As governments race to address Canada’s housing crisis, the United Brotherhood of Carpenters (UBC) is warning that worker exploitation and tax fraud are threatening the integrity of the construction industry.
The union’s Canadian District says the country’s push to build more homes — while necessary — is also fuelling growth in the underground economy. It has launched its annual Tax Fraud Days of Action campaign, running April 12 to 18, to raise awareness about the issue.
“The residential construction industry is already Canada’s worst offender when it comes to tax fraud,” said Jason Rowe, district vice-president of the UBC Canadian District. “There’s rot so entrenched, it’s become an understood part of the business model for many in the industry — from owners to subcontractors and labour brokers.”
Citing data from Statistics Canada, the union says residential construction made up 32.7 per cent of the country’s $72.4-billion underground economy in 2023. Without stronger enforcement, the sector could represent half of all underground activity within the next decade.
According to the union, some contractors are routinely misclassifying workers as independent operators, allowing them to be paid off the books. This practice deprives workers of benefits such as employment insurance, health care, pensions and workplace protections, while also undercutting responsible employers.
The UBC says these practices not only put workers at risk — especially on unsafe job sites — but also rob Canadian taxpayers of billions in potential revenue.
“That’s money that should be going to schools, hospitals, and vital public services,” Rowe said.
The union is calling for stronger oversight and new policies, including:
- Provincial legislation making general contractors liable for abuses by subcontractors
- Greater transparency in procurement on publicly funded projects
- Mandatory apprentice minimums on government construction projects
Rowe said governments must match their investments in housing and immigration with equal commitments to enforcement and worker protections.
Canada is expected to require roughly 400,000 new construction workers over the next decade, according to BuildForce Canada. At the same time, the Canada Mortgage and Housing Corporation estimates the country needs 3.5 million more homes by 2030 to restore affordability.
Compounding the issue is a federal plan to temporarily reduce immigration levels through 2027, a move designed to stabilize population growth while jurisdictions catch up on housing supply. The UBC says this may further strain the construction workforce and leave workers — especially newcomers — more vulnerable to exploitation.
Immigration, Refugees and Citizenship Canada has recently introduced pilot programs to address some of these issues. One initiative allows out-of-status construction workers in the Greater Toronto Area to apply for permanent residency. Another new measure announced in March permits foreign workers to start apprenticeships without a study permit.
Despite these developments, the union warns the risk of deepening worker exploitation remains high unless stronger protections are put in place.
“Canada needs to ensure that workers are paid fair wages, are properly classified, and that enforcement keeps pace with investment,” Rowe said.
The UBC’s Tax Fraud Days of Action campaign includes an animated video explaining how tax fraud and worker misclassification operate in the industry. More information is available at stoptaxfraud.ca.