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Diagnostic Report on Undeclared Work in Greece

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Diagnostic report on undeclared work in Greece DIAGNOSTIC REPORT ON UNDECLARED WORK IN GREECE INTERNATIONAL LABOUR ORGANIZATION Copyright © International Labour Organization 2016 First published 2016 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Licensing), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: [email protected]. The International Labour Office welcomes such applications. Libraries, institutions and other users registered with a reproduction rights organization may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. ILO Cataloguing in Publication Data Diagnostic report on undeclared work in Greece / International Labour Office, Employment Department, Informal Economy Unit. - Geneva: ILO, 2016. ISBN: 9789221313236; 9789221313243 (web pdf) International Labour Office. Employment Department. Clandestine employment / hidden economy / labour relations / employment policy / Greece 13.01.3 The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications and digital products can be obtained through major booksellers and digital distribution platforms, or ordered directly from [email protected]. For more information, visit our website: www.ilo.org/publns or contact [email protected]. FOREWORD In August 2015, the European Stability Mechanism support programme for Greece was approved by the Greek authorities and the European Commission. Its Memorandum of Understanding included the following key deliverable: “the authorities will adopt an integrated action plan to fight undeclared and under-declared work in order to strengthen the competitiveness of legal companies and protect workers as well as raise tax and social security revenues”. Addressing undeclared work is a complex and difficult challenge, especially when a country faces a difficult socioeconomic situation marked by high unemployment, a poor business environment and the lack of fiscal space. In Greece, like many other European countries, undeclared work remains a significant feature of the economy, despite measures taken in recent years to address the issue, including imposing stricter sanctions, reducing non-wage costs and reducing bureaucratic obligations and the administrative burden. In this context, the ILO, in close collaboration with the Greek Government and the social pa rtners, has formulated a project funded by the European Commission, on “Supporting the transition from informal to formal economy and addressing undeclared work in Greece”. A first and unique result of this project was the preparation, through a participative and consultative process, of the present Diagnosis of Undeclared Work in Greece. The Diagnostic Report was endorsed by the Greek Government and the social partners in a high level tripartite validation meeting held on 6 July 2016. It also provides a set of policy recommendations that reflects the ILO’s vision of a balanced approach combining incentives with compliance measures, as enshrined in the ILO Recommendation n. 204 on the transition from the informal to the formal economy, adopted at the International Labour Conference in June 2015. This Recommendation affirms that the transition to the formal economy is essential to achieve inclusive development and to realize decent work for all. It is therefore essential to improve working and living conditions, to promote sustainable small and medium enterprises and to achieve fair competition and fiscal consolidation at national level. Thus it aims to achieve greater inclusiveness and cohesion in our societies, and to better design the “Future of Work” that we wish to shape for our societies. Reaching a tripartite agreement on the main characteristics and drivers of informality in Greece was an important step. The next challenging step is to design, through tripartite dialogue, a road map for addressing undeclared work in Greece. This road map should contain a balanced regulatory and poli¢y framework for preventive and appropriate corrective measures that will facilitate the transition to the formal economy and tackle undeclared work. The Greek Government and the social partners, with the support of the ILO and of the Structural Reform Support Service/EU, will be working jointly to achieve these results. We would like to express our special thanks to the high level team of experts that prepared this comprehensive Diagnostic Report: Professor CoJin WiJJiams from SheffieJd University, Dr. Stavroula Demetriades from EUROFOUND and Professor Eleni Patra from the American College of Greece, made a remarkable analysis of the situation and a key contribution to the national policy debate on undeclared work. We would also like to thank the ILO technical team in charge of the project: Frederic Lapeyre, Head of the Informal Economy Unit; Philippe Marcadent, Chief of INWORK Branch; Maria Luz Vega Ruiz, Special Advisor of the Europe and Central Asia Regional Office; Joaquin Nunes Pintado, Senior Specialist in Labour Administration; and Athina Malagardi, National Officer in Athens. George Katrougalos Heinz Koller Minister of Labour, Social Security and Assistant Director-General Social Solidarity Regional Director for Europe and Central Hellenic Republic Asia International Labour Organization Date Diagnostic Report on undeclared work in Greece EXECUTIVE SUMMARY ........................................................................................................................... 9 1 Introduction: Background context 2 Undeclared work: an analytical and policy framework 2.1 Analytical framework .................................................................................................................... 16 2.2 Policy approaches towards undeclared work ................................................................................. 18 3 Extend and nature of undeclared work in Greece 3.1 Magnitude of the undeclared economy .......................................................................................... 22 3.2 Nature of the undeclared economy ................................................................................................ 24 3.2.1 Varieties of undeclared work ......................................................................................................... 24 3.2.2 Demand for undeclared goods and services ................................................................................... 26 3.2.3 Supply of undeclared work ............................................................................................................ 28 3.2.4 Under-declared employment: envelope wages .............................................................................. 30 4 Drivers of the undeclared economy in Greece 5 Organisation of the fight against undeclared work: Institutional framework 5.1 Responsibilities of government ministries ..................................................................................... 40 5.2 The role of social partners .............................................................................................................. 47 5.3 Bodies of Social Dialogue ............................................................................................................. 47 5.4 Towards a joined-up strategic approach ........................................................................................ 51 6 Current policy approach and measures: an evaluation 6.1 Direct controls: deterrence measures ............................................................................................. 55 6.2 Penalties and sanctions .................................................................................................................. 55 6.2.1 Detection measures ........................................................................................................................ 57 6.3 Direct Controls: supply-side incentives ......................................................................................... 62 6.4 Direct Controls: demand-side incentives ....................................................................................... 67 6.5 Indirect controls ............................................................................................................................. 72 6.5.1 Altering informal institutions: awareness raising campaigns .......................................................
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