Hidden economy monitoring group, Ireland
This case example describes the role of the ‘Hidden economy monitoring group’ in tackling undeclared work. The group is part of a broader legal employment rights framework concluded by the government and the social partners under Ireland’s social partnership agreements. It has been accompanied by a number of other measures designed to tackle the informal economy, including the enactment of the Employment Law Compliance Bill.
The ‘Hidden economy monitoring group’ was established to help reduce the level of undeclared work in Ireland. It was agreed under Ireland’s social partnership framework. In relation to the general context regarding undeclared work in Ireland, while recognising the broad level of compliance with employment rights across the economy in general, the Irish government and social partners are nevertheless committed to securing better compliance with legal requirements, underpinned by adequate enforcement. The topic of undeclared work has received considerable attention in tripartite national-level bargaining in Ireland, particularly in recent years. Ireland’s 10-year national social partnership agreement, Towards 2016 (2.86Mb PDF) – which has since been reviewed in the Transition Agreement – includes a number of specific commitments in relation to employment status as well as the ‘hidden’ or informal economy.
The Hidden economy monitoring group is made up of representatives of Ireland’s tax authorities the Office of the Revenue Commissioners, the Department of Social and Family Affairs, the Irish Congress of Trade Unions (ICTU), the Irish Business and Employers’ Confederation (IBEC), the Small Firms’ Association (SFA) and the Construction Industry Federation (CIF).
The Hidden economy monitoring group is essentially an advisory/monitoring group, whose main objective is to promote more effective ways of combating activities in the informal economy by monitoring developments and reviewing the effectiveness of measures to combat tax evasion and social welfare fraud. The terms of reference for the Hidden economy monitoring group are as follows: ‘to provide a forum for the exchange of views on the effectiveness of measures introduced in combating the “black economy” between the Revenue Commissioners and Department of Social and Family Affairs and representatives of employers, trade unions and the construction industry’.
The government and the social partners agreed under ‘Towards 2016’ to continue to expand the role of the Hidden economy monitoring group – which was connected to a growing recognition of the need to tackle undeclared work. Furthermore, the government and social partners, including peak level employer and trade union representatives, have agreed under ‘Towards 2016’ to review the application of the existing Code of Practice on employee status, in order to bring greater clarity to employee or self-employed status and with a view to more effective implementation.
In addition, ‘Towards 2016’ contains a number of other measures designed to tackle problems associated with the hidden or informal economy. It is intended that these measures will complement the work of the Hidden economy monitoring group. In particular, the Irish government and the social partners reached agreement on the Employment Law Compliance Bill 2008. The government committed itself to enacting the bill before the end of 2008 following further detailed consultations with the social partners. The main objectives of the new legal provisions are as follows:
- to place the new National Employment Rights Authority (NERA) on a statutory footing by appointing a Director of NERA (within the Department of Enterprise, Trade and Employment), dedicated to employment rights compliance, and assigning a tripartite Advisory Board;
- to increase the number of labour inspectors to 90;
- to strengthen inspection and enforcement powers and make other necessary provisions to secure compliance with employment law generally and the Employment Permits Acts 2003 and 2006 – this includes provision for compensation of up to two years of pay and protection of bona fide complainants against victimisation; the measures are in line with ‘state-of-the-art’ provisions in legislation regulating areas such as revenue, social welfare and consumer protection;
- to specify the statutory employment records to be kept by employers for all employees and the high penalties for failure to do so or for other breaches of employment law;
- to foster increased cooperation at workplace level in order to safeguard employment rights;
- to support current monitoring and inspection activity in relation to compliance with the Registered Employment Agreement in the electrical contracting industry;
- to provide for exchanges of information between statutory enforcement authorities in order to facilitate joint investigations of employment suspected of contravening the law;
- to strengthen the powers of the Minister for Enterprise, Trade and Employment to initiate investigations and publish the outcomes in cases of public interest;
- to impose penalties of up to €250,000 or a prison term.
Evaluation and outcome
Information provided by the Revenue Commissioners to the Irish parliament (Dáil Eireann) indicates that 57 meetings of the Hidden economy monitoring group took place between its original commencement in 1990 up to the end of 2005. The dates of the most recent meetings are as follows: 24 February 2000, 3 May 2000, 20 June 2000, 12 September 2000, 30 November 2000, 1 February 2001, 19 April 2001, 29 November 2001, 21 February 2002, 18 November 2002, 19 January 2004 and 15 November 2005. Each meeting lasted for between two and three hours.
Unfortunately, aside from this information, no published reports are available in relation to outcomes emanating from the work of the Hidden economy monitoring group. As a standing forum, there are no official requirements for the group to report formally. There is more information available on the outcomes relating to the role of NERA, which complement the work of the Hidden economy monitoring group. However, in many respects, it is still too early to evaluate outcomes and arrive at definitive conclusions.
Achievement of objectives
As stated, no evaluation is currently available, and it is perhaps too early to properly predict the overall outcome of this measure.
In terms of impact indicators, the Hidden economy monitoring group and the new employment rights framework are designed to cover the whole economy – and all employers and workers therein – rather than being restricted to particular sectors. In practice, however, the targeted sectors will be those in which there is a relatively high incidence of undeclared work. For instance, one issue that has emerged is the classification by some companies of workers as ‘self-employed contractors’ in circumstances where they would normally be considered as employees. This has arisen mainly in the construction and food processing industries.
This measure applies to the whole economy. In practice, however, it is targeted at specific sectors where hidden economy activities dominate.
Main organisations responsible:
National Employment Rights Authority (NERA), Website: http://www.employmentrights.ie/
Department of Enterprise, Trade and Employment, Website: http://www.entemp.ie/
Department of Social and Family Affairs, Website: http://www.welfare.ie/
Revenue Commissioners, Website: http://www.revenue.ie/
Tony Dobbins, IRN Publishing