Around 130,000 construction workers are not covered for pensions or sick pay benefits, the Pensions Ombudsman warned today.
Many employers are deliberately avoiding paying pay pension contributions to the mandatory industry scheme, either by not disclosing all their workers to the authorities or falsely declaring them as self-employed contractors.
The Pensions Ombudsman Paul Kenny said that there were major difficulties in enforcing compliance with the Construction Federation Operatives Pension Scheme (CFOPS).
"If you had an effective method of policing it, you would have a lot more people better off, " he said.
Mr Kenny said that while 75,000 construction workers were covered by the scheme, the number of workers at risk could be as high as 130,000 because previous estimates used older figures from the Central Statistics Office and did not fully take account of the building boom.
The Labour Court ruled in December that another 60,000 labour-only contractors should be included in the scheme but the tax laws will have to be changed to allow this.
Mr Kenny said he had received complaints from compliant construction companies who were being undercut by their non-compliant rivals. "When an employer welches on his obligations to his workers, he is not paying pension contributions or PRSI contributions, the agency reckons that gives that employer a 22 per cent competitive edge in terms of his labour costs over a compliant employer."
He said he had also received reports of construction workers who were being forced to declare themselves as self-employed contractors, or else face being sacked from their jobs.
The Construction Industry Monitoring Agency (CIMA), which is run by the industry and trade unions, has taken employers to the Labour Court to force them to comply with the scheme.
In one recent case, it forced a non-compliant employer to pay €74,000 in compensation to the wife and three children of a Polish construction worker who did not receive the death benefits due to him. "So it shows the cost of not having the worker in the scheme," said Mr Kenny.