Initiatives by the European Commission to clamp down on undeclared work in the hotels and restaurants sector were welcomed by the EU-level social partners on 3 December 2010. Undeclared work in this sector is high, involving in Greece, for example, up to 60% of the workforce. The social partners, who condemned the practice in 2002 because it hampers the creation of ‘proper employment’, now want to combat it with a mix of control and incentives, supported by information initiatives.
Background
The EU-level social partners in the hotels and restaurants sector signed a joint declaration on undeclared (239Kb PDF) work on 3 December 2010. It took the European Federation of Food, Agriculture and Tourism Trade Unions (EFFAT) and employer organisation Hotels, Restaurant and Cafés in Europe (HOTREC) 20 months to negotiate the declaration. It welcomes the previous initiatives on undeclared work.
These include:
The social partners in this sector, who condemned undeclared work in a joint declaration on EU enlargement in 2002 (15.5Kb PDF), want now to go further and to combat undeclared work, defined as ‘any paid activities that are lawful as regards their nature but not declared to the public authorities’.
Details of declaration
In their declaration, the social partners stress that ‘undeclared work causes a downward spiral of deterioration of conditions of all, employees and enterprises’, adding that undeclared work can ‘threaten the validity of social protection systems and can jeopardise labour legislation and collective bargaining agreements’. They go on to state that undeclared work ‘is an obstacle to the creation of proper employment and therefore weakens the opportunities for successful employment policies’. The social partners also consider that undeclared work represents unfair competition. They have two main demands:
- to develop an approach based on providing incentives for the development of regular work combined with a monitoring and control policy;
- to collect more information on the level of the undeclared work within the EU.
Call for a mix of controls and incentives
The social partners have called on EU Member States ‘to consider improving incentives for regular work, which may include increasing the tax-free income band and, for employers, reducing the non-wage cost associated with legal employment’. They also ask Member States to ‘reduce the burden of taxation on the workforce’ and call on the EU to be more ‘pro-active and incisive, so as to ensure that the modernisation of labour law … is not confined to the purely theoretical level, but translates into effective, high-quality policies’.
The social partners want employers and unions to aim for a compromise on a comprehensive approach, relating to monitoring and control, to combat undeclared work. They also stress that Member States have to combine ‘preventive action and sanctions aimed at transforming undeclared work into regular employment’ with ‘strong incentives for those involved in the sector to put undeclared work on a formal economic footing’.
Campaign for information and awareness
The social partners have also asked the Commission to propose ways of measuring undeclared work, and to set up a Community-level database recording undeclared work. Member States could therefore exchange ‘good practice and knowledge’.
Furthermore, the social partners call for ‘permanent campaigns concerning the prevention of undeclared work, with information and awareness-raising initiatives at Community, national and local levels’. These campaigns would emphasise sanctions, costs, the risks of undeclared work and the benefits of declared work and, the social partners suggest, could be partly funded by the European employment and social solidarity programme PROGRESS.
Commentary
This joint declaration by the EU-level social partners in this sector shows that they have reached a compromise in which the employer organisation accepts the need for control and sanction policies. This compromise was reached because the social partners are aware of the need to combat the high rate of undeclared work, a source of unfair competition between employers and which also creates a negative image for the sector. This sector is the third to adopt a common position on undeclared work, following a joint position (in French, 15.5Kb PDF) from the private security sector in 2006, and a joint text (23Kb PDF) from the cleaning industry in 1998.
Frédéric Turlan, HERA