The Irish State could have lost over €600 million since 2007, due to the huge growth in "bogus self-employment" in the construction sector, a new report from the Irish Congress of Trade Unions has revealed.
False Economy: The Growth of Bogus Self-Employment in the Construction Industry details the alarming growth of "bogus self-employment" in the sector and the possible loss to the state and taxpayer of up to €80 million per annum, since 2007.
Bogus self-employment is the deliberate misclassification of workers as 'self-employed" to ensure major contractors save money on social insurance payments.
There are further losses arising from workers without social insurance coverage being forced to rely on social protection payments and from possible fraud in public contract pricing.
According to Fergus Whelan, the author of the report, the losses stem directly from a lack of adequate risk control: "In 2007, unions, employers and Revenue agreed a Code of Practice to tackle bogus self-employment, but the numbers shot up after that date, strongly suggesting the code is not being adhered to.
"In 2012, Revenue changed from a paper based application system for contractors, to an online system. A number of controls were lost with the move online and the numbers have since risen further," he said.
The report reveals that every single bogus self-employed worker means an annual loss to the State of €2,886 in PRSI payments.
Current figures show some 27,600 sole traders operating in construction – with no adequate controls to ensure all are legitimate. If all are bogus, this equates to a loss of almost €80 million per annum and close to €640 million since the Code was agreed in 2007.
Mr Whelan said: "Everybody - bar a few contractors - loses in this: workers lose employment protections and social insurance cover, the industry sees an erosion of standards and the State and citizens are deprived of substantial revenue."
Congress General Secretary Patricia King said the report highlighted serious systemic and policy shortcomings: "Ultimately, responsibility rests with policymakers who, must ensure that labour standards are upheld, good jobs supported and public contracts are not a vehicle for fraud."
