Electronic labour card, Greece

About

Country: 
Greece
Sectors: 
All
Target Groups: 
employers/purchasersworkers/suppliers

One of the few legislative measures for tackling undeclared work in Greece is the establishment of a special electronic labour card. The pilot implementation of the innovative measure aims to provide incentives and counterincentives for the observance of the labour and social security legislation. The measure has not yet been implemented in practice, and it is expected it will have only a limited effect on preventing the rapid spread of undeclared work in the country.

Background

The deepening economic crisis and its effects on the Greek economy and labour market, in particular, resulted in a rapid increase of the recorded percentages of undeclared work. The fundamental axis of the government's view is still the unambiguous linking of the direct and indirect labour costs (which are considered as excessive) with the extent of undeclared work. Thus, since, by means of a multitude of legislative interventions related to the specification of remuneration in the private sector, direct labour costs have decreased during the last two years by an average of up to 25% throughout the country, leading the government to consider decreasing the indirect labour cost also.

In this context, the government encourages, on the one hand, the social partners to reconsider the amount of social security contributions in particular as regards employer contributions and, on the other hand, to introduce a specific regulation under which the increase in labour legislation compliance controls, aiming to tackle undeclared work, shall be compensated by a decrease in the amount of social security contributions to social security funds.

Objectives

The measure introduced by the government aims to ensure compliance with the labour and social security legislation and the timely fulfilment of the respective obligations of employers while compensating this by a decrease in the amount of social security contributions. As mentioned in the explanatory report to the law introducing the innovative measure for tackling undeclared work (article 26 of Law 3996/2011) its implementation shall initially proceed at a pilot level in specific sectors of the economy and at enterprises of a specific size (mostly small ones), in which it is estimated that undeclared work is more common. The selection of sectors and enterprises shall be made under a subsequent ministerial decision following a study of the special conditions prevailing in the Greek labour market.

Since the selected enterprises shall be obliged both to implement the measure and to undertake the respective costs, they shall be subject to stricter penalties in the case of a breach of the imposed terms (counterincentive), but will be rewarded by a reduction of the indirect labour costs in case of compliance with such terms (incentive). Finally, in cases where during the pilot implementation of the measure a reduction of undeclared work is established, the implementation of the measure shall be extended under other related ministerial decisions to other industries and enterprises also.

Specific measures

Among the measures aiming to increase the control capabilities of the Corps, the 'labour card' stands out. The labour card electronically depicts the time of arrival and departure of the worker as well as their work hours. Such data shall be recorded via an online connection in an integrated central system for the three actors concerned with the labour market (IKA-ETAM, SEPE, OAED (Workforce Employment Organisation)). In particular enterprises shall be responsible for the daily and real-time updating of IKA-ETAM in relation to work time, arrival and departure time of those workers of the enterprise who are subject to IKA-ETAM social security. This procedure shall be implemented through the use of the labour card on an electronic personnel attendance clock (time measurement) and the data shall be transferred by electronic or other means to IKA-ETAM. Such data shall be compared with the data recorded in the detailed periodical statement submitted by the enterprise.

To the enterprises obliged to install the labour card system and which pay their contributions timely, as well the employees of such enterprises, a discount of up to 10% of the respective social security contributions shall be granted.

In an enterprise where the labour card system has been introduced the use of such a system is not conducted according to the provisions of this article. In addition to the other administrative penalties specified under the applicable legislation, the following penalties shall be imposed: suspension of the discount under paragraph 2 for a period of three months after the imposition of the penalties; an additional administrative penalty on the enterprise amounting to €400 for each employer who does not use the labour card; and an administrative penalty amounting to €200 imposed on the employee and paid by the employer.

Actors involved

The actors involved are mainly the three organisations entrusted with labour market and employment relation affairs, namely IKA-ETAM, SEPE and OAED.

