ID06 project in construction sector, Sweden
The construction sector in Sweden is challenged by widespread undeclared work and tax evasion. Undeclared work is not only illegal, but usually leads to a more insecure workplace and personal safety risks. The ID06 project in the construction sector has proven to be an effective control measure aiming to tackle undeclared work in the construction sector by requiring all workers at construction sites to be registered and carry proper identity (ID) cards.
According to the Swedish National Council for Crime Prevention (Brottsförebyggande rådet, Brå), undeclared work is extremely frequent in the construction sector. The National Tax Agency (Skatteverket) estimates the income loss from tax evasion in the construction sector to amount to between SEK 10 million and SEK 20 million (€0.9–€1.9 million as at 26 January 2009). The detected undeclared business within construction has an annual turnover of SEK 1 billion (€94.3 million) a year. However, the National Tax Agency estimates that 10% of all undeclared business in the sector is detected.
The ID06 project in the construction sector (ID06-projektet i byggbranschen) was initiated in 2007 and is part of an action plan of a cluster organisation within the sector – Construction Sector in Cooperation (Byggbranschen i samverkan, BiS). BiS comprises seven business organisations and five trade unions in the construction sector. The head organisation is the Swedish Construction Federation (Sveriges Byggindustrier, BI). The employer side is represented by BI, the Swedish Electric Contractors Association (Elektriska Installatörsorganisationen, EIO), Glasbranschföreningen, Maskinentreprenörerna, Målaremästarna, Plåtslageriernas Riksförbund and VVS Företagen. The trade union side is represented by Byggcheferna/Ledarna, the Swedish Building Workers’ Union (Svenska Byggnadsarbetareförbundet, Byggnads), the Swedish Painter’s Union (Svenska Målareförbundet) and the Union of Service and Communication Employees (Facket för Service och Kommunikation, SEKO).
Several reasons can be mentioned for the frequency of undeclared work in the construction sector. In a recent study, Brå suggests several measures to counteract illegal work. For example, they suggested the implementation of the ID06 system at all construction sites to prevent the occurrence of undeclared work (Brå, 2007).
The actors involved in the project include the BiS organisations, construction companies and the ID card and card reader manufacturers and distributors.
The main objective of the ID06 project is to reduce undeclared work within the construction sector by limiting access for untrustworthy actors to the market and increase the possibilities of competition for serious actors.
The ID06 project consists of the following measures:
- a requirement that everyone who attends a construction site must carry valid ID06 identity card;
- the subcontractor is obliged to register their employees in advance with the main contractor;
- daily registration of authorised employees at the workplace;
- daily registration must be kept for two years and be available at the site in the event of a control visit from the National Tax Agency;
- the main contractor has the right to remove anyone from the construction site who is not authorised;
- the main contractor has the right to demand a fine of SEK 500 (€47) a day and per person if an employee cannot show the required identification.
Evaluation and outcome
Achievement of objectives
Since the project is still in its implementation phase, no actual evaluation has yet been made. However, compared to the results that have been presented from investigations in the restaurants and hairdressers sectors, the expectation is that this project will also prove to be efficient, since they are all similar in their approach. If the National Tax Agency becomes involved in the project at a later stage, it will most likely present reports on the expected tax income from the prevention work being carried out.
Obstacles and problems
Surprisingly, few problems with the ID06 implementation have been apparent, according to the ID06 project manager at BI, Peter Löfgren. One of the challenges with introducing identification systems at a construction site is the geographical openness. When the activity takes place outdoors, rather than in an office, it is more difficult to establish an official entrance where workers can identify themselves. Another issue is the administrative work associated with the project implementation, even though it is very limited and simple. Because of the fact that all actors benefit from the work with ID06, it has been relatively easy to implement the system, states Mr Löfgren.
The project has been positively reviewed in the construction sector. No one has expressed a negative view on the implementation of ID06. A reason for this may be that the project was created to avoid forced legal measures, such as those that are being implemented in the restaurants and hairdressers sectors. Another reason for the positive response is that the work involved in preventing and detecting undeclared work is something that benefits everyone because it promotes fair competition in the sector. No reputable companies would like to be associated with undeclared work and therefore it is profitable for these to support the ID06 implementation.
To date, manufacturers of the required components for the system have distributed about 300 card readers and about 60,000 ID cards to various companies. The trend is an increase of 8,000 ID cards a month. At present, about 2,000 companies, including those with branches throughout the country, are connected to ID06. The ID06 card costs SEK 90 (€8.50) per employee, while the card reader device costs SEK 8,000 (€755).
The ID06 project is led by BI, which is headed by mainly one person, namely Mr Löfgren. However, several employees at BI are involved in the project in other ways, for example by spreading information on the system.
ID06 can with ease be implemented in other economic sectors that have problems with undeclared work, due to the simplicity of the system. The construction industry is very much alike throughout different countries, and therefore the ID06 system could also easily be transferable to the industry abroad. Foreign companies that work temporarily in Sweden have already begun to use the ID06 system.
Since the ID06 project is relatively new – operating for only a year – no official evaluations of the efficiency of the measures have yet been made. However, the perceived popularity of the project and the speed of the implementation process still make it an interesting case to investigate.
ID06 project website: http://www.id06.se/
Peter Löfgren, ID06 project manager, email: firstname.lastname@example.org
Construction Sector in Cooperation (Byggbranschen i samverkan, BiS)
Swedish Construction Federation (Sveriges Byggindustrier, BI)
Swedish Building Workers’ Union (Svenska Byggnadsarbetareförbundet, Byggnads)
Swedish National Council for Crime Prevention (Brottsförebyggande rådet, Brå):
Brå, Organiserat svartarbete i byggbranschen, Report 2007:27, Stockholm, 2007, available online at: http://www.byggbranschenisamverkan.se/files/rapporter/Org%20svartarbete%20i%20byggbranschen.pdf
Thomas Brunk, Oxford Research