Let’s stop undeclared work campaign, Slovenia
The public campaign ‘Let´s stop undeclared work’ – aimed at preventing undeclared work – was launched on 31 August 2010 by the Ministry of Labour, Family and Social Affairs, in cooperation with the relevant supervisory authorities and with the support of the social partners. The campaign lasted until the end of 2010. It consisted of various promotional means (posters, brochures, radio ads, ads in business magazines and web banners). The purpose of a public campaign was to inform and raise public awareness on the risks and negative consequences of undeclared work in terms of the welfare state, business and individuals.
In Slovenia, the extent of the shadow economy is quite large. According to various estimates, it represents between 15% and 25% of the GDP. A 2007 worldwide study on the shadow economy in 120 countries, estimated the share in Slovenia at around 27% of GDP (for the years 2005, 2006 and 2007). In Slovenia, the latest published work in this area is a doctoral dissertation 'Shadow Economy in Slovenia', that deals with the methodology, measurement, driving forces and effects of undeclared work. The study – using a survey as a direct estimation method – estimates that the shadow economy in Slovenia in 2007 comprised 15.6% of GDP.
In recent years, various studies, analyses and professional organisations have been warning the government to look into the scope of the shadow economy. The highlight the following reasons for the development and persistence of the shadow economy:
- the large number of unemployed persons;
- the high number of relatively young pensioners;
- relatively high tax and social security contributions in regular forms of employment or self-employment;
- lengthy, complicated and costly administrative procedures at obtaining work permits or authorisations for the renovation or construction of new working places;
- relatively rigid employment regulation and lack of small employers´ knowledge and in this respect the existing non-use of flexible forms of employment;
- the low standard of living of a considerable number of citizens who are looking for cheaper products and services and are engaging in undeclared work;
- outdated information system and an insufficiency of human resources at the supervisory organs and inspectorates;
- low penalties for violations and an inefficient system of recovery of penalties.
The public campaign was encouraged by discussion and conclusions of the parliamentary Labour, Family and Social Affairs Committee on the issue of undeclared work in autumn 2009, by the European Commission´s documents on strengthening the fight against undeclared work and by some Member States' successful campaigns to raise awareness about the negative consequences of undeclared work (the Danish 'Fair Play' campaign in 2004 and a successful campaign in Lithuania in 2005). Its purpose was to inform the public and raise awareness regarding the risks and negative consequences undeclared work causes to the welfare state, the economy and the individual citizen. The negative consequences of undeclared work are considerable for employers, employees and for the welfare state, property and safety of people and the environment. Notwithstanding the fact that in specific circumstances undeclared work also complements the legal economy and reduces social tensions, states adopt different measures in order to prevent undeclared work.
The campaign was aimed at the general public, especially enterprises, workers and consumers, and set out to:
- inform people about the benefits of paying taxes and to emphasise the fact that social security contributions provide social security, while undeclared work endangers the foundations of the welfare state and significantly reduces the scope of certain public services, such as free education, health care, childcare, social assistance and unemployment benefits, and other public services, such as libraries and public kindergartens;
- raise awareness regarding the negative effects for the consumers (i.e. no invoice = no warranty);
- promote a positive image of compliance with employment and social security regulation and to emphasise the importance and purpose of the payment of social security contributions and the payment of taxes. It is important that all citizens respect the rules, as it is the only way to maintain the welfare state and to provide citizens with services that are in the public interest;
- underline the negative effects of undeclared work that leads to unfair market competition: business entities that are operating in accordance with the regulations are disadvantaged as they cannot compete with those engaged in undeclared work.
Posters and leaflets aimed at the general public were available at all regional offices of the Employment Service of Slovenia, at social work centres, local administrative units, at the tax office. They were distributed also through the offices of all social partners participating in the campaign. Promotional materials were available also at various trade fair activities organised by these institutions. Promotional materials were posted on the state administration, supervisory authorities and e-government websites. Ads were published in various magazines aimed at entrepreneurs and craftsmen as well as on the radio. The campaign more precisely included the following promotional materials:
- print of hoardings and rental of poster sites at 60 different locations;
- print and distribution of leaflets in the range of 30,000 pieces;
- print and distribution of B2 size posters in the range of 700 pieces;
- production and release of radio ads on radio stations VAL 202 and Radio Center (ads were playing for one week);
- publication of ads in the journal Craftsman (Obrtnik), Entrepreneur (Podjetnik), in the gazette of Slovenian Chamber of Commerce;
- publication of campaign banners and logos on the websites of ministries, supervisory authorities and participant institutions.
Given that the social partners are of essential importance in the combat against undeclared work, the Ministry of Labour, Family and Social Affairs (Ministrstvo za delo, družino in socialne zadeve, MDDSZ) invited them to participate in the campaign. Some of them participated as sponsors: the Craft and Small Business Chamber of Slovenia (Obrtno podjetniška zbornica Slovenije) and the Slovenian Chamber of Commerce (Trgovinska zbornica Slovenije); and some as supporters: the Chamber of Commerce and Industry of Slovenia (Gospodarska zbornica Slovenije), the Slovenian Craft and Small Business Association (Združenje delodajalcev obrti in podjetnikov), the Association of Employers (Združenje delodajalcev Slovenije) and the trade union Pergam (Sindikat Pergam). In addition, all supervisory authorities that have responsibilities in the prevention and detection of undeclared work participated in the campaign.
