Tripartite committee to combat undeclared work in construction sector, Cyprus
In April 2007, a special technical committee for tripartite representation was set up, with the aim of finding ways to combat undeclared work in the construction sector (Τριμερής επιτροπή για την καταπολέμηση της αδήλωτης εργασίας στην οικοδομική βιομηχανία). Undeclared work tends to affect vulnerable groups of workers, such as migrants and Turkish Cypriots. The initiative includes increased inspection activity, particularly with regard to public works.
Although a significant knowledge gap with regard to the extent of undeclared work has been noted, all the indications are that the problem of undeclared work in Cyprus is more widespread in certain sectors of economic activity – particularly in the construction sector and in hotels and restaurants, as well as in other parts of the services sector. Undeclared work also affects to a greater extent specific categories of workers who tend to be more vulnerable – in particular, migrants and Turkish Cypriots, and to a lesser extent women and new labour market entrants.
In this context, specific initiatives have been taken at sectoral level, primarily with regard to the construction industry. These measures are following on from a series of concerted actions, most of them implemented since 2004 (CY0406104T). In April 2007, a special technical committee for tripartite representation was set up in order to more effectively combat the problem of undeclared work in the construction sector.
The government side is represented on the committee by the Ministry of Labour and Social Insurance (Υπουργείου Εργασίας και Κοινωνικών Ασφαλίσεων, MLSI), through the Social Insurance Services and the Department of Labour Relations (Τμήμα Εργασιακών Σχέσεων). It is also represented by the Ministry of Communications and Works (Υπουργείο Συγκοινωνιών και Έργων, MCW), through the Public Works Department.
The workers’ side is represented by the following trade unions: the Democratic Labour Federation of Cyprus (Δημοκρατική Εργατική Ομοσπονδία, DEOK), the Cyprus Building, Wood, Mine and General Workers’ Trade Union, affiliated to the Pancyprian Federation of Labour (Παγκύπρια Εργατική Ομοσπονδία, PΕΟ), and the Federation of Builders, Miners and Relevant Professions, affiliated to the Cyprus Workers’ Confederation (Συνομοσπονδία Εργαζομένων Κύπρου, SΕΚ).
The employer side is represented by the Federation of Building Contractors Associations of Cyprus (Ομοσπονδία Συνδέσμων Εργολάβων Οικοδομών Κύπρου, OSEOK), affiliated to the Employers and Industrialists Federation (Ομοσπονδία Εργοδοτών και Βιομηχάνων, OEB).
The main activities are implemented by the following departments of MLSI:
- Department of Labour Relations;
- Social Insurance Services;
- Department of Labour Inspection.
The primary objective of the special technical committee is for both employers and workers to find ways to combat undeclared work in the construction sector.
The first action of the technical committee involved the examination of ways to tackle undeclared work in construction in the public sector. Specifically, after emphasising the need to observe the terms of the relevant contracts for construction in the public sector, detailed lists were drawn up of all the government construction works in progress. These lists were sent to the district offices so that inspections could be scheduled. In addition, by decision of the committee, a letter was sent to the Union of Cyprus Municipalities recommending that contracts for the construction of public works be observed by all municipalities in the country. A similar letter was sent to all the general directors of ministries that enter into contracts for the construction of public building works.
As part of this action, targeted inspections have been carried out on public sector building works – where feasible on the basis of worksite notifications – by a joint group consisting of inspectors from the Department of Labour Relations, the Social Insurance Services and the Department of Labour Inspection. It should be noted that, apart from public works, at regular intervals the Social Insurance Services department carries out controls in the construction sector as a whole throughout the country.
The committee’s second initiative concerns the issue of the failure of certain Turkish Cypriots who come to work in the Greek Cypriot area to pay social insurance contributions; some of these workers declare themselves to be self-employed and others state that they are employers acting as contractors on building sites. As a result, they are not registered in the Social Insurance Scheme and do not comply with the provisions of the existing legislation regarding social insurance.
With a view to finding ways to combat undeclared work by Turkish Cypriot workers, inspectors from the Social Insurance Services also visited the Agios Dometios checkpoint near the capital city of Nicosia (Lefkosia) in order to observe which data are recorded when Turkish Cypriots enter the Greek Cypriot areas.
Evaluation and outcome
Achievement of objectives
Since the special technical committee for combating undeclared work in construction was only set up in April 2007, the effectiveness of the measure has not yet been evaluated.
Nevertheless, from the data that have emerged from the tighter controls carried out by the Social Insurance Services throughout the construction sector, significant progress has been recorded compared to previously. More specifically, the conclusions of the nationwide campaign conducted by the Social Insurance Services during the period between 9 and 13 June 2008 were the following: of the 1,109 employers checked, only 3.97% were not enrolled in the Social Insurance Scheme and, of the 2,953 employees of these employers, 2,146 workers – or 72.67% – were declared and the remaining 807 (27.33%) were undeclared. Based on the data available for 2003, out of a total of 789 inspections carried out in November 2003, the percentages of employers and workers not enrolled in the Social Insurance Scheme were 11.3% and 29.93% respectively.
Obstacles and problems
The main problems of the initiative may be summarised as follows:
- limited opportunities for analysis and processing of data emerging from workplace inspections, due to insufficient data collected as well as lack of personnel;
- fewer inspections than necessary;
- obstruction of the work of the labour inspectors on certain worksites;
- lack of coordination and a need for greater cooperation between the actors directly involved and the departments of the competent ministry.
It is rather early to assess the lessons learnt and draw any conclusions. Likewise, no impact indicators are yet available.
When the measure’s effectiveness has been evaluated, similar structures could come into effect in all sectors of economic activity where undeclared work is most evident – such as hotels and restaurants, for example.
Main organisation responsible: Department of Labour Relations at the Ministry of Labour and Social Insurance
Ministry of Labour and Social Insurance, Undeclared and illegal employment, Working Paper, Nicosia, October 2008, available on request.
Soumeli, E., European Industrial Relations Observatory, part of the European Foundation for the Improvement of Living and Working Conditions (Eurofound), Industrial relations and undeclared work – Cyprus, Dublin, 2004, available online at: /ef/observatories/eurwork/articles/thematic-feature-industrial-relations-and-undeclared-work-2.
Eva Soumeli, INEK/PEO