Is wage theft in the construction industry reaching crisis point?

Wage theft in the construction industry is rapidly emerging as a global issue, affecting millions of workers across borders.

Workers tend to a railway construction project. (Image: Adobe Stock)

From developed nations to emerging economies, construction workers are increasingly vulnerable to exploitation, with wage theft taking various forms, including non-payment for overtime, illegal deductions, underreporting of hours and misclassification of workers. As construction is one of the world’s most critical industries, the global scale of wage theft poses significant challenges for labour rights and economic justice.

While the global cost of wage theft is difficult to quantify precisely, due to under-reporting and the varying degrees of data collection across countries, recent estimates and studies provide insight into the magnitude of the problem. In the USA, wage theft is estimated to cost workers more than US$15 billion annually (Economic Policy Institute).

In the UK, wage theft through unpaid work and other forms of pay violations, costs workers €1.20 billion ($1.27 billion) annually (Trades Union Congress). In Australia a study by the McKell Institute found wage theft costs workers at least $1.35 billion a year.

Wage theft is clearly not confined to any one region or sector of the workforce. It often targets low-income and migrant workers, who make up a significant portion of the construction workforce. In developing countries the situation can be even more dire. In many cases these workers have few legal protections and are reluctant to report wage theft due to fears of retaliation or deportation.

Address and advocate

One of the primary reasons wage theft is so rampant in the construction industry is the lack of strong labour protection and enforcement mechanisms. Even in countries with robust labour laws the transient nature of construction work makes enforcement difficult. Construction workers often move from one jobsite to another. Without union protections or collective bargaining agreements they have little recourse when their wages are stolen.

In developing countries, labour laws are often weak, and enforcement is minimal. Employers can exploit workers with impunity, knowing regulatory bodies lack the resources or political will to hold them accountable. Consequently, the cost advantage for companies choosing to cheat in this way, can truly create separation from the competition.

That said, legal experts acknowledge the best first line of defence is often to know your trade partners well, ensure they have the means to pay employees and build trust in that working relationship. In addition, encouraging labour organisations to advocate for and enforce better protections, while also consistently raising awareness about wage theft, will go a long way.

Another key component is empowering workers to advocate for themselves through education programmes, informing workers of their rights, and by supporting the formation of unions.

These days technology offers an array of innovative solutions to combat wage theft. AI-powered systems and blockchain technology can be used to track hours worked and ensure payments are made transparently and on time. By creating an immutable digital record of transactions, these tools can help prevent wage theft and hold employers accountable.

Global construction can and should do better. Addressing the global wage theft issue is not only a legal and ethical responsibility, it is also a way to build a stronger, more sustainable industry.