According to the Labour Inspectorate’s findings, fines of up to €8,000 per offence are no longer sufficient to deter employers from engaging in illegal labour practices. The investigation revealed cases where employers recovered the fines within a short period of time, typically within a year or even three months, due to the significant cost savings achieved by employing illegal workers.
The survey covered companies in the construction, cleaning, agriculture and road transport sectors and revealed an average cost saving of 60 per cent for employers. Had these companies adhered to legal employment practices, they would have incurred significantly higher labour costs, averaging around €16,000. However, by underpaying workers, employers saved over €9,500, more than the standard fine.
The Inspectorate’s analysis highlights the erosion of the deterrent effect of fines as they have not kept pace with inflation and increases in wealth. As a result, fines, which have been set at a maximum of €8,000 per offence since 2005, are no longer effective in deterring illegal labour practices.
The investigation stresses the broader societal costs associated with illegal labour, including additional strain on healthcare, education, and housing markets. Employers who engage in illegal employment shift these external costs onto society, further exacerbating the consequences of their actions.
The Labour Inspectorate has submitted its findings to the House of Representatives, urging policymakers to review and revise fine structures to align with current economic realities and adequately deter illegal labour practices. The Inspectorate emphasises the importance of considering not only financial penalties but also the broader societal impacts of illegal employment.