Beyond national variations, at European level undeclared work involves ‘any paid activities that are lawful as regards their nature but not declared to public authorities’. Common types include work carried out in a formal undertaking, which is partially or fully undeclared, and undeclared ‘own account’ or self-employed work.
Eurofound has carried out various research activities over the years on undeclared work, as well as on closely related topics such as fraudulent work, posting of workers and other new forms of employment.
Eurofound research in 2013 looked at policy approaches and measures that have been implemented to tackle undeclared work in 27 EU Member States and Norway since the beginning of the recession in 2008. The analysis provided examples of potentially good practice policy measures that Member States might wish to further consider.
Taking a broader view on circumventing labour, social and tax regulations, the research path followed since 2016 has highlighted the importance of fraudulent contracting of work. In general, research has focused on pushing the boundaries of misused employment relationships beyond undeclared activities. In-depth analysis of several types of employment relationships, such as fixed-term contracts, posting of workers and self-employment, and in different sectors, such as road haulage, construction and industrial cleaning, has put the spotlight on the connections between undeclared work and fraud.
Research on the situation of posted workers across the EU emphasises the importance of identifying this cross-country phenomenon, specifying obligations and rights applicable in these situations and recalling the criteria to distinguish between genuine and bogus posting. It also underlines the consequences of the misuse of posting for workers, businesses and governments. Assessing and monitoring the posting of workers present challenges like those of undeclared work situations. Indeed, labour inspectorates face similar difficulty in identifying the circumvention of regulations, increased by cross-border characteristics.
Recent trends in the labour market, including the increasing flexibility of employment relationships and technological development, have led to a rise in new forms of employment, such as casual work or platform work. Eurofound research highlights the challenges these forms of contracting work bring to labour law, labour rights, social protection and benefits, and tax regulations. Some of these new forms have been developed to help formalise undeclared work practices. However, the links between new forms of contracting work and undeclared work are not straightforward and have to be closely monitored.
Undeclared work remains a widespread phenomenon around the world. Workers, employers and governments across the EU all experience the negative effects of undeclared work on labour rights, health and safety, social security and taxation. However, assessing the scale of the phenomenon is inherently challenging. European Commission 2019 data estimate undeclared work at about 11.1% of total labour input in the EU private sector and 14.8% of gross value added.
Over the years, national authorities have adopted different policy approaches. Deterrence-based measures aim to improve detection tactics or increase penalties, while compliance-based approaches aim to prevent people from taking up undeclared work, to legitimise previously undeclared work, or to change attitudes.
The EU institutions have put in place a range of initiatives to help reduce the incidence of undeclared work. The creation of the European Platform tackling undeclared work in May 2016 is among the EU-level initiatives to support these efforts. The Platform brings together relevant authorities and actors involved in fighting undeclared work, to tackle this issue more effectively and efficiently, while fully respecting national competences and procedures. Since 26 May 2021, the Platform is a permanent working group of the European Labour Authority (ELA).
The Platform promotes cooperation between the Commission, social partners and national authorities in preventing and deterring undeclared work, particularly in sectors where it is common: agriculture, aviation, tourism, construction, security services, cleaning, provision of childcare, commerce, road transport and hotels, restaurants and catering. This means all stakeholders working together to exchange information, especially in cross-border situations. Eurofound acts as an observer contributing to the Platform’s discussions and the ELA’s work.
Eurofound’s work on undeclared work links in with the Commission’s 2019–2024 priority on a stronger Europe in the world.
