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EESC President Henri Malosse

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Shedding light on the hidden economy – EESC calls for a common approach

22 Jan 2014
Ref: 04/2014

The EESC has dedicated yet another opinion to combating the shadow economy and undeclared work. Both topics are highly delicate, not least because their extent and impact on the economy differs enormously among Member States and regions, ranging from below 10% to more than 30% of total output. They also vary considerably from one economic sector to another. 

"Unfortunately too many people still view the shadow economy as a normal part of society and lack any remorse about using the 'black market' either to hire/provide cheap workers or buy/sell goods while circumventing taxation. Furthermore, many countries still lack a clear stance on the shadow economy and undeclared work ", says Stefano Palmieri, rapporteur for the own-initiative opinion 'A strategy against the shadow economy and undeclared work'.

Almost one-third beyond the reach of government authorities

Estimates show that the shadow economy and undeclared work in Europe today are worth over EUR 2.1 trillion[1], which is money governments lack for much-needed investment and job creation. "Some people are profiting at the expense of many others", stresses Mr Palmieri.

The shadow economy also has harmful consequences for the economy (e.g. its impact on the quality of products and services, lost tax revenues, etc.) and for society (its impact on working conditions and the exploitation of vulnerable working groups, such as immigrants, young people, women, etc.).

The EESC recommends adopting the Italian methodology to measure the scale, impact and development of the shadow economy and undeclared work

The EESC is convinced that an effective fight against the hidden economy has to start with a quantitative and qualitative impact assessment. "For a Europe-wide assessment, the different methods have to be consolidated. Only then can we compare numbers and develop targeted policies", states Mr Palmieri, who is convinced that a common methodology is the first step in the right direction. In this regard, the EESC recommends a method developed by the Italian National Institute of Statistics and which has also been tested in that country, which is particularly vulnerable to these phenomena and also has considerable regional differences.

"A complex problem requires a mix of different measures and policies", states Mr Palmieri, alluding to the various EESC proposals contained in the opinion. "Nor must we forget to look beyond the EU's borders too, as it is our responsibility that minimum decent working standards also apply to subcontractors for EU companies".

Available data can be found at: SOC480\SOC-tables.doc.



[1] "The Shadow Economy in Europe, 2013", Friedrich Schneider, Ph.D, JKU Linz, ATKearney, VISA

 

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