Undeclared work continues to present a significant labour market challenge within the EU. The September 2019 Eurobarometer indicates that 1 in 10 Europeans has paid for undeclared goods or services. Those services most affected are home repairs and renovation (30%), hairdressing and beauty treatments (27%) and repair services (19%). Undeclared work is defined as ‘paid activities that are lawful in nature but are not declared to the public authorities.’ It has an adverse impact on workers and citizens and creates a host of macro-economic problems that undermine both business and the economy.
European citizens working in the undeclared economy are effectively outside of the system. They have no job security, no rights and often no career progression. At the same time, all work counts, and workers need to be encouraged to check their rights. Declared work is their right to social security, and national public authorities can help workers to understand their rights and protections.
For governments, undeclared work obstructs revenues from national insurance and taxes. It undermines the sustainability of social protection systems and weakens the power of collective bargaining. There is an important potential for governments to learn from other countries through joint actions and staff exchanges.
Undeclared work, which operates in the black, puts legitimate businesses at a competitive disadvantage. While for customers in the undeclared economy, there is no insurance if a job is badly done and no guarantee that health and safety procedures have been followed. Declaring income and protection for workers makes companies a trusted employer and enhances their reputation.
The European Commission intends to make undeclared work a thing of the past. This month, the European Platform Tackling Undeclared Work is running the #EU4FairWork campaign. Through a range of activities across the EU, the Platform seeks to spread effective solutions for national policymakers in tackling undeclared work while also raising awareness of the problem and the benefits that citizens, governments and society can reap from working in a formal, declared situation.
The Platform is setup by the European Commission and brings together EU Member States, relevant social partners, enforcement authorities and other actors to exchange information and best practice, increase awareness and drive change by promoting better working conditions and formal employment. The World Employment Confederation-Europe is one of the stakeholders involved and fully supports the Platform’s mission and the ongoing #EU4FairWork campaign.
As the private employment services sector, we believe that the most effective way to stamp out undeclared work is to turn it into formal work. Creating an environment that is conducive to both workers and employers serves to reduce both supply and demand for undeclared work and our sector is highly effective in driving down levels of undeclared work. Agency work can transform undeclared work into jobs that support businesses to access flexible labour while also taking workers out of the black economy and into formal employment – with all the attendant rights, benefits and access to training that this brings.
Statistics show a strong correlation between labour market efficiency and the size of the undeclared economy, and those countries with efficient, appropriately regulated labour markets enjoy the lowest levels of undeclared work. A key element is the presence of balanced regulation which allows private employment agencies to play their role in supporting companies manage fluctuations in demand and smoothly transitioning workers within sectors and jobs to ensure that they are constantly in work.
There is hard evidence to show that those countries with less restrictive agency work regulation also enjoy lower levels of undeclared work. Conversely, those markets which impose more restrictive regulation on agency work have a larger black economy. This is also evidenced in certain sectors of the economy: Europe’s construction sector for example, accounts for 19% of all undeclared work in the EU and is also a sector where the agency work sector faces ongoing regulatory restrictions on supplying workers in some markets. Other sectors where undeclared work is notably higher than is average in the economy are the cleaning and agriculture industries.
World Employment Confederation-Europe members offer governments a supportive and effective partner in fighting malpractice. Our members operate in a responsible manner and have taken action to reduce undeclared work and stamp out non-compliance with national law in several European countries. We have worked through the ombudsman system in Belgium and Portugal to drive down undeclared work, while in the Netherlands the collective labour agreement enforcement authority, set up by the social partners, offers a powerful force in upholding regulation established via collective labour agreements.
Tackling undeclared work requires vigilance alongside balanced policies and regulation. Over-burdensome regulation can drive businesses into the undeclared economy in the same way as inefficient regulation can. Appropriate levels of regulation, which encourage open and inclusive, labour markets, will result in a natural reduction in undeclared work – boosting not only labour market participation but also financial contributions to governments which will ultimately find their way back into society to support growth and jobs throughout Europe.