Outcome of evaluations: lessons and conclusions

Achievement of objectives

1 September 2011 was set as the effective date for the aforementioned regulation to begin. This date expired without a ministerial decision regarding the specification of the sectors and enterprises or the practical issues related to the installation of the electronic systems at the enterprises and actors involved. Within the framework of the second memorandum (Law 4046/February 2012) a new deadline for the regulation's gradual introduction was set for March 2012. It also expired without any new developments, despite the fact that such measure now constitutes one of the terms for the payment of the instalments under the new loan agreement. As of August 2012 no official notification had been given to the management of the involved actors in relation to the implementation progress of the new regulation.

Obstacles and problems

It is noted first of all that through the labour card only the employment time and no other qualitative element of the evolution of the employment relationship shall be controlled. Since it is not possible to cross-check such data with the contents of the agreements concluded at the individual (employment contract) or collective level (collective labour agreement), the systematic recording of the employment time would only prove useful to the worker if they are pursuing claims based on employment time (proof of employment time becomes easier with a card).

However, even the card itself does not guarantee the avoidance of any breach of the statutory or contractual restrictions in relation to employment time, since it is quite possible that the duration of the actual work does not correspond to the period of time between two successive 'scans' of the card at the entrance of the enterprise.

The second comment regards the fact that since the introduction of the new electronic system monitoring arrival and departure to and from the worksite will not be voluntary, but mandatory and will serve as a pilot, the regulation has actually established exemptions and not incentives particularly for the employer and to certain degree for the employee.

The imposition of a fine (€200) on the employee also in case of infringement of the legislation regarding the labour card system 'since he/she also receives a benefit from the implementation of the regulation in the form of increase of its salary', is problematic.

In relation to the invention of the labour card as a means to enforce compliance with labour and social security legislation, no guarantees are provided for the avoidance of its misuse, since the known forms of false report of employment time are preserved, while other substantial and effective incentives and counterincentives for the limitation of undeclared work do not exist in any case.

Lessons learned

Once more, it is prominently confirmed that substantiated knowledge and the exercise of (social) policy constitute the two equally strong pillars of progress and welfare, in particular under conditions of depression and crisis. In addition to the technical difficulties related to the implementation of the measure in question and which have not been taken into consideration at the time of its establishment, this measure is difficult to implement for both practical and substantial reasons. If no scientific studies are conducted in order to comprehend, determine and qualitatively analyse a negative phenomenon, it becomes nearly impossible to alleviate it.

The labour card as a means to tackle undeclared labour is one of the few measures announced and established as a law during the last two years. Both are not only totally impossible to implement but also covered by a veil of mystery as regards their future.

Impact indicators

The sectors and the estimated number of potentially involved workers have not been specified yet, not to mention that the expected benefits of the implementation of the measure have not been calculated econometrically.

Contacts

Commentary

The reduction of labour costs has followed precisely a reverse course of development compared to the extent of undeclared work in Greece during the last two years. The tackling of this phenomenon depends on many factors combining selected incentives and counterincentives for both parties of the employment relationship, a culture of compliance with the labour and social security legislation, the sufficiency of competent control mechanisms and the commitment of social partners to contribute to this effort. Since all these elements do not exist, the dramatic decrease of the workers’ income, the total deregulation of labour rights in the absence of any dialogue between social partners, combined with a general feeling that the tax policy within the framework of the memoranda is unfair and inefficient, guarantee the further increase of undeclared work during the next months.

The labour card is the sole measure adopted for tackling undeclared work during the last years, its implementation is, however, very difficult. If it is ever implemented, the resulting decrease of undeclared work will be minimal.

Bibliography

Kapsalis, A. (2012), 'Tackling the problem of undeclared work', May 2012. /ef/observatories/eurwork/articles/tackling-the-problem-of-undeclared-work

Kapsalis, A. (2007), Undeclared work and legitimizing immigrants, INE/GSEE, Study 27.

Apostolos Kapsalis, Labor Institute/General Confederation of Greek Workers

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