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The Fight Against Undeclared Work : A New Challenge for an Enlarged Europe ?. Cicero Foundation Seminar, 17-18 April 2008 Guido VANDERSEYPEN DG Employment, Social Affairs and Equal Opportunities, EUROPEAN COMMISSION. Definition of Undeclared work (UDW) Why bother about UDW ?

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the fight against undeclared work a new challenge for an enlarged europe

The Fight Against Undeclared Work :A New Challenge for an Enlarged Europe ?

Cicero Foundation Seminar, 17-18 April 2008

Guido VANDERSEYPEN

DG Employment, Social Affairs and Equal Opportunities, EUROPEAN COMMISSION

structure of presentation
Definition of Undeclared work (UDW)

Why bother about UDW ?

Estimates of UDW as % of GDP

Socio economic facts from an EU survey (1)

Socio economic facts from an EU survey (2)

EU policy mix for the fight against UDW

Some success stories

Policy issues

Follow up to COM(2007)628

References

Structure of presentation
1 definition of udw
« Any paid activities that are lawful as regards their nature but not declared to public authorities, taking into account differences in the regulatory system of Member States »

= an activity based definition as opposed to enterprise- or job-based definition

= emphasis on social security and tax fraud

excludes criminal activities

1. Definition of UDW
slide4
Undeclared work

undermines the financing of social security

may go together with tax and social security fraud

represents a negation of the principles of flexicurity

Constitutes a pull factor for illegal immigration

may result from dysfunction of European labour law

2. Why bother about UDW ?

4 socio economic facts according to special eurobarometer 284
11% of respondents acquired undeclared goods or services

UDW performed by 5% of respondents (mainly as side activity)

Wages paid cash-in-hand to 5% of employees in EU (up to 10% in new MS) - estimated at 2% of total wage bill

4. Socio economic facts according to Special Eurobarometer 284
5 socio economic facts according to eurobarometer 284 ctd
Main sectors : household and personal services, construction, horeca and repair

The performers : high incidence among students, jobless, self-employed*

Detection risk high for 1 respondent out of 3

…and 18% of public thinks no risk of a fine

* NB outside scope of survey :illegal immigrants and transactions between companies

5. Socio economic facts according to Eurobarometer 284 (ctd.)
6 eu policy mix
A Council resolution of 29.10.2003 calls for:

reducing the financial incentives for UDW in tax and benefit systems (incl. the permissiveness of the social protection systems);

administrative reform and simplification, with a view to reducing the cost of compliance with regulations;

strengthening the surveillance and sanction mechanisms, with the involvement of labour inspectorates, tax offices and social partners;

trans-national cooperation between Member States, and

awareness raising activities.

6. EU POLICY MIX
7 some success stories
Service vouchers for household services (e.g. BE, SP)

Increased minimum wage as a threshold for declaration (PT, PL, SK)

Flat taxes avoiding distortions between dependent work and (false) self employment (EE, SK)

VAT reduction for labour intensive services (FR)

Simplified registration for seasonal work etc. (FR)

Laws & Action plans on UDW (DE, FR, IT )

Social Partner Agreements (DE, NL)

Regularisations (IT, SP, PT)

Public campaigns (LV, LT)

7. some SUCCESS Stories
8 policy issues
Taxation on low productivity jobs

Extra social security contributions on overtime

Taxation regime for (false) self employment

Level of minimum wages

Transitional arrangements limiting access to EU-15

Flexicurity

Detection of tax and social security fraud

Role of social partners in law enforcement

Administrative cooperation incl. transnational

Regularisations and amnesties

8. Policy Issues
9 follow up of com 07 628
Improved quantification of UDW

Focus in Lisbon Strategy reporting (UDW as a dimension in flexicurity pathways)

Exchange of good practices (Employment Cttee etc.)

Review of transitional arrangements

Social Partners’ Work programme 2006-2008

Regulatory simplification (posted workers, social security)

Setting up « platform » for info. exchange

9. Follow up of COM(07)628
10 references
Communication COM(2007)628

Council resolution of 29.10.2003

(OJ C 260/1 of 29.10.2003)

Study « UDW in an enlarged Union »

http://ec.europa.eu/employment_social/incentive_measures/activities_en.htm#2004

Eurobarometer Special Survey 284

http://ec.europa.eu/public_opinion/archives/eb_special_en.htm

European Employment Observatory

http://www.eu-employment-observatory.net/index.aspx

10. REFERENCES