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Undeclared work

Business man offers money under the table
© Shutterstock.com /BITOEYpixx

At EU level, undeclared work is defined as "any paid activities that are lawful as regards their nature, but not declared to public authorities, taking into account differences in the regulatory systems of the Member States".

Undeclared work may come in different forms

  • The most common type is work carried out in a formal undertaking, partially or fully undeclared. Partially undeclared work is sometimes also called "under-declared work", "envelope wages" or "cash-in-hand";
  • Another type is undeclared "own account" or self-employed work, where self-employed persons provide services either to a formal enterprise or to other clients, such as households;
  • Undeclared work occurs in all kind of economic sectors, both within countries and across borders. It is often carried out in sectors like construction, renovation or repair works, gardening, cleaning, provision of childcare or HORECA (Hotel / Restaurant / Catering – food services).

Undeclared work is everybody's problem

A Eurobarometer survey, carried out in 2013, shows that, in the EU:

  • 11% of Europeans admit that they have bought goods or services involving undeclared work in the previous year;
  • 4% concede that they themselves have received undeclared pay in return for work;
  • One in 30 (3%) has been paid partly in cash by his or her employer ("envelope wages").

Fighting undeclared work

The main responsibility for tackling undeclared work lies with national authorities. The fight against undeclared work relies mostly on three types of enforcement bodies:

  • Labour inspectorates addressing abusive behaviour regarding working conditions and/or health and safety norms;
  • Social security inspectorates fighting fraud on social insurance contributions;
  • Tax authorities dealing with tax evasion.

Additionally, in some Member States, social partners are also involved in these tasks, as well as customs authorities, migration bodies, the police and the public prosecutor's office.

Within the last ten years, all Member States introduced various measures to step up their efforts in the fight against undeclared work, given its negative consequences. Most of them are in the area of deterrence measures to influence people's behaviour with stricter sanctions or focusing on more effective inspections. In addition, Member States use preventive measures such as

  • tax incentives
  • amnesties
  • awareness raising

to decrease the incidence of undeclared work and facilitate compliance with existing rules.

European Platform

The European Platform Tackling Undeclared Work enhances cooperation between Member States' relevant authorities and other actors involved to fight undeclared work more effectively and efficiently while fully respecting national competences and procedures.

The main objective of the Platform is to improve the Member States' capacities to tackle undeclared work in its various forms, including bogus self-employment, and drive change at national level in order to promote better working conditions and the emergence of formal employment.

The Platform provides a forum at EU level where the different actors involved can

  • exchange information and good practices,
  • develop knowledge and evidence,
  • learn from each other and together,
  • engage in closer cross-border cooperation and joint activities.

On the first plenary meeting on 10th October 2016, the Platform adopted the work programme for 2017-2018. In line with the provisions of the legal decision, the following three strategic priority axes will be guiding the activities:

  • Cooperation and joint action. The Platform shall assist the Platform members/observers in order to better cooperate across borders, to benefit from being part of an EU-wide network, to develop tools that facilitate the work and support capacity building.
  • Mutual learning. Peer learning and peer reviews will be organised in different formats such as thematic reviews, seminars or mutual assistance.
  • Increasing knowledge. This will include the compilation of existing sources/information material and the overview of operating models/business models of enforcement bodies through surveys and studies.

The range of tools to implement the work programme includes inter alia

  • studies
  • surveys
  • seminars working groups
  • thematic reviews
  • mutual assistance
  • support to internal and external communication (such as newsletters and a collaborative work space)
  • plenary meetings twice a year.

An external service provider will facilitate the practical implementation of the tools. Funding for the activities of the European Platform and the support services by the contractor is provided by the European Union Programme for Employment and Social Innovation ('EaSI') 2014-2020.

During the plenary meeting, the Platform also adopted the study "Member State Factsheets and synthesis report". The study summarises the characteristics of undeclared work and the institutions and policy responses in place to address it, across all 28 Member States.

Composition

The Platform is composed of

  • Members: representatives of the Member States, for example from federal ministries, labour and social inspectorates, tax and customs authorities or social insurance agencies, of EU level cross-industry social partners and of the Commission.
  • Observers: representatives of social partners representing the sectors most affectd by undeclared work and organisations like Eurofound, the European Agency for Safety and Health at Work (EU-OSHA) and the International Labour Organisation (ILO).

Background

The Platform is based on the Decision of the European Parliament and the Council from 9 March 2016.