Joint action to detect and prevent undeclared work, Slovenia

About

Country: 
Slovenia
Target Groups: 
workers/suppliersemployers/purchasers

The Slovenian government has increased workplace inspections and supervision visits in an effort to identify and combat undeclared work. This measure is being carried out in accordance with the 2000 Act on Prevention of Undeclared Work and Employment. The initiative is steered by the Government Commission for detecting and preventing illegal work and employment; this body considers that the measure is efficient as the extent of the problem is on the decrease.

Background

In 1997, the government of the Republic of Slovenia adopted a programme for detecting and preventing undeclared work. Within this framework, relevant legislative parameters were set. More stringent monitoring activities concerning undeclared work and employment are now carried out within the framework of joint actions aiming to detect and prevent illegal work and employment (skupne akcije odkrivanja in preprečevanja dela in zaposlovanja na črno). These actions are steered by the Government Commission for detecting and preventing illegal work and employment, headed by a representative of the Ministry of Labour, Family and Social Affairs (Ministrstvo za delo, družino in socialne zadeve, MDDSZ). The commission also comprises representatives of the Ministry of Finance (Ministrstvo za finance), the Ministry of the Interior (Ministrstvo za notranje zadeve), the Ministry of Justice (Ministrstvo za pravosodje) and the Ministry of the Economy (Ministrstvo za gospodarstvo).

In addition, the following organisations are represented on the commission: the Labour Inspectorate (Inšpektorat Republike Slovenije za delo, IRSD), the Market Inspectorate (Tržni inšpektorat), the Transport Inspectorate (Prometni inšpektorat), the Inspectorate for Agriculture, Forestry, Hunting and Fisheries (Inšpektorat Republike Slovenije za kmetijstvo, gozdarstvo in hrano, IRSKGH), the Inspectorate for the Environment and Spatial Planning (Inšpektorat Republike Slovenije za okolje in proctor, IRSOP), the Health Inspectorate (Zdravstveni inšpektorat Republike Slovenije, ZIRS) and the Inspectorate for Education and Sport (Inšpektorat Republike Slovenije za šolstvo in šport), as well as the Tax Administration (Davčna uprava), the Customs Administration (Carinska uprava) and the Uniformed Police Directorate (Uprave uniformirane policije).

The activities of these parties are not meant to replace regular workplace inspections; they rather represent additional joint inspections in which several agencies cooperate. A number of the above actors work together more intensively in the planning and carrying out of these joint activities – namely, IRSD, the Market Inspectorate, the Transport Inspectorate, the Tax and Customs administrations and the police. The National Employment Service of Slovenia (Zavod Republike Slovenije za zaposlovanje) also participates in the joint actions aiming to detect and prevent undeclared work.

IRSD has set up an automated telephone answering service to facilitate anybody who notices potential illegal employment practices and wants to report them.

Objectives

The main objective of the inspections and supervision visits is the identification of undeclared employment, as well as disciplining the employers and thus preventing irregular practices in the future.

Specific measures

The supervisory bodies have focused in particular on certain fields of economic activity recording the most cases of undeclared work and employment, including: construction, catering, retail and wholesale trade, the transport of passengers and cargo, driving school activities, security activities, the organisation of public events and for-profit activities of societies.

In 2005, almost 200 joint inspections took place within the framework of the joint actions. The supervisory bodies do not simply inspect one particular aspect but carry out a complete inspection from their respective area of expertise. This comprehensive investigation helps to identify numerous other irregularities and breaches of regulations. The supervisory bodies registered 1,890 violations of the Act on Prevention of Undeclared Work and Employment of April 2000, which represents a decrease of 31.1% compared with 2003.

Evaluation and outcome

Achievement of objectives

The Government Commission for the detection and prevention of illegal work estimates that the extent of undeclared employment and work has been decreasing. The following table shows a comparison between the number of infringements of the Act on Prevention of Undeclared Work and Employment in 2006 and 2007.

