Undeclared Work

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Undeclared WorkUndeclared Work

Governments and Social partners’ Governments and Social partners’ involvementinvolvement

UNICE – ETUC, Brussels 19 09 05 UNICE – ETUC, Brussels 19 09 05

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WHY ?WHY ? European interest since early 90’s

White Paper on Growth, Competitiveness and Employment - 1993

Communication on UW, EC - 1998 Resolution on UW, Council - 2003

Social Partners specifically concerned European level: Joint programme National level

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HOW?HOW?

Through the EIRO network National correspondants in European countries (28) National short report via an harmonised questionnaire

The Overview Objective: picture of UW in Europe Issues adressed: Regulatory framework, Role and

actions of public authorities and Social partners

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DDefinitionefinitionSS

What are we looking at?

International level

National level

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International DefinitionsInternational Definitions

ILOIllegal employment

OECDHidden employment

EUUndeclared work

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ILOILO

Illegal employment

“Employment which does not comply with the requirements of national laws, regulations and practice”

Employment Policy (Supplementary Provisions) Recommendation, 1984 (No. 169)

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OECDOECD

Hidden employment

Employment “that which although not illegal in itself, has not been declared to one or more administrative authorities”

OECD Employment Outlook, 2004

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EUEU

Undeclared work

“Any paid activities that are lawful as regards their nature but not declared to public authorities”

1998 EC Communication

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National Definitions….National Definitions….

No common definition

No national legislation dealing directly with UW 1 Exception : Germany

Negative definitions Tax evasion essentially

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National Definitions….National Definitions….

Mainly « Non declared work » to Tax and / or SS Authorities

Specifically Any work without an Employment contract [Pld, Latv]

Unlawful foreign Employment [A, Gy, Ntl] Not registered Business [Slov] Not declared Business income [Sw]

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National Definitions…National Definitions…

Austria

Non declared working time (tax fraud) Unlawful foreign employment Paid work carried out beyond a treshold of simple

‘neighbourly’ help

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National Definitions…National Definitions…

UK Activity not declared to the tax authorities Activity that evades the minimum wage rules Activity undeclared while in receipt of state

unemployment benefits Childwork Work by those not entitled to be in the country

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National Definitions…National Definitions…

Labour/Employment relations Employment contract, Minimum wage

Category of workersMigrants

Business RegulationsRegistration

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Variety of forms + PracticesVariety of forms + Practices undeclared hours of work, trafficking in foreign labour, unlawful loan of staff, bogus self-employment, multiple employment exceeding the statutory

thresholds set for specific occupations and jobs, benefit fraud (pension, sickness, unemployment), fraudulent use of foreign companies, ‘envelope wages’ ……

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Sectors Sectors (1(1

Agriculture

Construction

HORECA

Other services

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Sectors Sectors (2(2

Common features Labour intensive Costs Competition re

low paid jobs

seasonal nature

unskilled labour

SMEs

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Sectors Sectors (3(3

Traditional specificities

Textile: Fr, Sp, Rom Entertainmnt: Fr Fish processing: Ntlds Shipbuilding: Fin

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Categories of Workers Categories of Workers (1(1

Unemployed Self employed Seasonal workers Students

…………

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Categories of Workers Categories of Workers (2(2

Migrant Workers

Sectors: Agriculture + Construction

Origine: from CEEC to Western Europe From CEI to CEEC

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Categories of Workers Categories of Workers (3(3

Children

UK: ½ Million schoolchildren(TUC 2001 Survey, England and Wales)

It: Estimation depends on sources(144,000 – ISTAT; 400,000- IRES)

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Categories of Workers Categories of Workers (4(4

Gender Men

Construction and Transport Women

Services , including medical services Cleaning Domestic service Manufacturing: textile, leather production....

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EstimationEstimation

Not a quantitative study Uncertainty

Sources Methods

Discrepancy Between countries Within countries

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EstimationEstimation

Undeclared Work rate in GDP %

Bulg, Gr, Hung, Slov 25-40% GDP Belg, Fr, Gy, It, Slovk, Rom…….

EU average : 11- 16 % GDP Austria, Ireland Sw, Fin, UK 5 % GDP

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Reasons for Discrepancies Reasons for Discrepancies (1(1

Economic background CEEC / Western Europe

Highest rate in CEEC Opposite trends: raising in Western Countries/ falling in

CEEC Potential costs saving New patterns of work

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Reasons for Discrepancies Reasons for Discrepancies (2(2

Societal factors UW = Structural features

Countries: CEEC, Gr Regions: Southern Italy Sectors: Construction, Agriculture

Tolerance re UW Trust and reliability on the State

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MeasuresMeasures

Variety of policies Transforming UW into formal work Controlling UW

Common trends despite various National contexts Combining measures Multiplicity of actors

