, IS 199 and IS 999, but the gateway is opened for new companies to spring up and gain a foothold in the industry. By representing themselves as working for State and semi-State bodies, they gain access to other sectors of the security industry.
For individual employees with low pay, low morale and poor working conditions, there is the even more serious risk of loss of life. A number of incidents investigated by the Health and Safety Authority have involved loss of life due to inappropriate working conditions, on which Kevin McMahon may comment further, whereby the regard given to security personnel on site is minimal in terms of accommodation and equipment required to do the job correctly.
We have tried to deal with the low pay aspect through the formation of the joint labour committee and the employment regulation order. Publication of the first such order was followed by pay increases of 20% to 25% and three subsequent orders resulted in 8% increases. The next order is due on 1 September. In the manned guarding sector, wages represent 80% of costs and any increase in wages is passed on directly to the client. A further 8% increase, on top of previous increases and a downturn in the economy, will result in loss of clients. Unless we have the ability to clearly identify those in the industry who are trying to provide services, there will be a real difficulty. In my own company, I have lost business. Clients have just disappeared and that business has not transferred within the regular industry but has gone to companies that did not exist a year ago.
In the document circulated to the committee, I have outlined the four steps we took in an effort to support the industry. First was the production of standards, industry-led and certified by the NSAI. The second element was the further design and delivery of training courses, some of which were funded through the Department of Enterprise, Trade and Employment to the amount of €120,000 in the last three years. We have brought in a minimum training standard at European level, based primarily on acceptance of the Irish submission. The third element was the formation of a JLC. The fourth is the formation of the Private Security Authority and the licensing of all those providing services, whether as individuals or companies. In reality, without this fourth element the other three become millstones because they all cost money, which is reflected in price increases. That makes it more attractive for other companies to come in and for clients to switch to them. On my reckoning, on the basis of anecdotal evidence from the bigger companies, some 20% of business has slipped away to companies that did not exist a year ago.
I will be glad to answer any questions.
