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Undeclared Work

Undeclared Work. Governments and Social partners’ involvement UNICE – ETUC, Brussels 19 09 05 . 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

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Undeclared Work

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  1. Undeclared Work Governments and Social partners’ involvement UNICE – ETUC, Brussels 19 09 05

  2. 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

  3. 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

  4. DefinitionS • What are we looking at? • International level • National level

  5. International Definitions • ILO Illegal employment • OECD Hidden employment • EU Undeclared work

  6. ILO Illegal employment “Employment which does not comply with the requirements of national laws, regulations and practice” Employment Policy (Supplementary Provisions) Recommendation, 1984 (No. 169)

  7. OECD Hidden employment Employment “that which although not illegal in itself, has not been declared to one or more administrative authorities” OECD Employment Outlook, 2004

  8. EU Undeclared work “Any paid activities that are lawful as regards their nature but not declared to public authorities” 1998 EC Communication

  9. National Definitions…. • No common definition • No national legislation dealing directly with UW • 1 Exception : Germany • Negative definitions • Tax evasion essentially

  10. 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]

  11. National Definitions… • Austria • Non declared working time (tax fraud) • Unlawful foreign employment • Paid work carried out beyond a treshold of simple ‘neighbourly’ help

  12. 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

  13. National Definitions… • Labour/Employment relations Employment contract, Minimum wage • Category of workers Migrants • Business Regulations Registration

  14. Variety 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’……

  15. Sectors (1 • Agriculture • Construction • HORECA • Other services

  16. Sectors (2 Common features • Labour intensive • Costs Competition re low paid jobs seasonal nature unskilled labour • SMEs

  17. Sectors (3 Traditional specificities • Textile: Fr, Sp, Rom • Entertainmnt: Fr • Fish processing: Ntlds • Shipbuilding: Fin

  18. Categories of Workers (1 • Unemployed • Self employed • Seasonal workers • Students …………

  19. Categories of Workers (2 Migrant Workers • Sectors: Agriculture + Construction • Origine: • from CEEC to Western Europe • From CEI to CEEC

  20. Categories of Workers (3 Children • UK: ½ Million schoolchildren (TUC 2001 Survey, England and Wales) • It: Estimation depends on sources (144,000 – ISTAT; 400,000- IRES)

  21. Categories of Workers (4 Gender • Men • Construction and Transport • Women • Services , including medical services • Cleaning • Domestic service • Manufacturing: textile, leather production....

  22. Estimation • Not a quantitative study • Uncertainty • Sources • Methods • Discrepancy • Between countries • Within countries

  23. Estimation Undeclared Work rate in GDP % • Bulg, Gr, Hung, Slov25-40% GDP • Belg, Fr, Gy, It, Slovk, Rom……. EU average : 11- 16 % GDP • Austria, Ireland • Sw, Fin, UK5 % GDP

  24. Reasons for Discrepancies (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

  25. Reasons for Discrepancies (2 Societal factors • UW = Structural features • Countries: CEEC, Gr • Regions: Southern Italy • Sectors: Construction, Agriculture • Tolerance re UW • Trust and reliability on the State

  26. Measures • Variety of policies • Transforming UW into formal work • Controlling UW • Common trends despite various National contexts • Combining measures • Multiplicity of actors

  27. EU Guidelines Combination of measures • Simplification of business environment • Removing desincentives to declare • Providing appropriate incentives in tax and benefits systems

  28. Removing incentives to go Undeclared • Reducing administrative burden Dk, Gy, Slov • Tax reduction DK, It, Slov, Sp, Sw • New business schemes Gy

  29. Enhancing access to formal economy (1 • Tax credits for Employed UK • Subsidised « service vouchers » Fr, Belg • Support to Small business It

  30. Enhancing access to formal economy (2 • Impact relatively low • Objectives not reached • Shifts in the policies

  31. Public 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

  32. Controling, Monitoring UW (1 Mainly Labour Inspectorate • Social security AuthoritiesCyp • Federal Custom AuthoritiesGy* • Economic Crime Bureau Sw • Tax AuthoritiesSp • Immigration Authorities UK

  33. Controling, Monitoring UW (2 Fostering cooperation among controlling Authorities • France:National Committee combating UW Labour Inspectorate, Police, Tax, SS, Custom authorities, Social partners • Netherlands + Poland: Joint Controlling Body

  34. Controling, Monitoring UW (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

  35. Controling, Monitoring UW (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

  36. Controling, Monitoring UW (5 Sanctions-Responsability • Gy + Nw: Responsability of the Main Contractor • Dk: Insurance Company to insure work carry out re insurance is declared

  37. Related 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

  38. Social Partners’ Involvement (1 Integrated approach • Belg, Ntlds, Nw, Gy • Employers Organisations • UW= harms economy and distorts competitiveness • TU • UW= Threatens Working Conditions and Industrial Relations

  39. Social Partners’ Involvement (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

  40. Social Partners’ Involvement (3 • Joint Initiatives • Information Campaigns : Belg, Fin, Latv, Nw, Sw • Training Belg • Monitoring the actions: Dk • Protests Nw

  41. Social Partners’ Involvement (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

  42. Social Partners’ Involvement (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

  43. Social Partners’ Involvement (5

  44. Governments Involvement • State Budgetary matters • Fear of electoral blackmail from both Employers and Workers • Corruption

  45. Innovative Initiatives Unilateral + non binding • Organising people likely to work Undeclared Belg, 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

  46. Undeclared 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

  47. Thank You Isabella Biletta Research Manager – Industrial Relations

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