Illegitimate Wage Practices in Central and Eastern Europe: A Study of the Prevalence and Impacts of ‘Envelope Wages’
Debatte: Journal of Contemporary Central and Eastern Europe, Vol. 17, No. 1, pp. 65-83, 2009
20 Pages Posted: 6 Jul 2013
Date Written: 2009
Most studies of illegitimate wage practices focus upon informal employees who are unregistered workers and paid on a wholly off-the-books basis. In this paper, however, the aim is to evaluate the prevalence in Central and Eastern Europe in particular, and the European Union (EU) more generally, of a so far little discussed illegitimate practice whereby formal employees are paid by their formal employer an additional undeclared (‘envelope’) wage. Reporting the findings of 26,659 face-to-face interviews conducted during 2007 in 27 European countries, some 1 in 20 (5 per cent) formal employees in the EU, and 1 in 8 (13 per cent) in Central and Eastern Europe, report receiving an additional ‘envelope’ wage from their formal employer. The paper then reviews the impacts of this common but overlooked wage arrangement and how it might be tackled.
Keywords: envelope wages, informal employment, informal sector, shadow economy, Eastern Europe, post socialist economies.
JEL Classification: O17, H26, H31
Suggested Citation: Suggested Citation