commission européenne 1 -1- the fight against undeclared work : a new challenge for an enlarged...

Commission européenne--11--

The Fight Against Undeclared Work :The Fight Against Undeclared Work :

A New Challenge for an Enlarged A New Challenge for an Enlarged Europe ?Europe ?

Cicero Foundation Seminar, 17-18 April 2008

Guido VANDERSEYPEN

DG Employment, Social Affairs and Equal Opportunities, EUROPEAN COMMISSION


Structure of presentation

1. Definition of Undeclared work (UDW)2. Why bother about UDW ?3. Estimates of UDW as % of GDP4. Socio economic facts from an EU survey (1)5. Socio economic facts from an EU survey (2)6. EU policy mix for the fight against UDW7. Some success stories8. Policy issues9. Follow up to COM(2007)62810. References


1. Definition of UDW

• « Any paid activities that are lawful as regards their nature but not declared to public authorities, taking into account differences in the regulatory system of Member States »

• = an activity based definition as opposed to enterprise- or job-based definition

• = emphasis on social security and tax fraud

• excludes criminal activities


Undeclared work

• undermines the financing of social security

• may go together with tax and social security fraud

• represents a negation of the principles of flexicurity

• Constitutes a pull factor for illegal immigration

• may result from dysfunction of European labour law

2. Why bother about UDW ?2. Why bother about UDW ?


3. UDW incidence in EU Member States > 10% UDW

0

5

10

15

20

25

30

35

40

PL SK IT SI SP H LV LI RO GR BG < 10% UDW

0

1

2

3

4

5

6

7

NL UK BE DK CY SF DE F PT SW EE


4. Socio economic facts according to Special Eurobarometer 284

• 11% of respondents acquired undeclared goods or services

• UDW performed by 5% of respondents (mainly as side activity)

• Wages paid cash-in-hand to 5% of employees in EU (up to 10% in new MS) - estimated at 2% of total wage bill


5. Socio economic facts according to Eurobarometer 284 (ctd.)

• Main sectors : household and personal services, construction, horeca and repair

• The performers : high incidence among students, jobless, self-employed*

• Detection risk high for 1 respondent out of 3• …and 18% of public thinks no risk of a fine * NB outside scope of survey : illegal immigrants and transactions between

companies


6. EU POLICY MIX

A Council resolution of 29.10.2003 calls for:

– reducing the financial incentives for UDW in tax and benefit systems (incl. the permissiveness of the social protection systems);

– administrative reform and simplification, with a view to reducing the cost of compliance with regulations;

– strengthening the surveillance and sanction mechanisms, with the involvement of labour inspectorates, tax offices and social partners;

– trans-national cooperation between Member States, and

– awareness raising activities.


7. some SUCCESS Stories• Service vouchers for household services (e.g. BE, SP)• Increased minimum wage as a threshold for declaration (PT,

PL, SK)• Flat taxes avoiding distortions between dependent work and

(false) self employment (EE, SK)• VAT reduction for labour intensive services (FR)• Simplified registration for seasonal work etc. (FR)• Laws & Action plans on UDW (DE, FR, IT )• Social Partner Agreements (DE, NL)• Regularisations (IT, SP, PT)• Public campaigns (LV, LT)


8. Policy Issues• Taxation on low productivity jobs• Extra social security contributions on overtime• Taxation regime for (false) self employment• Level of minimum wages• Transitional arrangements limiting access to EU-15• Flexicurity• Detection of tax and social security fraud• Role of social partners in law enforcement• Administrative cooperation incl. transnational• Regularisations and amnesties


9. Follow up of COM(07)628• Improved quantification of UDW• Focus in Lisbon Strategy reporting (UDW as a

dimension in flexicurity pathways)• Exchange of good practices (Employment Cttee etc.)• Review of transitional arrangements• Social Partners’ Work programme 2006-2008• Regulatory simplification (posted workers, social

security)• Setting up « platform » for info. exchange


10. REFERENCES• Communication COM(2007)628• Council resolution of 29.10.2003

(OJ C 260/1 of 29.10.2003)

• Study « UDW in an enlarged Union »http://ec.europa.eu/employment_social/incentive_measures/activities_en.htm#2004

• Eurobarometer Special Survey 284http://ec.europa.eu/public_opinion/archives/eb_special_en.htm

• European Employment Observatoryhttp://www.eu-employment-observatory.net/index.aspx

commission européenne 1 -1- the fight against undeclared work : a new challenge for an enlarged...

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