I can't support my family on the dole -- so that's why I work in the black economy
Joe O'Shea talks to two people who flew high in the good times -- but now rely on tax-free nixers
Published 04/12/2010 | 05:00
Hard times make for hard choices. But for the ever-expanding army of those working in the black economy, the often meagre returns still outweigh the considerable risks.
The 'nixer' culture of past tough times is back. One billion black economy euro will be spent in the building sector alone this year, according to the Construction Industry Federation (CIF).
In many ways, it is a return to the bad old days of the 1980s when social welfare fraud was rampant in a crushing recession.
However, those working on the ground in our shadow economy talk of a new edge, where your next-door neighbour or a former workmate is now as much of a threat as the official with the clipboard.
The number of anonymous tip-offs to dedicated Department of Social Protection report lines, email, phone and post has soared in the past 24 months.
Between January and October this year, the department received some 9,918 individual reports of suspected welfare fraud from concerned citizens.
That was up from 6,400 in the whole of 2009 and just 1,000 in 2008.
Many tradesmen doing nixers are stashing their tools with friends or leaving them at work sites so the neighbours do not see them leaving home with their gear in the morning.
Family members are told to keep quiet about any work that dad might be doing and tell-tale work clothes are stashed along with the tools.
Cars and vans are parked several streets over from sites to avoid the multi-agency vehicle checkpoints being operated by the Department of Social Protection in co-ordination with other agencies, including the gardai, Traffic Corps and Revenue Commissioners.
There is a culture of secrecy and suspicion, where nixers are picked up via networks of tradesmen who once worked together on major building projects and employers work on a first-name-only basis.
"They don't want to know anything about you and they want to keep everything quiet," says Tony, an electrician in his mid-30s working in the Munster region.
"You don't know who is going to make a tip-off so you cover your tracks as much as possible. You hear about a nixer, you turn up, do your couple of days' work and you get paid.
"You keep your head down and your mouth shut.
"If it's a job where they need a plasterer and you have a buddy you know who could do with the work, you'll let him know. But you have to depend on your friends. And you never know who is going to shop you."
Tony had been making a "very good living" during the boom times in the construction industry but now finds himself scrabbling to pay the bills.
"There's no choice; you take whatever comes along, stacking pallets, a small job here and there, a bit of security work, whatever brings a few bob in," he says.
"There's a lot of stress. You are always looking over your shoulder. Nobody wants to work or live like that -- but what are you going to do? I've got a family to look after."
Michael is a carpenter working in Dublin and he has been signing on since 'Black Friday' at the end of July in 2008 -- when thousands of tradesmen heading off for the traditional builder's holiday were told by employers not to bother coming back.
He has been working nixers on an irregular basis ever since.
"The last guy I did a couple of weeks work with, I told him I wanted to be on the books, but he said no because then he would have to pay tax," he says.
"It's right through it. The clients don't want to pay either, it's all off the books, cash-in-hand stuff."
Michael recently did an estimate for a small renovation job in a city centre office in Dublin and when he presented the tax-compliant figure, he got a familiar response.
"The guy basically said that he had gotten a Polish guy to tile his whole hall at home for €150, so why should he pay me more?" he says.
"If you want to do it legally, you are going to be charging them at least 35pc more and they don't want to pay it.
"So what do I do? Walk away?"
Both Tony and Michael have experience in working for solidly respectable clients who would not normally dream of breaking the law.
They have both worked for businesses that are themselves struggling to pay the bills and willing to cut corners on tax compliance.
The CIF estimated earlier this year that the growing black economy in the building trade could end up costing the Exchequer €250m a year in lost taxes and social insurance contributions. The CIF estimates the value of the contracts involved in the black economy in 2010 at €1bn.
In its pre-budget submission, the CIF is lobbying the Government to tighten regulations to ensure contractors who are not paying tax and social insurance are squeezed out.
The CIF has pointed out that the system still has some glaring loopholes that can only encourage the cowboys.
The CIF's proposals include a mandatory reporting to the Revenue Commissioners of any contract worth €3,000 or more and requiring property owners who reclaim VAT on building work to produce VAT invoices from suppliers and contractors.
Michael knows he is breaking the law by signing on and still picking up work (although he says he often goes weeks without any jobs).
"It's against the law. The stress of that, knowing that you could get caught, trying to pay the bills. If you have two kids, rent to pay, a car to insure, the bills are up around three grand a month and you are never going to cover that on two hundred a week on the dole," he says.
"Christmas is going to be small this year. The kids are getting clothes because they need them.
"But I turn on the news and see these bankers that have cost the country millions, billions even, and they are not going to jail, are they?
"Has one of those guys even ended up in court?"
Michael believes he has no choice but to work in the black economy.
"At the end of the day I will do whatever it takes. The people who were supposed to look after the welfare of this country failed. Worse, they sold us out," he says.
"They won't make me feel guilty about taking whatever work I can get."
Ending up in court is a real hazard for those working in the black economy. Some 217 individuals were prosecuted by the Department of Social Protection for welfare fraud to the end of October this year.
The majority received fines but seven went to prison.
The Government has already drawn up a series of cross-departmental measures to increase detection rates and close up loopholes in 2011.
Increased data-sharing and data-matching between the various agencies will make it harder for those working in the black economy to fly below the radar.
And a new Public Services Smart Card, together with electronic signing-on, will streamline data collection and cut down on opportunities for fraud.
Our civil servants and the various regulators may have missed out on a lot of the big stuff in recent years.
But it appears we can soon count on having a world-class detection and prosecution service as far as social welfare fraud is concerned.