Brussels Prepares to Tackle Illicit Labour

• The EU Commission will create a platform to tackle illegal employment activity
• On average 18.4% of GDP of the EU is lost through undeclared work and fraud
• New measures should be ready to put into practice by the autumn

The prolonged economic crisis and difficulties faced by much of the population has not only caused many to lose their jobs and with it a stable income, but it has also driven more and more people to carry out ‘illicit work’ as a means of survival.

Illicit work in this case can be translated in a number of ways:

• Working cash in hand
• Being employed without any type of contract or insurance
• Claiming unemployment benefit and carrying out extra jobs on the side
• Being employed with a contract for less hours than actually worked
• Creating ‘fictitious’ companies in order to avoid paying taxes

Well aware that these activities have flourished over the last five years, the European Commission has begun to take measures to reduce and combat activities carried out within the hidden work market.

Although it is impossible to gather statistics that are 100% correct on this subject, it is estimated that there are 11 million people across the EU that are working illegally – and that’s a lot of money not entering EU coffers.

The EU Commission has therefore decided to do something about the worrying situation, particularly in light of the rising number of ‘fictitious self-employed contracts’ created to avoid paying taxes, social security contributions and other employment-related payments and the fact that in some countries it is much easier to defraud the system than in others.

The Commission has started off by asking Employment Commissioner László Andor to come up with a strategy other than asking governments to pursue any irregularities.

So, Andor’s department has already asked industry experts for their proposals and ideas on how to combat the proliferation of undeclared work, which he hopes to receive by September. With these he plans on presenting a proposal of measures some time in autumn.

One of the main objectives is to put together some type of coordinating tactics involving various bodies across Europe.

The most innovative idea so far is the creation of a platform that comprises representatives from all member states. Their principal task would be to coordinate and organise employment, Social Security, Tax and even Immigration inspectors so that they can share information and work together in the best way to tackle the situation.

An EU spokesperson for trade unions has declared it ‘completely unacceptable’ that people are employed without a contract and contribution to the social security system. Not only is public money depleted but also workers are risking their entitlements and benefits that they will require later on in life upon reaching retirement age.

Statistics

When considering the amount of hidden economic activity, which includes the loss of money resulting from every illicit work-related action, it is estimated that as an EU average 18.4% of communitary GDP is lost (calculations for 2012).

The table below calculates what percentage of a country’s GDP is lost through illegal work activities.

Bulgaria	32%
Rumania	29%
Cyprus	26%
Malta	25%
Greece	24%
Italy	22%
Portugal	19%
Spain	19%
EU 27	18%
Belgium	17%
Sweden	14%
Denmark	13%
Germany	13%
Ireland	13%
France	11%
United Kingdom	10%
Luxemburg	8%
Austria	8%

Source: www.elpais.com