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Transition to formal employment

ILO members agree on a roadmap to curb undeclared work in Greece

New initiative aims at reducing undeclared work that remains a significant feature of the Greek economy.

News | 31 October 2016
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ATHENS (ILO News) – The Greek Ministry of Labour, Social Security and Social Solidarity and the country’s social partners have agreed on a roadmap to address undeclared work in Greece. The agreement builds on an effective social dialogue based on the main findings and recommendations of an ILO Diagnostic report on undeclared work in Greece. The report estimates the size of the undeclared economy in the country at 25 per cent of GDP.

The roadmap was adopted during a workshop that took place in Athens by Georgios Katrougalos, Greek Minister of Labour, Social Insurance and Social Solidarity; Giannis Panagopoulos, President of the Greek General Confederation of Labour (GSEE); Harry Kyriazis, Advisor to the Board of Hellenic Federation of Enterprises (SEV); George Kavvathas, President of the Hellenic Confederation of Professionals, Craftsmen and Merchants (GSEVEE); Vasilis Korkidis, President of Hellenic Confederation of Commerce and Entrepreneurship (ESEE) and Giannis Retsos, the First Vice President of the Association of Greek Tourism Enterprises (SETE).

“This roadmap is a major step to significantly increase efforts to curb undeclared work in Greece. It will help to avoid treating this form of work as a survival strategy for people excluded from the declared economy,” says Heinz Koller, ILO Assistant Director‐General and Regional Director for Europe and Central Asia.

The ILO report shows that undeclared work is pervasive in all professional categories. However, it is most prominent in a “lower tier” formed by young people and those with financial difficulties, and an “upper-tier” occupied by highly skilled professional groups such as lawyers, doctors and accountants.

Quoting a 2013 Eurobarometer survey, the study says that 67.3 per cent of undeclared work in Greece is in wage employment (with 13.3 per cent fully undeclared wage employment and 54 per cent under-declared employment.) 10.2 per cent was undeclared self-employment and 22.5 per cent consisted of paid favours for close social relations.

The high level of self-employment and the large share of micro-and small enterprises are also listed among the reasons for the size of the undeclared economy.

The report especially looks at the drivers of the undeclared economy and highlights the failings of formal institutions that result in citizens considering it as socially acceptable what is considered illegal by the state.

The authors acknowledge measures taken in recent years to address the issue, including imposing stricter sanctions, reducing non-wage costs and limiting bureaucratic obligations and red tape. However, they said even more incentives and effective awareness raising campaigns are needed to reduce undeclared work and avoid an approach that is purely based on repression.

National action plan

The report, therefore, calls for a national action plan to reduce undeclared work. Besides more effective deterrence measures, it proposes various incentives to businesses to move to the formal economy.

Other measures would include redressing the fall in GDP per capita, improving the quality of government and further reducing corruption. Increasing expenditure on labour market interventions would further help vulnerable groups and develop more effective and targeted social transfer systems that reduce the widening levels of income inequality.

Other steps include more targeted inspections, better training for tax, labour and social security inspectors and a reform of public services to make them more customer-friendly.

Established in close cooperation with the Greek government and social partners, the report and the roadmap are major outcomes of an ILO project funded by the European Commission on Supporting the transition from informal to formal economy and addressing undeclared work in Greece.

All proposals are based on ILO Recommendation 204 on the Transition from the Informal to the Formal Economy, adopted at the International Labour Conference in June 2015. The Recommendation provides strategies and practical guidance on policies and measures that can facilitate the transition from the informal to the formal economy.

“Many of these recommendations can be put into practice in Greece through an integrated strategy,” concludes Frédéric Lapeyre, Head of the Informal Economy Unit at the ILO Employment Policy Department.

The roadmap contains a sequence of interrelated actions which will support the fight against undeclared work in Greece between 2016 and 2019. It is based on two pillars: 1) a permanent tripartite social dialogue body which draws on the appropriate legal provisions and takes the responsibility for the integrated strategic approach towards tackling undeclared work in Greece; 2) the interoperability of data bases for the exchange of data between the different enforcement bodies.