Greece: Tripartite strategy for combating undeclared work

Greece’s informal economy is estimated to account for 25% of its gross domestic product. A three-year project to strengthen employment monitoring and inspection, improve tax collection, and educate employers and workers about the benefits of formal work is being led by the ILO, closely supported by the social partners. The programme will run until December 2019. 


Undeclared work remains a significant feature of the Greek economy, despite measures taken in recent years to address the issue. These include stricter sanctions, the reduction of non-wage costs and efforts to limit bureaucratic obligations and the administrative burden on employers. Despite this, the size of the undeclared economy is estimated to be equivalent to some 25% of Greece’s gross domestic product (GDP).

A key factor is the high level of self-employment and large number of micro- and small businesses. Micro enterprises with between one and nine employees make up 96% of all enterprises and employ 55% of the labour force (compared with less than 30% in the EU28). Other factors that contribute to the growth of undeclared work include:

  • a poor economy with lower GDP per capita;
  • significantly high levels of unemployment;
  • the continuing ineffectiveness of monitoring and inspection;
  • the lack of intervention in the labour market, particularly to help the most vulnerable groups;
  • lower social expenditure to reduce inequalities.

In August 2015, the European Stability Mechanism support programme for Greece was approved by the Greek authorities and the European Commission. Its Memorandum of Understanding included the following key deliverable:

The authorities will adopt an integrated action plan to fight undeclared and under-declared work in order to strengthen the competitiveness of legal companies and protect workers as well as raise tax and social security revenues.

In this context the ILO, in close collaboration with the Greek government and the social partners, set up a European Commission-funded project which will run until December 2019. The programme, Supporting the transition from informal to formal economy and addressing undeclared work in Greece: Identifying drivers and ensuring effective compliance, aims to map undeclared work, exploring its causes and forms while simultaneously making use of social dialogue. So far, the following elements of the programme have been implemented and ratified by all participants after a series of consultations:

  • a diagnostic report on undeclared work in Greece (July 2016);
  • a roadmap for fighting undeclared work (October 2016);
  • a series of social dialogue processes, both internally within national social partner organisations through targeted workshops by the General Confederation of Greek Workers (GSEE), the Hellenic Federation of Enterprises (SEV) and the National Confederation of Hellenic Commerce (ESEE), and through trilateral decision-making meetings.

The next phase, based on a three-year plan, will implement the following actions:

  • planning and implementing a new Labour Inspectorate (SEPE) strategy;
  • enhancing the skills and knowledge of participants (for instance, inspectors and social partners);
  • developing a pilot project, with the agreement of the social partners, to implement the agreed national action plan for tackling undeclared work;
  • implementing communication policies/campaigns and awareness-raising.

Diagnostic report on undeclared work in Greece

The diagnostic report evaluates the extent, nature and drivers of the undeclared economy in Greece and offers recommendations about how to tackle the problem.

The National Action Plan for tackling the undeclared economy sets out 25 recommendations grouped in six categories, identifying the actors involved and explaining the expected outcomes. Examples include:

  • putting in place an organised, holistic and integrated strategic approach to combat undeclared work;
  • setting up effective deterrents such as effective electronic systems and data-sharing, targeted inspections, and inspection of all public works contracts to ensure that contractors or subcontractors do not use undeclared workers;
  • supply-side incentives such as a ‘white list’ of legitimate employers;  
  • improving tax collection, partly through administrative sanctions and penalties, and partly through incentives to encourage businesses to function  formally;
  • demand–side incentives such as electronic payments, or the use of service vouchers in sectors such as household service and agriculture to cover tax and social contributions;
  • changing the values, norms and beliefs of citizens through measures such as public awareness campaigns to explain the benefits of declared work or to explain the tax system;
  • reform of formal institutions to strengthen social dialogue and encourage the signing of binding collective agreements;
  • monitoring the impact of a National Action Plan.

Contents of the roadmap for combating undeclared work

The roadmap specifies details of the strategic plan of action that need to be developed to combat undeclared work. The roadmap is based on the 25 recommended actions included in the diagnostic report, and sets out a timetable for a sequence of procedures and decision-making. The plan runs from January 2017 to December 2019 and takes a holistic and integrated approach to tackling undeclared work. It is based on two fundamental requirements:

  • the establishment and permanent operation of a body of tripartite dialogue to formulate legislative provisions, take responsibility and make decisions;
  • the exchange of data and the interoperability of databases between the Ministry of Labour (Social Security Fund (IKA), the Manpower Employment Organisation (OAED), SEPE) and the Ministry of Finance (General Secretariat of Public Works).

