European Platform Undeclared Work 2017 Platform Survey Report: Organisational Characteristics of Enforcement Bodies, Measures Adopted to Tackle Undeclared Work, and the Use of Databases and Digital Tools
European Commission, Brussels, October 2017
28 Pages Posted: 11 Dec 2017
Date Written: October 30, 2017
This report presents the main findings of the first online survey of members of the European Platform Tackling Undeclared Work. A total of 23 Member States responded.
Organisational characteristics of enforcement bodies:
Undeclared work covers paid activities that are lawful as regards their nature but are not declared to public authorities so as to evade either payment of taxes, social security contributions and/or labour laws. In three-quarters of Member States, responsibility for these three forms of evasion lies in separate public authorities, with each having separate targets and key performance indicators (KPIs). The outcome is a departmental ‘silos’ approach, and the lack of a strategic joined-up approach. Only one quarter of Member States have common targets and KPIs across the whole of government and/or one single authority responsible for all aspects of undeclared work. This suggests the potential for mutual learning and developing good practice in relation to common strategic objectives and targets.
The survey reveals considerable heterogeneity across Member States in terms of budget allocation, human resources, inspection activity and detected cases of undeclared work. In some, these are declining, in others increasing and in yet others static.
The degree of involvement of social partners varies markedly across Member States, ranging from no or limited involvement to tripartite models based on mutual information exchange and consultation. Consideration should be given to developing an assessment framework to measure the involvement of social partners, and exploring further their involvement in different Member States.
Measures to tackle undeclared work:
Although Article 1 of Decision (EU) 2016/3441 establishing the Platform states “’tackling’, in relation to undeclared work, means preventing, deterring and combating undeclared work as well as promoting the declaration of undeclared work”, this survey reveals that the current focus of Platform members is narrowly upon ‘deterring’ undeclared work using measures that increase the penalties and risks of detection. Approaches to ‘prevent’ it or ‘promote the declaration of declared work’ using either (supply- or demand-side) incentives to operate on a declared basis, or indirect measures to align norms and beliefs about engaging in undeclared work with national laws and regulations, remain less commonly used.
The dominant view across Member States is that deterrence measures are the most important type of measure and also the most effective at ‘tackling’ undeclared work. This survey, however, reveals little ex-ante and ex-post evaluation of policy measures, and an absence of pilot studies. This is hindering the adaptation and transformation of policy approaches away from the current heavy reliance on deterrence measures, and towards a more ‘evidence based’ policy development approach.
Use of digital tools and databases:
Over half (57%) of Member States responding state that each Ministry/enforcement body in their Member State involved in tackling undeclared work has access to a database that allows them to detect potential instances of undeclared work. Moreover, a similar share state that the design and architecture of the ICT-infrastructure is directly related to their targets and KPIs for tackling undeclared work.
However, only 13% of respondents state that the database in their ministry/enforcement authority is inter-operable with other Ministries’ databases who are also involved in tackling undeclared work. Only 39% of Member States currently share data across borders. Increasing the sharing of data, and the improvement of existing analytical tools, were the most commonly mentioned requirements to improve the effective use of databases and digital tools.
Keywords: informal sector, informal economy, labor economics, entrepreneurship, industrial relations, tax evasion, informal labor markets, tax law, illegal behaviour, formal and informal sectors
JEL Classification: H26, J48, J46, K34, K42, O17, P37
Suggested Citation: Suggested Citation