Extend inspections to stamp out shadow economy – CIF

The Construction Industry Federation (CIF) has called on the Government and Revenue to help stamp out shadow economy activity on State contracts by extending inspections to all contractors operating on all public projects. The CIF said such a change in approach would prevent this work going to those misusing the system and ensure that legitimate operators were awarded work.

“Most people will be aware that there is a shadow economy problem in the Irish construction sector still,” said CIF Director General Tom Parlon. “So we were not surprised when the latest reports arose in the Dáil of this type of activity as we receive reports of this nature regularly from our members. There are still a substantial number of contractors operating outside the law in this country – not paying their taxes, not meeting their employment obligations and using social welfare to help subsidise wages.

“This is hitting the legitimate contractors, specialist contractors and sub contractors who are missing out on projects because they are being undercut when tendering for work. That is not what the economy needs and it is not in the interests of the State. It is particularly galling when these problems occur on public projects – as was recently highlighted in the Dáil. The only way to stamp out this activity is to change the inspections regime and ensure that all contractors are being monitored. We also need to extend the inspections to all public projects.

“Currently where inspections do take place they are usually limited to the main contractor. However we believe that all contractors – specialist contractors, sub contractors and main contractors should be subject to these inspections. We also believe that the inspection process needs to be widened to ensure that all public projects are covered. If these steps were taken then we would eliminate black economy activity on public projects very quickly.

“No one in the legitimate industry likes seeing reports appearing that shadow economy workers are being employed on public projects while also receiving the dole. It undermines the legitimate contractors throughout the industry – those who pay their taxes, pay PRSI and meet their other employment obligations.

“On a wider basis we also believe that the Government needs to look at the way public construction contracts are awarded as part of the review of public procurement. If you award on a lowest price principle, as is currently the case, then you encourage abnormally low tenders. Abnormally low tenders involve corners being cut somewhere along the line – usually in the form of shadow economy activity of some description.

“If the Government were to move to a best value principle in awarding public contracts this would dramatically help stamp out shadow economy activity in this country.

“We would encourage anyone who is aware of shadow economy activity in the construction sector to report it. If more people were prepared to highlight cases it would certainly help the more legitimate companies operating in the construction industry. We would remind all our members and everyone involved in the construction industry that they can make anonymous reports to the Revenue via the ‘Good Citizen’s Report’. The process involved for this can be found at – http://cif.ie/member-services/388-good-citizens-report.html