With proper coordination, it is intended that policy measures and information and awareness-raising campaigns to effectively combat undeclared work will be planned and gradually implemented.

The roadmap details the deliverables and the required actions, the participating bodies and the timeframe. It is divided into five distinct sets of actions:

  • institutional reforms and actions;
  • data interoperability;
  • policy measures;
  • information and awareness-raising campaigns;
  • miscellaneous actions – for instance, targeted and joint inspections involving SEPE, the Greek Public Revenue Service (GPSR) and possibly other inspectorates to pilot future regular joint inspections.

The roadmap was officially adopted by the Greek government and the social partners at a high level tripartite meeting held on 6 July 2016.

Views of government and social partners

Both the diagnostic report and the roadmap were the result of tripartite social dialogue under the auspices of the ILO. The national social partners – GSEE, SEV, ESEE, the Hellenic Confederation of Professionals, Craftsmen and Merchants (GSEVEE) and the Association of Greek Tourism Enterprises (SETE) – and the government accepted the need to tackle undeclared work, cooperating and unanimously approving the diagnostic report and the roadmap. However, the various bodies sometimes differed in their positions and proposals and put emphasis on different points.

The Ministry of Labour noted that combating undeclared work goes hand-in-hand with tackling general unlawfulness in the labour market. Aspects of the tax and social security system interact and intensify the problem, and an important tool for combating undeclared work was the restoration of a regulatory framework and the extension of collective agreements.

GSEE pointed out that combating undeclared work and unlawful labour in general continues to be a matter of clear and targeted political will, and at the moment this is lacking. The tendency is for undeclared work to increasingly be seen as normal. GSEE therefore argued that critical parameters for combating unlawfulness in the labour market were the immediate restoration of the collective bargaining framework, the reintroduction of the National General Collective Employment Agreement and the extension of sectoral collective agreements. GSEE also wanted the abolition of provisions in the Memorandum of Understanding that promote flexibility and precariousness in individual contracts and jobs.

SEV strongly supported efforts to combat undeclared work and unlawfulness in general, since this reduces tax revenues, affects social security funding and distorts competition. The SEV statement said:

Transforming informal work into formal employment can help improve the quality and sustainability of public finances and labour market efficiency, while helping to achieve full employment, to improve quality and productivity at work, to strengthen social cohesion and inclusion, to eliminate poverty traps and to avoid market distortions. In this area, the social partners must play a strong and active role in all stages from design of the policies to their implementation.

ESEE noted that in comparison with larger companies, small and medium-sized enterprises (SMEs) bear a disproportionate regulatory and administrative burden when new jobs are created, and that there is a connection between undeclared work and issues such as the level of taxes or the tax system.

GSEVEE noted that a necessary condition for a holistic strategic approach to combating undeclared work was economic growth. The latest six-monthly survey by the Institute of Small Enterprises (IME) of GSEVEE reveals deepening disinvestment in the previous six months, with over-taxation and lack of liquidity creating a difficult environment for small and very small businesses that are trying to survive rather than maximise profits. GSEVEE says that undeclared work is a complex economic and social phenomenon and that an attempt to tackle it in ways appropriate for economies not in crisis may fail in Greece. The roadmap is an ambitious plan, and factors such as the role of the tripartite committee, interoperability between public services, reduced costs of compliance and tax incentives will be crucial to its success.

SETE recognises that undeclared work is a critical and complex problem for the economy and the labour market. It believes that government policies that impose heavy taxes and social insurance burdens encourage illegal practices in the labour market. SETE stressed its own contribution in combating undeclared work as signatory to sectoral collective agreements in the hotel sector and a supporter of compulsory collective agreements for all employers.


Undeclared work is quite a complex problem in Greece and is a high policy priority, given the continuing economic crisis.

The national social partners participated in a Tripartite Consultation Committee coordinated by the Labour Ministry for the first time in March 2015 and successive meetings resulted in some commonly accepted decisions, such as the establishment of an integrated information system. However, the work of the committee was discontinued after the September 2015 elections.

This new initiative to address undeclared work was launched in April 2016 under the coordination of the ILO and involving close tripartite cooperation. The results so far, including the establishment of a roadmap for combating undeclared work, is one of the few cases where the social partners together and the government have been able to adopt a common policy strategy on an issue. This will be key to the programme’s success and the adoption of practical policy measures.

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