Outcome of evaluations: lessons and conclusions
Achievement of objectives
The report of the Commission of the Government of the Republic of Slovenia for the detection and prevention of undeclared work employment for the year 2010 mentioned the public campaign, but unfortunately did not evaluate its results. It just summed up the materials prepared before the launch of the 2010 campaign.
The rate of violations of illegal work among inspections conducted by the Market Inspectorate, in the years 2009, 2010 and in the first half of 2011 did not change significantly. The percentage of violations among inspected cases had been constantly around 43%.
On the other hand, the Labour Inspectorate – which monitors illegal employment – has detected an increase in violations from 495 in 2010 to 574 in 2011.
Due to the economic crisis, the number of registered unemployed persons rose from 96,672 at the end of 2009 to 110,021 at the end of 2010 and 107,081 in June 2011. Considering these unfavourable conditions in the labour market, one would expect the percentage of violations to increase. The relatively stable share of violations in the field of undeclared work can therefore also be contributed to a successful public campaign.
Obstacles and problems
The reasons for the persistence and development of the shadow economy in Slovenia do not differ significantly from the reasons in other countries. The main reason for engagement in the shadow economy is ensuring the survival of individuals and families, as in many cases it can be the only way out of difficult living conditions. Thus, it encompasses the characteristics of the social economy. Amongst the main causes for the shadow economy are also high administrative burdens (procedures, institutional barriers), high tax load and fraud (Nastav 2009, 66). The reason for participation in undeclared work is not lack of knowledge or awareness, but a conscious decision of participants. In this respect it is doubtful if carrying out awareness campaigns meets the goal of reduced undeclared work.
In Slovenia, an important obstacle for the success of public campaigns promoting legal work and employment is the reduced level of public confidence in the rule of law and fairness of the socio-economic system. A whole range of different financial abuses of the state budget and other state and public property reduce the significance and scope of awareness-raising campaigns.
Public awareness campaigns are a very important means to combat undeclared work, but particularly in times of socioeconomic crisis they need to be combined with enhanced supervision, increased resources and incentives for regular employment and efforts to strengthen confidence in the rule of law.
The public campaign affected a relatively large number of employers, employees and consumers as it was nationwide, but the intensity of the effect was rather small. The radio ads were broadcast for one week on only two radios stations, without TV ads and without use of social media.
For the creation and implementation of the entire campaign €40,470 was spent.
This measure is transferable to any other Member State, it could also target only specific sectors of the economy (such as catering and tourism, civil engineering, legal counselling, private health care), regions and parts of the population (such as consumers, students working under civil contracts, precarious workers, pensioners).
- Ministry of Labour, Family and Social Affairs (Ministrstvo za delo, družino in socialne zadeve): http://www.mddsz.gov.si/
- Craft and Small Business Chamber of Slovenia (Obrtno podjetniška zbornica Slovenije): http://www.ozs.si/
- Slovenian Chamber of Commerce (Trgovinska zbornica Slovenije): http://www.tzslo.si/
- Chamber of Commerce and Industry of Slovenia (Gospodarska zbornica Slovenije): http://eng.gzs.si/slo/
- Slovenian Craft and Small Business Association (Združenje delodajalcev obrti in podjetnikov Slovenije): http://www.zdops.si/
- Association of Employers (Združenje delodajalcev Slovenije): http://www.zds.si/
- Trade union Pergam (Sindikat Pergam): http://www.sindikat-pergam.si/
The Labour Inspectorate of the Republic of Slovenia, Poročilo o delu Inšpektorata RS za delo za leto 2011 [Report of the Labour Inspectorate for 2011], Ljubljana, 2012.
Bühn, Andreas, Friedrich Schneider (2007), Shadow Economies and Corruption All Over the World: Revised Estimate for 120 Countires.Economics: The Open-Access, Open-Assessment E-Journal, Vol. 1, 2007-9 (Version 2). http://dx.doi.org/10.5018/economics-ejournal.ja.2007-9.
Nastav, Bojan (2009), Siva ekonomija v Sloveniji, doktorska disertacija. [Shadow Economy in Slovenia, doctoral dissertation]. Ljubljana: Faculty of Economics, University of Ljubljana.
Zakon o preprečevanju dela in zaposlovanja na črno [Prevention of Illegal Work and Employment Act], Official Gazette of the Republic of Slovenia (Uradni list RS), 12/2007.
Commission of the Government of the Republic of Slovenia for the detection and prevention of undeclared work employment, Poročilo o aktivnostih in učinkih preprečevanja dela in zaposlovanja na črno za obodbje 1.1.2011-30.6.2011 [Annual report on activities and impacts of the prevention of undeclared work and employment for the period 1.1.2011-30.6.2011], Ljubljana, September 2011.
Commission of the Government of the Republic of Slovenia for the detection and prevention of undeclared work employment, Poročilo o aktivnostih in učinkih preprečevanja dela in zaposlovanja na črno za leto 2010 [Annual report on activities and impacts of the prevention of undeclared work and employment, 2010], Ljubljana, April 2011.
Commission of the Government of the Republic of Slovenia for the detection and prevention of undeclared work employment, Poročilo o aktivnostih in učinkih preprečevanja dela in zaposlovanja na črno za leto 2009 [Annual report on activities and impacts of the prevention of undeclared work and employment, 2010], Ljubljana, June 2010.
Barbara Rajgelj, University of Ljubljana