Tighter control over undeclared work, Slovakia
Despite of implementation of legal regulations, the extent of undeclared work is growing. In order to reduce the level of undeclared work, a tighter legal regulation was adopted in 2009–2011. It includes targeted control aimed at specific risky sectors and tightening of penalties. New measures strengthen the cooperation between the labour Inspectorates and Social Insurance Agency regarding disclosure of records of insured persons and employers. It also responds to new responsibilities of the National Labour Inspectorate to present information to the European Commission on checks of illegal employment in high-risk sectors.
Legislation to fight undeclared work was established in Slovakia in the years 2005–2006 by two acts (the Act No. 82/2005 Coll. on illegal work and illegal employment and the Act No. 125/2006 Coll. on labour inspection). The onset of the global financial crisis in late 2008, however, resulted in a decline of GDP (by 4.9% in 2009) a worsening of the economic situation of enterprises and the growth of unemployment (up to 15.1% in the first quarter of 2010). The labour market situation was compounded by persons returning home as unemployed from foreign labour migration. The findings of the inspections concerning the undeclared work reported an increase in the number of persons found in the course of 2009: while in the second half of 2008 there were 635 illegally employed persons identified during 5,060 inspections carried out, in the second half of 2009 it was 723 illegally employed persons found during 4,068 inspections, especially in the trade, construction, accommodation and food services and industrial production sectors (data from the National Labour Inspectorate, NIP).
The legislative measures of tightening the control and sanctions have aimed at aggravating the conditions for the carrying out of illegal work and deterring employers, employees, as well as the self-employed from doing it.
The tightening of the reporting obligation of the employer
- From December 2009 employers in selected risky industries have been obliged to report employment not only to the Social Insurance Agency (SP), but also to the Labour Inspectorate within 30 days from the start of an activity or its change,
- From July 2011 the employers have been obliged to report employment to the SP prior to the commencement of the inspection.
Increasing the powers of the labour inspectors
- From December 2009 the labour inspectors may report illegal employment to the prosecuting authorities for the purpose of prosecution.
- From March 2010 the NIP introduced a central publicly accessible list of natural persons and legal entities which in the past five years violated the prohibition of illegal work and illegal employment. The labour inspectors report illegal employment to the trade office with the purpose of revocation of the trade licence due to repeated violation of the prohibition of illegal work and illegal employment.
- From April 2011 the labour inspectors may submit a proposal to abolish temporary employment and supported employment agencies. The labour inspectors report illegal work to the SP, to the labour offices, tax offices and the police.
Strengthening of repressive measures
- From March 2010 the rates of penalties for undeclared work increased. The maximum rate increased from €33,000 to €200,000.
- From September 2011 labour inspectors working outside their districts has been introduced.
Increase in safeguard and social importance of the labour inspectors
- From December 2009, upon the request of the Labour Inspectorate, the police provide assistance and safeguards for the carrying out of labour inspections.
- From 2012 the labour inspector's ID and uniform were introduced.
NIP, SP, Offices of Labour, Social Affairs and Family, trade license offices, tax offices and the police.
Outcome of evaluations: lessons and conclusions
Achievement of objectives
The objectives have been achieved: the quality of the labour records administration improved and the number of detected cases of performing undeclared work decreased.
Obstacles and problems
The obstacles to a more rigorous inspection of undeclared work is the continuing low number of the labour inspectors (around 300–350 in the country), whose job description includes not only the inspection of illegal work, but occupational safety as well.
In its report Informácia o vyhľadávaní a potieraní nelegálnej práce a nelegálneho zamestnávania za II. polrok 2011 (Information on searching and fighting illegal work and illegal employment in the second half of 2011) the NIP states that it is necessary to continue focusing the inspection on those economic spheres in which, according to the experience from the previous inspection activity and its results, the highest amount of violation of the legal regulations occurs. The NIP will continue placing emphasis also on the prevention of labour inspection. For instance, by organising lectures and publishing information materials for entrepreneurs and job seekers.
Since the beginning of 2010, the number of detected persons performing illegal work has been decreasing. Following the NIP data, in the second half of 2010 during 4,017 inspections 503 illegally working persons were detected (218 less than the year before) and in the second half of 2011 during 4,469 inspections 354 illegally working persons were detected, which means a further reduction of the number of cases. On the other hand, the amount of fines imposed has increased: e.g. for the second half of 2011 compared to the second half of 2010 there was an increase of 80%.
The measures in place may be applied without problems in other EU countries, provided adequate institutional and administrative facilities are present.
- National Labour Inspectorate: www.ip.gov.sk, www.safework.gov.sk
- Ministry of Labour, Social Affairs and Family of the Slovak Republic: http://www.employment.gov.sk/
- Central Office of Labour, Social Affairs and Family: www.upsvar.sk
- Social Insurance Agency in Slovakia: www.socpoist.sk
Although the tightening of the legislation has been able to reduce the extent of the illegal work detected, the low number of labour inspectors continues to poses problem. The risks of performing illegal work is the continuation of the debt crisis in the Eurozone with consequences of decreasing the number of jobs, creating ground for the rise of undeclared work.
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Rastislav Bednárik, Institute for Labour and Family Research