Evaluating the Prevalence and Distribution of Envelope Wages in the European Union: Lessons from a 2013 Eurobarometer Survey

Journal of Contemporary European Research, Vol. 11, No. (2), pp. 156-172, 2015

17 Pages Posted: 12 Dec 2016

See all articles by Colin Williams

Colin Williams

University of Sheffield - School of Management

Ioana Alexandra Horodnic

University of Sheffield - School of Management

Jan E. Windebank

University of Sheffield - Department of French

Date Written: February 10, 2015

Abstract

The aim of this article is to evaluate the prevalence and distribution in the European Union of a little discussed illegitimate employment practice whereby employers pay their formal employees both an official declared salary and an undeclared ‘envelope’ wage so as to evade the full tax and social security dues owed. To do this, a 2013 Eurobarometer survey involving 11,025 face-to-face interviews with formal employees in the 28 member states of the European Union is employed. The finding is that one in 33 employees received envelope wages during the 12 months prior to the survey, amounting on average to one quarter of their gross annual wage. Employers in East-Central and Southern European countries, and in smaller businesses, are more likely to use this fraudulent wage practice which is concentrated amongst weaker more vulnerable employee groups such as younger, skilled and unskilled manual workers, those facing financial difficulties and those with fewer years in formal education, but interestingly, also professionals and those travelling for their jobs. The paper then discusses possible causes as well as the policy options and approaches for tackling this illicit wage practice.

Keywords: Illegal Employment, Tax Evasion, Undeclared Work, Informal Economy, European Union

JEL Classification: H26, J46, J48, K34, K42, O17, P37

Suggested Citation

Williams, Colin and Horodnic, Ioana Alexandra and Windebank, Jan E., Evaluating the Prevalence and Distribution of Envelope Wages in the European Union: Lessons from a 2013 Eurobarometer Survey (February 10, 2015). Journal of Contemporary European Research, Vol. 11, No. (2), pp. 156-172, 2015, Available at SSRN: https://ssrn.com/abstract=2883466

Colin Williams (Contact Author)

University of Sheffield - School of Management ( email )

15 Conduit Road
Sheffield, S10 1FL
United Kingdom

HOME PAGE: http://https://www.sheffield.ac.uk/management/staff/williams/index

Ioana Alexandra Horodnic

University of Sheffield - School of Management ( email )

Conduit Rd
Sheffield, S10 1FL
United Kingdom

Jan E. Windebank

University of Sheffield - Department of French ( email )

United Kingdom
(0114) 222 4888 (Phone)

HOME PAGE: http://www.shef.ac.uk/french/staff/jwindebank.html

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