Thematic feature - industrial relations and undeclared work

Source: DILTI.

The industry most affected by undeclared work is construction and civil engineering. However, proportionally, the percentage of all offences reported in this sector dropped from 31.4% in 1992 to 19.1% in 2001. The hotel, café and restaurant sector, on the other hand, saw its share of reported offences increase significantly over the same period, from 13.2% in 1992 to 18.6% in 2001. During the same period, the percentage of offences reported in the distribution, transportation, agriculture and clothing industries remained stable.

DILTI does not provide a breakdown of figures by gender.

Undeclared work is unevenly spread throughout mainland France (excluding overseas territories and départements, for which no up-to-date statistics exist). The number of offences is particularly high in Nord Pas-de-Calais (northern France), Ile-de-France (Paris area) and Provence-Alpes-Côtes d’Azur (south-eastern France). In general, port areas are more seriously affected by offences than other areas.

Undeclared work is thought to account for between 10% and 20% of GDP. An official report on the subject, published in February 2003 (La lutte contre le travail illégal en 2001[The struggle against illegal work in 2001], ACOSS), states that it is a growing phenomenon and that it is assuming increasingly subtle and varied forms (see above) and may involve companies with hitherto spotless records.

Law

What is the legislative framework in your country concerning undeclared work? Please include here: definition; incentives for transformation of undeclared work into regular work; sanctions and penalties; connection with the tax system and benefits; any attempts at administrative or fiscal simplifications; and any recent legislative changes.

The Inter-Ministerial Delegation on Undeclared Work defines illegal work as being any type of economic, social and public order fraud covered by the Labour Code. Under this definition, such work may take various forms, such as: undeclared hours of work, activities or employees; trafficking in foreign labour; labour-only subcontracting; the unlawful loan of staff; bogus self-employment; undeclared employment; multiple employment exceeding the statutory thresholds set for specific occupations and jobs; benefit fraud (pension, sickness, unemployment); and the fraudulent use of foreign companies.

A law of 11 March 1997 (FR9702116N) put in place the main instruments that now exist to tackle undeclared work. It developed cooperation between the services run by various ministries - labour inspectorates, police, gendarmerie, customs and tax authorities, social security funds etc - at national and départemental level, and with trade unions and employers’ organisations. At nationwide level, the National Committee on Combating Undeclared Work (Commission nationale de lutte contre le travail illégal) was created, using this model. At départemental level, the same model was used to set up 'operational committees on combating undeclared work' (comités opérationnels de lutte contre le travail illégal, COLTIs), which report to prefects (préfets). More recently, in 2002, 'regional action units' (Groupements d’intervention régionaux, GIRs) were created, to complete the initiative.

Social dialogue

Please provide an overview of any collective agreements dealing with the issue of undeclared work (at any level - eg intersectoral, sectoral, company, regional). If there are any such agreements, please outline their content and, if possible, their impact, giving examples. Where possible, please provide details on collective agreements in sectors particularly affected by undeclared work, such as hotels/restaurants/catering, agriculture, domestic/personal services, retail or construction.

Please give details of any joint or unilateral initiatives on undeclared work taken by trade unions and employers’ organisations (such as information campaigns, providing training for their members responsible for negotiations, or adopting codes of conduct/ethics).

Are there cases in your country where workforce representatives have mobilised employees on the issue of undeclared work? If so, what form did this take (demonstrations, strikes etc)? Are there cases where social partners have made appeals on this issue to the public authorities (the government, elected representatives etc)? What were the results?

Social dialogue in France does not appear to have brought about genuine agreements between trade unions and employers’ organisations on the issue of undeclared work. The social partner organisations contacted in researching this article were unable to provide any concrete examples of experiences or accomplishments in this ares. While the various national and local-level social partner organisations are fully aware of the negative impact that undeclared work has on France’s economy and on the resources of social security funds, they take the view that the government must take the lead in providing impetus and action. It was state intervention, particularly the law of 11 March 1997 (see above under 'Law'), that led to the gradual development of a comprehensive initiative to tackle undeclared work.

Partnerships

Please outline any initiatives taken jointly by public authorities and social partners in order to address undeclared work, and their results. What types of partnerships exist in your country (eg involving local authorities or NGOs) and what tools or measures have been used to address the problem? Please refer to good and bad practices, indicating which policies have proved to be successful in the national context and why (such as a good mix of actors, cultural traditions or flexible tools).

Has a comprehensive partnership on undeclared work developed in the context of your country’s National Action Plans (NAPs) on employment (in response to the EU employment guidelines)? Have there been significant tripartite arrangements on undeclared work as a result or in the context of the NAPs? How have the social partners at various levels implemented the aspects of EU employment guidelines on the issue of undeclared work that are under their responsibility?

Please give details of any cross-country collaborative plans involving your country with the aim of combating undeclared work? Are these inter-governmental activities (ie collaboration between two or more countries, neighbouring or otherwise) or initiatives taken by social partners, or both?

As outlined above (under 'Law'), the law of 11 March 1997 promoted cooperation between the various public authorities and social partners to combat undeclared work, providing for the establishment of bodies representing these parties at various levels. However, this initial initiative stalled for several years. The National Committee on Combating Undeclared Work did not meet for several years after 1998. However, in June 2004, the government provided fresh impetus, drawing up a plan for tackling undeclared work over 2004-5. The new initiative will fit into the French response to the European EU employment strategy as part of its next National Action Plan (NAP) on employment.

