At EU level, undeclared work is defined as "any paid activities that are lawful as regards their nature, but not declared to public authorities, taking into account differences in the regulatory systems of the Member States".
Undeclared work may come in different forms:
- The most common type is work carried out in a formal undertaking, partially or fully undeclared. Partially undeclared work is sometimes also called "under-declared work", "envelope wages" or "cash-in-hand";
- Another type is undeclared "own account" or self-employed work, where self-employed persons provide services either to a formal enterprise or to other clients, such as households;
- Undeclared work occurs in all kind of economic sectors, both within countries and across borders. It is often carried out in sectors like construction, renovation or repair works, gardening, cleaning, provision of childcare or HORECA (Hotel / Restaurant / Catering – food services).
Undeclared work is a persisting challenge negatively affecting workers, businesses and governments across Europe.
A new Special Eurobarometer survey carried out in 2019 shows that in the EU:
- One in ten Europeans say they have purchased in the past year goods or services that might include undeclared work. Europeans are most likely to have purchased undeclared goods or services for home repairs or renovations.
- One third of Europeans know someone who works undeclared.
- Half of Europeans perceive the risk of being detected by authorities as low.
Fighting undeclared work
The main responsibility for tackling undeclared work lies with national authorities. The fight against undeclared work relies mostly on three types of enforcement bodies:
- Labour inspectorates addressing abusive behaviour regarding working conditions and/or health and safety norms;
- Social security inspectorates fighting fraud on social insurance contributions;
- Tax authorities dealing with tax evasion.
Additionally, in some Member States, social partners are also involved in these tasks, as well as customs authorities, migration bodies, the police and the public prosecutor's office.
Within the last ten years, all Member States introduced various measures to step up their efforts in the fight against undeclared work, given its negative consequences. Most of them are in the area of deterrence measures to influence people's behaviour with stricter sanctions or focusing on more effective inspections. In addition, Member States use preventive measures such as
- tax incentives
- awareness raising
The European Platform tackling undeclared work enhances cooperation between Member States' relevant authorities and other actors involved to fight undeclared work more effectively and efficiently while fully respecting national competences and procedures.