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EU GuidelinesEU Guidelines

Combination of measures

Simplification of business environment Removing desincentives to declare Providing appropriate incentives in tax and

benefits systems

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Removing incentives to go UndeclaredRemoving incentives to go Undeclared

Reducing administrative burden Dk, Gy, Slov

Tax reduction DK, It, Slov, Sp, Sw

New business schemes Gy

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Enhancing access to formal economy Enhancing access to formal economy (1(1

Tax credits for Employed UK

Subsidised « service vouchers » Fr, Belg

Support to Small business It

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Enhancing access to formal economy Enhancing access to formal economy (2(2

Impact relatively low

Objectives not reached

Shifts in the policies

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Public awareness raising campaignPublic awareness raising campaign Criminalising UW DK, Hun

Towards new immigrants Norway

Comprehensive campaign Rom Consulting for SMEs E-Learning projects for TU and Employers

Organisations Initiatives with the Media

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Controling, Monitoring UW Controling, Monitoring UW (1(1

Mainly Labour Inspectorate

Social security Authorities Cyp Federal Custom Authorities Gy* Economic Crime Bureau Sw Tax Authorities Sp Immigration Authorities UK

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Controling, Monitoring UW Controling, Monitoring UW (2(2

Fostering cooperation among controlling Authorities

France: National Committee combating UWLabour Inspectorate, Police, Tax, SS, Custom authorities, Social partners

Netherlands + Poland: Joint Controlling Body

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Controling, Monitoring UW Controling, Monitoring UW (3(3

Sanctions-Nature

Mainly Financial sanctions A, Dk, Fr, Gy, Gr, Hu, It, Latv, Nw, Pl, Slovk, Sw, Uk

And / Or Penal Dk, Gr, Nw, Sw, Uk

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Controling, Monitoring UW Controling, Monitoring UW (4(4

Sanctions-Target Shared by Employers and Workers

Poland: Workers are responsable for UW

Denmark: The Social Partners raised the possiblity to excluding members carrying out UW

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Controling, Monitoring UW Controling, Monitoring UW (5(5

Sanctions-Responsability

Gy + Nw: Responsability of the Main Contractor

Dk: Insurance Company to insure work carry out re insurance is declared

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Related MeasuresRelated Measures Immigration Policies

Legalising Immigrants (Gr) Tightening rules for asylum seekers Bilateral Agreements with NMS (Gy, Sp) Liaison offices in the NMS (Fr, as requested by EU 1996

Directive) Employment relation (CEEC)

Written and Registered contract Computerisation of data

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Social Partners’ Involvement Social Partners’ Involvement (1(1

Integrated approach Belg, Ntlds, Nw, Gy Employers Organisations

UW= harms economy and distorts competitiveness TU

UW= Threatens Working Conditions and Industrial Relations

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Social Partners’ Involvement Social Partners’ Involvement (2(2

Collective Agreements Mainly in the Constructiona and Agriculture Sectors Bel,Fin, Gy, It, Ntlds, Nw

Social Dialogue Mainly Tripartite Bel,Fin, Hun, Gy, Ntlds, Nw, Pld

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Social Partners’ Involvement Social Partners’ Involvement (3(3

Joint Initiatives Information Campaigns : Belg, Fin, Latv, Nw, Sw Training

Belg Monitoring the actions: Dk Protests Nw

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Social Partners’ Involvement Social Partners’ Involvement (4(4

No Social Dialogue specify France : Reliability on the State Greece: Lack of public debate on UW

Initiatives on corollary topics Bul, Cyp, Ee, Slovk, Sp

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Social Partners’ Involvement Social Partners’ Involvement (5(5

Western Countries All sort of Tripartite Initiatives Difficult to find permanent reliable arrangements

CEEC Social Partners shared view on UW : Temporary pb Liberalisation of the economy

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Social Partners’ Involvement Social Partners’ Involvement (5(5

Social Partner Against In practice

Employers Condamn Competition distortion

WelcomeFlexibility and Labour costs savings

Trade Unions Blamed for Undermining Working Conditions

Potential lost of members

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Governments InvolvementGovernments Involvement

State Budgetary matters Fear of electoral blackmail from both Employers

and Workers

Corruption

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Innovative InitiativesInnovative Initiatives

Unilateral + non binding

Organising people likely to work UndeclaredBelg, Dk, Fin, Ntlds, UK

Finland : right to do legal procedure o/b of foreign workers

Norway, Sweden: Employers introduce Certification systems for bona fide companies

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Undeclared workUndeclared work

Good will / Low degree of action

Lack of determined coalition

Problems links with combating UW Flexibilisation not an efficient means Quality of new jobs created

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Thank YouThank You

Isabella BilettaIsabella Biletta

Research Manager – Industrial RelationsResearch Manager – Industrial Relations