The 2004-5 undeclared work plan targets four priority industries where specific action is to be taken: live and recorded entertainment; agriculture; construction and civil engineering; and hotels, cafés and restaurants. The government would like to see trade union and employer organisation involvement in each of these areas. In agriculture, the main association of farmers (including both employers and self-employed), the National Federation of Farmers’ Unions (Fédération nationale des syndicats d’exploitants agricoles, FNSEA), is already involved in a new initiative to tackle undeclared work under the auspices of the Ministry of Agriculture and in association with DILTI and the Agriculture Mutual Insurance (Mutualité sociale agricole, MSA) - a social security fund specifically serving the agriculture and agri-food industries. This new initiative is designed to provide information on the rules governing the provision of services, compulsory legal precautions and the risks involved in using undeclared work.

The government hopes that, in exchange for taxation and social security breaks in the hotel, café and restaurant sector - involving reduction of the VAT rate and review of a sectoral agreement on working time reduction (FR0301103N) - the representative social partner organisations in the industry will use existing collectively-agreed provisions to take action on recruitment, housing, employment and working conditions and that they will develop partnership-based arrangements to tackle undeclared work.

The 2004-5 plan to tackle undeclared work contains an important section designed to strengthen government monitoring. This includes improving the flow of information between monitoring bodies and those that manage public subsidies, tailoring administrative penalties applied to companies - in particular, withholding recruitment and vocational training assistance for offending companies - and strengthening measures to deal with cross-border fraud.

In the last-named area, the plan provides for: improved administrative cooperation with the liaison offices that Member States are required to nominate for the purposes of implementing EU Directive 96/71/EC concerning the posting of workers in the framework of the provision of services (FR0306108T); and greater bilateral cooperation with other EU Member States across the whole spectrum of undeclared work activities. This cooperation is to go beyond those issues covered by the posted workers Directive and the EU Council Resolutions of 29 October 2003 (see above) and 22 April 1999 (on improved cooperation between the Member States in combating transnational social security benefit and contribution fraud and undeclared work, and the transnational hiring-out of workers). In concrete terms, this presupposes a closer relationship with the competent authorities of the countries of origin of employment agencies/labour contractors that send large numbers of workers to France (notably the UK, Ireland, Portugal and Luxembourg) and with which administrative cooperation remains insufficient. For the plan to work, greater cooperation with central and east European nations is seen as being required in areas such as:

• technical support in transposing the posted workers Directive, in particular Article 4 relating to cooperation and the setting up of liaison offices (Poland, Czech Republic, Slovakia and Hungary), or in developing exchange of information (Romania, Bulgaria, Turkey and Ukraine); and

• targeted information initiatives aimed at employment agencies/labour contractors in those countries likely to supply labour to French employers.

Nationwide follow-up of the implementation of the 2004-5 plan to tackle undeclared work is to be carried out by the Ministry of Labour and the National Committee on Combating Undeclared Work, which is to meet every six months.

Views

Please summarise the views of trade unions and employers’ organisations on the issue of undeclared work. Please include their positions on the role of the administrative, tax system and social welfare regime, and their view/assessment of government initiatives.

French trade unions and employers’ organisations have all formally condemned illegal employment. However, their ability to act either among their own membership or outside it to stamp out undeclared work seems - for different reasons - very limited. There is little trade unions can do, apart from a few high-profile initiatives, to bring pressure to bear on offending companies, since unions' presence in these companies is most often tenuous and contested. Employers’ organisations can also do very little against offending companies and are unable to start discussions with trade unions on addressing undeclared work without first obtaining the approval of their members and, more generally, companies in their sector. As this is often not possible, they tend to follow the lead of the National Federation of Farmers’ Unions and stick to providing information to their members.

All trade unions and employers’ organisations are pleased that the government wishes to give a fresh boost to the fight against undeclared work (see above under 'Partnerships'), even if they do not necessarily like the whole range of measures set out in the plan, especially those pertaining to the withholding of certain assistance from offending companies.

Commentary

Please give your own comments on the issue of industrial relations and undeclared work.

Undeclared work in France is a particular problem in certain long-standing industries where, despite significant concentration of firms over the past 50 years, many smaller companies - on the whole averse to social dialogue and trade unionism - still exist. Cases in point are the transportation, construction and civil engineering, agriculture and hotels, cafés and restaurants. However, the major trade unions and employers’ organisations, which are fully aware of the medium-term interests of the sectors concerned, cannot alone force these sectors to adopt more law-abiding practices. Consequently, government assistance and resolve are essential. It is most often the case that the government is reluctant to force these sectors to stick more closely to the law, since it is very sensitive to the threat of redundancies, closures and, on some occasions, to 'electoral blackmail'.

The development of a European framework to tackle undeclared work, setting out action to be taken in all 25 EU Member States, enables the various countries, including long-standing Member States such as France, to undertake a review of their practices in this area. Undeclared work is not merely a phenomenon that happens in other countries, and all forms (old and new) of undeclared work must be equally addressed in all Member States. (Maurice Braud, IRES)