MORE THAN THREE-QUARTERS of Irish construction companies have come across “black economy operations” in recent months, a new survey shows.

The Construction Industry Federation (CIF) carried out a survey on the black economy in the sector and found that 76 percent of construction companies have come across black economy operations in the last three months.

It also showed that 85 per cent of construction companies have come across an increased number of black economy operations in the last 12 months.

Findings

Almost 20 per cent of construction companies believe that black economy activity in the construction sector has grown by more than 100 percent since the downturn began.

The survey also showed:

• 52 per cent of construction companies believe they have lost more than five jobs to black economy operations in the last 12 months
• Just under one in four construction companies are aware of public contracts being awarded to black economy operations
• 98.5 percent of construction companies believe black economy operators pay their workers with cash outside of the tax system
• 65 per cent believe that wage rates offered to construction workers in black economy operations are undercut by more than 20 percent
• Almost one in two construction companies have come across clients who have experienced problems with black economy operators or the work they have carried out and 39 per cent have been asked to repair work carried out by a black economy construction operative
• 56 per cent believe that the materials used by black economy operators are lower in quality

When it comes to regulation, 93 per cent believe the Government needs to take stronger action to regulate black economy operators.

Meanwhile, 74 per cent believe the Revenue Commissioners should be responsible for ensuring regulations to combat the black economy are enforced.

Regulations

Commenting on the survey, CIF Director General Tom Parlon said:

For some time now it has been evident that there is a major problem with black economy activity in the construction sector.  Legitimate construction operatives who obey their tax obligations and comply with the various regulations in the industry are finding it more difficult to win work.  The fact is that they are being undercut by black economy operators when it comes to tendering.

He said that the black economy operators are able to do this because they are not paying tax, providing their workers with the mandated wages and pensions, are using lower quality materials and not abiding by regulations and safety standards.

Responsibility

Parlon said that this is not just an issue for those in the construction sector.

These companies regularly avoid tax, which reduces the payments to the Exchequer.  That impacts on everyone in the country.  Additionally in some cases these construction operatives may be claiming Jobseekers Allowance at the same time as they are doing this construction work on the side.

He said that “lower rates do not mean the construction work is of the same quality”, with some CIF members saying they have seen jobs done by black economy operators which had to be repaired.

Parlon said there are also “real concerns” about the safety standards implemented by such black economy operatives.

The CIF said it hopes that by releasing the survey, more measures may be introduced to tackle the black economy in the construction industry.

There is particular responsibility on the Government, the various local authorities and state agencies. These bodies are responsible for the majority of the construction work that is taking place at the moment and they must lead by example on this issue.

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