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Research carried out prior to the UK’s withdrawal from the European Union on 31 January 2020, and published subsequently, may include data relating to the 28 EU Member States. Following this date, research only takes into account the 27 EU Member States (EU28 minus the UK), unless specified otherwise.

Undeclared work is work which is in itself legal but is not declared to the authorities for tax, social security and/or labour law purposes. It has long been a focus of attention for policymakers in Europe. In early June 2013, Eurofound published new comparative research on undeclared works in Europe since the onset of the economic recession some five years ago. It found that a wide range of policy approaches and measures have been introduced in all EU Member States over the past five years, which have resulted in an incremental decline in the size of the undeclared economy from the equivalent of 22.3% of GDP in 2003 to 18.4% by 2012, although with big differences between countries. Eurofound's work has resulted in:

On 4 July 2013, the European Commission launched a consultation process with representatives of trade unions and employers' organisations on possible future EU measures to prevent and deter undeclared work through improved cooperation between Member States enforcement authorities.

For the EU27 plus Norway, Eurofound's research sought to summarise policy approaches and measures used to tackle undeclared work since 2008 and, therefore, to indicate:

  • how the undeclared economy has grown or shrunk since the onset of the recession
  • who is being affected by these changes
  • what policy approaches have been used and what measures have been implemented since the beginning of the recession to tackle undeclared work.

For a second group of countries (Croatia, Iceland, the former Yugoslav Republic of Macedonia, Montenegro and Turkey) the research set out to provide a systematic overview of the extent and nature of undeclared work and how it is being tackled. This included how efforts against undeclared work are organised and the policy approaches and measures being adopted. The situation in these countries was compared with the EU-27 and Norway where feasible.

EU 27 and Norway

Tackling undeclared work in 27 European Union Member States and Norwayfinds that there is an ongoing small decline in the size of the undeclared economy across all Member States and Norway. Although a deterrence approach which seeks to ensure compliance by detecting and punishing non-compliance remains the dominant approach across the majority of Member States, there has been a much wider take-up of an enabling approach which provides encouragement and incentives for people and businesses to comply.

This research indicates that there is no correlation between lower tax rates and smaller undeclared economies. Regimes in which there is higher expenditure on labour market interventions, social protection and redistribution, and greater levels of equality have smaller undeclared economies.

Croatia and four candidate countries

The research found great variation in the level of undeclared work in these countries. In Iceland the size of the undeclared economy is below the EU27 average, for example, while in the other countries it is above that average. These countries also varied in how coordinated or fragmented the organisational approach to tackling undeclared work was and in the involvement of social partners in tackling undeclared work - although there was some level of tripartite social dialogue on the topic in all five countries. More details can be found in individual country reports on Croatia, Iceland, the former Yugoslav Republic of Macedonia, Montenegro and Turkey.

Tackling undeclared work in Croatia and four EU candidate countries concludes that these countries need to deploy a wider range of both deterrence measures to detect and end undeclared work, and also of enabling measures that foster tax morality and compliance.

Collection of measures to tackle undeclared work

The new phase of the project described 86 additional measures (including some from Croatia and four candidate countries) which have been added to the collection of measures against undeclared work.

See more publications on tackling undeclared work

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