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