The Construction Industry Federation (CIF ) is warning of up to 50,000 job losses in the sector if further cuts are made to capital spending.
The CIF is calling on the Government to prioritise job retention and creation in the four-year budgetary plan on which the Cabinet is currently working.
The federation says continued investment in infrastructure projects is crucial because a reduction in spending will only further hit economic activity.
"Cutting capital investment again will only serve to further depress economic activity and as has been illustrated over the past tow years, put more pressure on the Exchequer as a result of further unemployment," said CIF Director General Tom Parlon.
"Cutting productive investment is a false economy”.
The construction sector also supports the broadening of the tax net along with the abolition of stamp duty in December's Budget.
The CIF has also called on the Government to use the Budget to close off the growing black economy in construction, which it estimates is costing the Exchequer €250m per year.
“The CIF is fully aware of the need to restore order to the public finances but how you go about doing this will determine whether or not the economy, and employment, returns to their medium-term potential," Mr Parlon said.
"Clearly, there are structural difficulties in the tax system that need to be addressed, particularly given the previous over-reliance on transaction taxes, and the CIF submission supports the broadening of the tax net.
"However, in order to minimise the damage to the economy, the balance of adjustment should be on current spending. Further cutting capital investment and raising the tax burden on families and businesses to try to balance the books is not a sustainable approach."