The warning follows claims that the unions involved in talks with the Olympic Delivery Authority (ODA) are split on the issue of 100% direct labour and are preparing to back down.
But a spokesman for construction union Ucatt insisted unions remained united and they committed to the use of direct employment.
Negotiations between the ODA and unions about employment are continuing.
Building work on the Games’ main site is due to begin next year, but unions have warned that failure to use directly employed builders would result in an excessive use of cheap foreign labour, and lead to increased health and safety risks on site.
One expert told Personnel Today’s sister title Contract Journal: “You are talking about an extra 20% at least on the wages bill when you take into account the additional cost of employers’ National Insurance contributions and benefits like holiday and sick pay.”