Fighting against undeclared work
The Commission proposed the creation of a European platform against undeclared work on 9 April 2014. The platform will bring together the Commission, social partners and EU national authorities in charge of combating undeclared work, such as labour inspectorates and social security authorities.
They will exchange information and best practices on fighting against undeclared work. The platform will also promote training for staff from various countries and identify common principles for inspections.
Undeclared work in figures
- €200 - an average amount every European spends yearly on undeclared goods and services
- €300 - the median yearly income from undeclared work
- 11% of Europeans (1 in 9) say they have purchased goods or services involving undeclared work last year
- 15% to 20% of the European GDP is an estimate of the shadow economy
Source: Eurobarometer survey "Undeclared work in the European Union"
Why is it needed?
Undeclared work is defined as any lawful paid activity that is "not declared to public authorities."
The negative effects of undeclared work are felt by workers, businesses and governments.
For workers, undeclared work translates into:
- lower pension rights
- less access to healthcare
- poor working conditions
- potential breach of employment rights
For businesses it creates unfair competition since companies that do not declare their workers gain an unfair advantage.
For governments, it means lost tax and social security revenue.
The construction sector is the most affected by undeclared work. Other affected activities include, among others:
- household services
- restaurant services
The responsibility for combating undeclared work is and will remain with the member states. The proposed platform would help them exchange information, especially in cross-border situations where it is difficult to identify and penalise undeclared work.
The platform will fill the vacuum, as previously there was no EU-level cooperation between national authorities fighting against cross-border undeclared work.
Scope of action
The platform will cover all forms of undeclared work, including bogus self-employment, which is used to disguise the employment of a worker to cut down on taxes and social security contributions
Membership of the platform
The decision creates a platform that involves all member states. The platform is a forum for practitioners and not a policy making body.
Each country will appoint a senior representative to liaise with all the authorities responsible for fighting undeclared work at the national level. In addition, the Commission and 4 representatives of the social partners organised at EU level (2 from businesses and 2 from trade unions) will also be members of the platform.
Social partners from sectors with a high incidence of undeclared work, representatives of Eurofound, the European agency for safety and health at work (EU-OSHA), the ILO and EEA countries will also be involved in the platform's work.
The platform's work will cover different aspects of undeclared work, which are related to labour law, health and safety, social security and taxation.
The platform will:
- allow experts from across the EU to share information and best practices
- examine national and EU tools for tackling undeclared work
- explore new ways of tackling cross-border undeclared work by improving data sharing between national administrations and identifying common principles for inspections
- promote joint training sessions and exchanges of staff
In the Council
The Commission submitted its proposal to the Council and the European Parliament on 9 April 2014. The presidency of the Council and the Parliament reached a provisional agreement after a round of trilogue meetings on 11 November 2015. On 20 November 2015, the Permanent Representatives Committee approved the compromise text negotiated with European Parliament.
On 2 February 2016, the European Parliament adopted the decision establishing a platform to tackle undeclared work at first reading. The Council formally adopted it on 24 February 2016.
The decision will be now signed by the presidents of both institutions and published in the Official journal of the European Union. The platform will start working in spring 2016.