National reform programme 2008-2010 Malta - European Commission

Intensify efforts to tackle undeclared work
A priority for the Maltese Government is to curb the amount of undeclared work. A Candidate
Country Exhaustiveness Project was undertaken in 2002 by the National Statistics Office.
This study established that the level of undeclared work in Malta then stood at 5.78% of GDP
in 2002 (EuroStat 2002) which is within the EU average.
A number of measures have been undertaken with a view to facilitate employment
registrations for both employees and employers. Further to facilitating the registration of
employees the other alternative is to apply enforcement measures in order to contain illegal
employment.
ETC has a Compliance Unit made up of a team of five inspectors who conduct on-site
inspections and desk investigations on a daily basis to track undeclared employment.
Legislation in Malta compels every employer employing a person to notify the ETC of such
employment by sending an engagement form. This is a legal document and enables ETC to
keep track of declared employment. Similarly, when an employer terminates employment of a
person, a termination form is to be sent to ETC. A computerised database of persons who
are in employment is thus maintained up to date. Persons not featuring in such database are
not considered to be in legal employment. These notifications can be done by employers
electronically in order to facilitate matters.
On-site inspections are carried out to identify any infringements and employers found acting
illegally are brought to Court. In 2007, a total of 878 persons were found to be working
illegally and criminal proceedings have been initiated against the employers.
Undeclared work is also fought through compulsory Active Labour Market Policies (ALMP)
measures for the registered unemployed. Failure to participate in these ALMP’s will result in
removal from the unemployment register. As a result of this, almost 2,400 persons were
removed from the register in 2007. Moreover, an increased number of persons were
removed from the unemployment register as they were found working and registering – they
must work consecutively for 6 months to obtain the right to register for unemployment benefits
again.
Undeclared work is also being addressed through:
• closer collaboration with the Police in conducting inspections especially when illegal
employment is expected to involve foreigners;
• turning undeclared work into regular employment following on-site inspections by
allowing employers to regularise the employment position of the persons found working
illegally and paying a fine;
• sharing of information with other government entities – Department of Social Security,
Police, VAT Department, Tax Compliance Unit;
• employers found breaching employment legislation are not having their application for
work permits for foreigners approved; and
• publicity measures to promote rights and responsibilities.
Government intends to intensify the response against undeclared work by intensifying its
current efforts by increasing the resource capacity as well increasing collaboration between
the various entities in order to curtail the defaulting workers. Moreover, it is also being
proposed that legislation is amended or introduced whereby higher fines are imposed on
these defaulters. In addition publicity and information campaigns with the aim of promoting
the benefits of legal employment are also being planned.
Malta National Reform Programme 2008-2010 - 37 -