95% Of Firms Come Across Black Economy Operation - CIF

64% of construction companies have been asked to do a job for cash outside of the tax system.

A new Construction Industry Federation (CIF) survey on the black economy in the construction sector also revealed that 57% of construction companies have been approached by construction workers offering to carry out work for cash payments while they were also receiving social welfare payments.

Other key statistics revealed in the survey include:

• 95% of construction companies have come across a black economy operation in the last 3 months. While 70% of construction companies have come across an increased number of black economy operations since the turn of the year and 76% have come across an increased number in the last 12 months.

• 95% of construction companies think they have lost jobs to black economy operations in the last 12 months while 50% believe they have lost 6 more jobs to black economy operations in the last 12 months.

• 94% of those who lost out on jobs to black economy operators believe it is because they submitted a cheaper tender.

• 40% believe that black economy operators always pay their workers with cash outside of the tax system while 51% believe they do this regularly.

• 53% of construction companies believe that wages paid by black economy operators undercut legitimate firms by more than 20%.

• 68% of construction companies have come across clients who have experienced problems with black economy operators or the work they have carried out, while 58% have been asked to repair the work done by a black economy operator.


• 71% of construction companies believe the materials used by black economy operators are lower in quality.

• 66% of construction companies describe the health and safety standards as poor quality on any construction sites run by black economy they have come across while a further 24% would describe them as non existent. While 11% of construction companies are aware of accidents occurring on construction sites operated by black economy operators.

• 37% have come across construction sites run by black economy operators where the health and safety standards put employees, clients or others at risk.

• 30% of construction companies have found that clients do not ask if their company has insurance before starting a job.

• 90% of construction companies think the Government needs to take stronger action to regulate black economy operators in the construction industry. While 84% of construction companies would be in favour of more regulation if it helped reduce black economy operations in the construction sector and 86% believe that black economy participation in public projects could be reduced with better regulation.

• 88% of construction companies would welcome stronger scrutiny of the construction sector by Revenue if it would help reduce black economy activity.

"The black economy continues to be a source of incredible frustration within the construction industry," said CIF Director General Tom Parlon. "What the latest statistics highlight is that the problem is still out there and if anything it seems to be getting worse. It is also noticeable that there seems to be a sizeable appetite for black economy work with potential workers and clients looking to do construction work off the books.

"This kind of activity hurts legitimate construction work. 68% of construction companies have come across clients who have experienced and another 58% have had to repair poor work carried out by black economy operators. This goes to show that clients are not making the savings they might think they will by engaging black economy operators and there is clearly a trade off in the quality of work being carried out.

"There is a reason why black economy operators are able to undercut their rivals. They don't make the correct tax returns, they have workers using social welfare payments as a subsidy to their wages, poor quality materials are used, corners are cut, the proper building practices are not followed and the proper health and safety standards are ignored.

"This last point is of paramount importance for clients as they can now face criminal charges in the event of an accident occurring on the construction site. Black economy operators are much less likely to follow the health and safety procedures so that increases the likelihood of accidents occurring.

"All of this is black economy activity is bad news for the construction industry, for the clients, the Government and for the Irish economy. Black economy operations result in the misuse of social welfare payments and the tax that is due to the Exchequer is not being collected. Effectively this type of work is hurting all of us."

(CD/JP)