Violations of legislation on undeclared work, 2006–2007
 

Undeclared work

Participation in undeclared work

Advertising undeclared work

Undeclared employment

Total

Legal entity or small enterprise

226 in 2006; 157 in 2007

3 in 2006; 5 in 2007

3 in 2006;12 in 2007

669 in 2006; 415 in 2007

901 in 2006; 589 in 2007

Individuals

484 in 2006; 513 in 2007

7 in 2006; 15 in 2007

65 in 2006; 61 in 2007

8 in 2006; 3 in 2007

564 in 2006; 592 in 2007

Total

710 in 2006; 670 in 2007

10 in 2006; 20 in 2007

68 in 2006; 73 in 2007

677 in 2006; 418 in 2007

1,465 in 2006; 1,181 in 2007

Source: MDDSZ

Despite the fact that the number of controls by the Market Inspectorate aiming to detect undeclared work increased in 2004, the number of breaches of the act declined by 10%. In 2005, the number of violations by legal entities decreased by 30%; however, the number of infringements by individuals did not go down to such an extent, with a decrease of less than 13%. The Government Commission emphasised in its annual report for 2005 that the success of its mission depends not only on the activities of the inspectorates but also on other measures. These include stricter financial penalties, the harmonisation of different acts that regulate these issues and centralised evidence of social insurance transfers, which would enhance the prevention of undeclared work.

Obstacles and problems

A possible obstacle to uncovering and preventing undeclared work and employment may be the false solidarity or cooperation between employers and unemployed persons, where both parties collude in keeping the work arrangement informal. In so doing, they avoid paying social security contributions, and the individual receives undeclared wages while also claiming unemployment benefit. Alternatively, employers and workers might agree not to declare the full wages, but only a proportion of the total sum.

Another obstacle to efforts to combat undeclared work may be the competences that particular supervisory bodies have. In Slovenia, the change of the legal framework in 2005 enabled the inspectorates to issue more mandatory fines than in previous years.

Lessons learnt

One of the benefits of the joint actions is that the supervisory bodies perform two tasks simultaneously: the first role is the detection and prevention of undeclared work, and the second task is inspections in their own particular field of interest.

Impact indicators

In a two-year period, the number of violations of the act caused by legal entities and small enterprises declined significantly, from 2,092 to 1,170 cases, while the number of breaches caused by individuals slightly increased in the same period, from 650 to 720 cases. Most of the violations were related to undeclared work (1,136 cases or 60.1%), while the proportion of undeclared employment was 35.9%.

The Market Inspectorate, which is responsible for detecting violations of the act in the area of undeclared work, identified 488 breaches made by legal entities or small enterprises; this represents an 86.1% decrease compared with 2003. IRSD was responsible for detecting the 679 cases of undeclared employment. In 594 instances, the employer failed to sign an employment contract with the worker and did not register the worker at the Health Insurance Institute of Slovenia (Zavod za zdravstveno zavarovanje Slovenije, ZZZS) and the Pension and Disability Insurance Institute of Slovenia (Zavod za Pokojninsko in invalidsko zavarovanje Slovenije, ZPIZ). In 77 cases, the employer hired a foreigner or an individual without Slovenian citizenship in contravention of the regulations on employing foreigners. The majority of infringements were reported in the economic sectors of catering, retail and wholesale trade, land transport and construction. As in previous years, small employers are major violators of the act.

The inspectorates closely cooperate with the Employment Service and the result of this cooperation is that, in 2003, 93 unemployed persons were deleted from the unemployment register due to the performance of undeclared work or employment. In 2004, some 111 persons were excluded from the register of unemployed persons and in 2005 this number decreased to 78 persons.

Effectiveness of the fight against undeclared work and employment in the context of these measures depends on the efficiency of the inspectorates and their competences. The administrative measures and fines issued by the inspectorate supervisory bodies amounted to about €691,615, compared with €269,463 in 2004. Furthermore, the Tax Administration audited 55 legal entities with the aim of detecting and preventing undeclared work; as a result, the auditors discovered additional obligations amounting to €1,447,776.

Transferability

This measure is likely to prove transferable to any country. The important condition for transferability is a suitable legal framework that enables the relevant inspectorates to directly issue mandatory fines when a violation of the act regulating undeclared work is detected.

Contacts

Main organisation responsible: Ministry of Labour, Family and Social Affairs (Ministrstvo za delo, družino in socialne zadeve)

Website: www.mddsz.gov.si

Bibliography

Ministry of Labour, Family and Social Affairs, Poročilo o aktivnostih in učinkih preprečevanja dela in zaposlovanja na črno za leto 2005 [Annual report on activities and impacts of the prevention of undeclared work and employment, 2005], Ljubljana, April 2006.

Ignjatović, M., Article on undeclared work from SYSDEM correspondent (Update of EEO Review: Autumn 2004), Slovenia, Brussels, European Employment Observatory, May 2007.

Mirko Mrčela

University of Ljubljana

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