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How to tackle efficiently undeclared work? Prevention versus punishment

Fourth session in the cycle on 

Job opportunities in 2020

Click here to view a summary of the event

Speakers

Muriel Guin

Head of Unit, DG EMPL, European Commission

Georgi Pirinski MEP

Kerstin Howald

EFFAT Tourism Sector Secretary

Moderator

Nicolas Vincent

Since 2007, undeclared work has been officially defined as any paid activities that are lawful as regards their nature but not declared to public authorities. It is a complex problem of significant dimension. In Europe, an estimated €2.1 trillion of income is lost each year due to undeclared work .

European institutions have taken measures to address the issue: in 2012, the European Employment Package emphasised the potential of job creation through the transformation of undeclared work into formal jobs. Two years later, the European Commission proposed the creation of a European Platform in order to further cooperation at EU level. The Platform seeks to help Member States to prevent and deter undeclared work.

The tenth Policies & Practices session focused on key characteristics of the future Platform and at a larger scale through a lively discussion with: 

-Georgi Pirinski, MEP and rapporteur for the European Parliament on the European platform on undeclared work

-Muriel Guin, Head of Unit at the European Commission (DG EMPL)

-Kerstin Howald, Tourism Sector Secretary at the European Federation of Food, Agriculture and Tourism Trade Unions (EFFAT)

Ms Guin opened the session giving an overall view on undeclared work: “it is a very complex phenomenon,” she started, “it actually affects all sides of the economic and social society – not only SMEs as it is usually said, but also big companies.” Ms Guin’s introduction addressed some preconceived ideas such as the fact that undeclared work would concern only migrants or low-skilled jobs. “At some time in our life,” she continued, “it affects us all”, if only as consumers. 

At a national scale, dealing with undeclared work is in Member States competence. Measures range from preventive to curative – through prevention, controls and formalisation – but always “taking into account the specificities of respective labour markets”, emphasised Ms Guin. This is a fundamental criteria for national policy makers as Mr Pirinski summed up clearly “subsidiarity and proportionality principles should be fully respected” in these matters.

The EU added value to identify, analyse and bring ideas to tackle undeclared work

However, the European Union can bring an added-value. According to Ms Guin at the EU level and through a holistic approach, the idea is “to crystallise” and share views with experts from Member States, social partners, international organisations and EU agencies and work together to see how the different policies of the EU (such as working conditions, health and safety at work, social security coordination, internal market tools, migration tools, tax and so on) can be used to tackle undeclared work.

According to Mr Pirinski, cooperation has to go further and to encompass “other aspects of enabling, encouraging the regularisation of jobs, measures which will work towards bringing undeclared work into the declared area, making jobs formalised” – in a nutshell, balancing punitive and proactive types of measures.

In Ms Howald’s view, too many parameters are at stake to decide on one single solution to undeclared work: the economic sector and the national context, but also the employment situation or the actors involved can have an impact. This calls for a combination of measures to tackle undeclared work. “Avoidance and prevention”, she said, “would be the preferable way, but I think that nevertheless we need to enforce this, and hence control and sanctions.”

Knowledge sharing, best practices promotion and easing partnership: a valuable investment

Partnership between stakeholders is an ultimate goal of the Platform. “The question for us”, Ms Guin emphasised, is “rather cooperation and partnership versus a patchy approach.”

In some Member States, Ms Guin explained, very interesting examples can be found of “associations and partnerships with social partners in different types of actions”. They are all very relevant at EU level, she emphasised. 

While stressing the major interest of sharing best practices, Ms Howald, also underlined the importance of involving the social partners in the Platform.

A question from MEP Anthea McIntyre embraced the idea of an exchange platform to share ideas and best practices. Still, she expressed concerns about the cost of such platform: it should not require an expensive commitment from Member states. Ms Guin replied that the Commission sees cooperation and exchange of best practices not really a costly option considering that the effects can be maximised with 28 Member States. 

The estimated costs of €2.1 million are worth the investment, especially compared with the €2.1 trillion of missed income due to undeclared work: “there is no comparison between costs and effects”, Mr Pirinski said. “There should be a virtuous alliance of interests rather than a confrontation and dissenting kind of attitude”, Mr Pirinsky continued. “Business should also be interested in having fair competition rather than a very significant infringement on fair competition due to undeclared work”. 

The lack of an EU wide labour market as a limit to the cooperation?

Ms Guin stressed the limits of a so-called EU labour market: “there are national labour markets at this stage” for which each specificity has to be taken into consideration. She continued: “We want people to start working together, thinking together and say what kind of practices can be transferred.”

As far as labour is concerned, common interests should push for proper remuneration and social rights because “all undeclared workers are working in jobs that are needed” Mr Pirinski stated. He asserted: “induced jobs should receive a full rate of proper remuneration and benefits.” 

Mentioning the future Platform representatives from each country, Mr Pirinski asked “what should they be concerned with: simply trying to sanction, punish and to push back? – or rather to generate an employment-friendly attitude?” He continued: “this is not simply a kind of political wish but makes economic and social equity sense. It is a central challenge within the EU at the moment.”

The segmentation of the labour market and its regulation is also, in Ms Howald’s view, a major cause for the strive to undeclared work, with employers seeking for the cheapest conditions on an atomised market. “We need coherent labour legislation at European level”, she concluded: “an inclusive labour market where all workers are treated equally.” 

Furthermore there is a lot to gain in raising awareness by putting undeclared work in the spotlight as well as adding pressure on Member States to act on this issue.

An existing link between decent working conditions and the fight against undeclared work 

From the floor, Werner Buelen, from the European Federation of Building and Wood Workers, warned that converting undeclared work into new jobs was a sensitive issue: “although we support the idea”, he said, “if we raise the issue within the platform, it could paralyse the whole discussion which is political: what kind of jobs?” Therefore, is the Platform the best body to discuss this issue?

Mr Pirinski replied that, as a rapporteur, he was interested in quality employment. And it remains a challenging issue to define quality jobs and what they entail.

Amana Ferro, from the Anti-Poverty Network, discussed with the panel the notion of punitive approach: “who do we mean to punish?” she asked. Ms Howald, from the panel took the remark further noting that undeclared workers most often cannot exercise their fundamental rights. “It is a violation of European and international workers and human rights”, she said, before advocating for an arsenal of clear and strict rules and, in case of infringement “severe punishment.”

Reaching the end of the session, the panellists were asked the key principles and actions they see at stake in the Platform. Mr Pirinski replied that one area was dealing with labour inspectorates and possibly, having their training included in the framework. The ILO Conventions could be used as reference criteria. “Another thing would be going to the enabling issue and analyse what kind of domestic care schemes exist, which could alleviate sometimes very severe problems”, Mr Pirinski continued.

As for Ms Howald, “we need a general equal treatment for all workers. It is also important for fair competition and a level-playing field in the economy”, she concluded.