COVID-19 and Undeclared Work: Impacts, Challenges and Policy Responses

Abstract

The aim of this study is to evaluate the impacts of the coronavirus pandemic on undeclared work in the Western Balkans and the emergent challenges for state authorities, and policy responses, in the immediate and longer-term in relation to tackling undeclared work. To achieve this, section 2 briefly evaluates COVID-19s impact on undeclared work in the Western Balkans. This examines its impacts on different types of undeclared enterprise and worker and the size and characteristics of those affected in the six Western Balkan economies using data from the Employment and Social Affairs Platform (ESAP1) economy reports on undeclared work and the 2020 Balkan Barometer. Section 3 then outlines the challenges state authorities in the Western Balkans and beyond witnessed in adapting to confinement in terms of on the one hand, providing protection for staff and on the other hand, their adoption of new working methods and practices. To do this, information provided at the 1st Plenary meeting of the Western Balkan Network Tackling Undeclared Work as well as from other European enforcement authorities is used. Section 4 turns to two important immediate challenges facing Western Balkan economies. On the one hand, there is the potential abuse of the short-term financial support schemes in Western Balkan economies, especially in relation to undeclared work, and on the other hand, the issue of protecting vulnerable workers in the undeclared economy left without revenue during the confinement period and possible policy responses that have and could be adopted. Section 5 then turns to three future challenges in the recovery period. The first issue is whether the conventional policy approaches and measures for transforming undeclared work into declared work will continue to remain valid. The second issue is whether the same or different policies will be required for preventing declared work shifting into the declared economy and the third and finally, there is the future challenge regarding the withdrawal of the short-term financial support packages and its implications for the growth of undeclared work. The sixth and final section then draws conclusions and makes recommendations.

Keywords: COVID-19, informal economy, undeclared work, public policy, Western Balkans

JEL Classification: H26, J46, K42, O17, P37