Cooperation between SMEs and trade unions in Europe on ... - ETUC

ETUC – UE APME: <strong>Cooperation</strong> betw een <strong>SMEs</strong> <strong>and</strong> Trade Unio ns <strong>in</strong> <strong>Europe</strong> 38
undeclared work 44 put the <strong>in</strong>formal economy at somewhere under 5% of <strong>Europe</strong>an GDP.
It estimated that the level of undeclared work<strong>in</strong>g was particularly high <strong>in</strong> Greece (over
20% of GDP). 45 It was also common <strong>in</strong> Italy (16%) <strong>and</strong> several accession countries
(Pol<strong>and</strong>, 14%; Slovakia, 13%-15%; Slovenia, 17%). It was rarest <strong>in</strong> Austria, the
Netherl<strong>and</strong>s <strong>and</strong> the UK (all 2% or less).
Major driv<strong>in</strong>g forces for undeclared work accord<strong>in</strong>g to the EU Commission are <strong>in</strong>
particular:
the grow<strong>in</strong>g dem<strong>and</strong> for household <strong>and</strong> care services as a result of sociodemographic
changes, possibly <strong>in</strong> comb<strong>in</strong>ation with work<strong>in</strong>g time reduction;
the trend towards smaller <strong>and</strong> less hierarchical work<strong>in</strong>g relationships with more
flexible pay systems or time account<strong>in</strong>g;
self-employment (<strong>in</strong>clud<strong>in</strong>g false self-employment) <strong>and</strong> sub-contract<strong>in</strong>g <strong>and</strong>, more
generally, flexible contracts <strong>and</strong> on-call work, when they are misused for
nondeclaration of part of the revenue;
the grow<strong>in</strong>g ease of sett<strong>in</strong>g up cross-border group<strong>in</strong>gs of enterprises, which require
efficient <strong>in</strong>ternational cooperation <strong>between</strong> monitor<strong>in</strong>g <strong>and</strong> enforcement bodies
<strong>and</strong>/or systems.
A recent stocktak<strong>in</strong>g by experts of the <strong>Europe</strong>an Employment Observatory network
<strong>in</strong>dicates that undeclared work is still on the rise <strong>in</strong> several Member States (see table on
the follow<strong>in</strong>g page).
Undeclared work obstructs growth-oriented economic, budgetary <strong>and</strong> social policies,
runs aga<strong>in</strong>st the pr<strong>in</strong>ciples of flexicurity <strong>and</strong> <strong>in</strong>terferes with immigration policies. From a
microeconomic perspective, undeclared work tends to distort fair competition among
firms, pav<strong>in</strong>g the way for social dump<strong>in</strong>g. Moreover, undeclared work tends to be
associated with poor work<strong>in</strong>g conditions for <strong>in</strong>dividuals <strong>and</strong> subsequent risks to workers'
health, low prospects for career progress <strong>and</strong> <strong>in</strong>sufficient social protection coverage. It
also causes productive <strong>in</strong>efficiencies, as <strong>in</strong>formal bus<strong>in</strong>esses typically avoid access to
formal services <strong>and</strong> <strong>in</strong>puts (e.g. credit) <strong>and</strong> prefer to stay small.
The issue of 'undeclared work' therefore has been receiv<strong>in</strong>g <strong>in</strong>creas<strong>in</strong>g attention as part
of the <strong>Europe</strong>an employment strategy, <strong>and</strong> s<strong>in</strong>ce 2003 the EU employment guidel<strong>in</strong>es
have <strong>in</strong>cluded a specific guidel<strong>in</strong>e entitled 'transform undeclared work <strong>in</strong>to regular
employment'. This provides that Member States should develop <strong>and</strong> implement broad
actions <strong>and</strong> measures to elim<strong>in</strong>ate undeclared work, which comb<strong>in</strong>e simplification of the
bus<strong>in</strong>ess environment, remov<strong>in</strong>g dis<strong>in</strong>centives <strong>and</strong> provid<strong>in</strong>g appropriate <strong>in</strong>centives <strong>in</strong>
the tax <strong>and</strong> benefits system, improved law enforcement <strong>and</strong> the application of
sanctions. They should undertake the necessary efforts at national <strong>and</strong> EU level to
measure the extent of the problem <strong>and</strong> progress achieved at national level.
44 EU Commission: Undeclared work <strong>in</strong> an enlarged Union. An analysis of undeclared work: An <strong>in</strong>-depth study
of specific items, Brussels, Employment <strong>and</strong> Social Affairs DG, 2004.
45 Given the nature of undeclared work – i.e. it is neither observed nor registered - it is naturally extremely
difficult to assess its extent <strong>and</strong> structure. The study draws on <strong>in</strong>formation from statistical offices <strong>in</strong> several
countries <strong>and</strong> results from a study cover<strong>in</strong>g five <strong>Europe</strong>an countries. A <strong>Europe</strong>an wide survey based on
direct methods, i.e. <strong>in</strong>terviews was carried out <strong>in</strong> 2007. See: EU Commission: Undeclared Work <strong>in</strong> the
<strong>Europe</strong>an Union, Special Eurobarometer Report 2007.