By Aaron Barbour
Amsterdam, a city known for its permissive approach to life, was the venue for a fascinating two day meeting on undeclared work recently. We were invited as the only social partner following our research and campaigns on the informal economy. It was hosted by Regioplan, a research organisation based in the Netherlands, and attended by various bigwigs (mainly from governments) from western European countries, to assess the feasibility of developing an EU platform to address undeclared work.
Commissioned by the European Commission (DG Employment Directorate) – the workshop concentrated on sharing and answering the following issues:
- characteristics of existing national policies towards undeclared work
- difficulties that enforcement bodies encounter on a national and international level
- characteristics of existing cross-border co-operations to tackle undeclared work
- best / worst practices in this field
- possible options for a European platform to prevent and fight undeclared work.
So we were presented with a blank canvass, and asked to paint. It became clear very early on that there are stark differences across Europe when it comes to undeclared work. Each country has its own particular informal economy, which in themselves are diverse and complex. Evidence bases vary massively as does their depth of understanding about the issues or lack of it. Governments respond very differently depending on who is leading that response, for example and to generalise it is more often the tax departments leading in western Europe and labour inspection departments in eastern Europe. This then determines priorities of how that response is shaped and driven forward.
Approaches do differ as you’ll see from the table below. Overall there has been a trend over the last ten years away from detection and deterrence to more joined-up preventative and curative measures in Europe. However this does not apply to all countries, some are regressing in the opposite direction.
| Approach | Method | Measures | Examples |
| Deterrence | Improve detection
Increase penalties |
Data matching and sharing
Joining-up strategy Joining-up operations Increase penalties for evasion |
Germany
Poland France UK |
| Enabling compliance | Preventative | Simplification of compliance
Direct & Indirect tax incentives Smooth transition to self-employment Introducing new categories of work Micro-enterprise development |
Ireland
Germany Lithuania Czech Republic |
| Curative / stimulating | Demand-side incentives
- service vouchers; targeted direct taxes; targeted indirect taxes Supply-side incentives -society-wide amnesties; voluntary disclosure; business advisory services |
Belgium
Luxembourg Netherlands |
|
| Fostering Commitment | Education
Peer-to-peer surveillance Tax fairness Procedural justice Redistributive justice |
Australia
Finland |
Ref: adapted from Regioplan and Prof Colin C Williams (2010)
This led me and others to question the value of trying to develop a European platform. Yes countries would like to learn from one another, to be able to share what works and what doesn’t (there is already an ideas bank run by EuroFound) would like increased co-operation between countries, including joint operations; would like to engage in capacity building to improve the efficiency and effectiveness of national actions; would like to involve a range of partners including different government departments, employers, trade unions, and social partners. However we didn’t want a top-down imposed legislative and bureaucratic framework, not taking into account cultural and political differences, serving no purpose but its own. This may evolved over time, but evolve it must to meet the needs of national countries and prove its added value.
So what happens from here? Regioplan are hosting 2-3 other workshops across Europe and then will feedback their findings to the Commission, and from there hopefully develop this EU platform from the ground up.
