Final Report Summary - GREY (Out of the shadows: developing capacities and capabilities for tackling undeclared work in Bulgaria, Croatia and FYR Macedonia)
Across the 28 Member States of the European Union, as well as EU Candidate countries, to better understand how governments can tackle undeclared work since 2013, a ‘knowledge bank’ was created by the European Foundation for the Improvement of Living and Working Conditions (http://www.eurofound.europa.eu/areas/labourmarket/tackling/search.php). Whilst this contained over 200 policy measures from 36 countries, there had been a lack of rigorous and systematic review and evaluation of these policy measures. The genesis of ‘GREY’ project started from this point with the clear overarching objective to provide a comprehensive, empirically informed evaluation of not only the nature and scale of undeclared work across the Balkan region, but also an evaluation of policy measures and their transferability to the institutional contexts of Bulgaria, Croatia and FYROM. A consortium was developed including world-renowned outstanding academic excellence (University of Sheffield) and long-term practical and analytical experience in the Balkans (VR, Sofia) and IPF Zagreb. During the four-year length of the project, the project partners have achieved the following key aims and milestones;
1. Conducting a comprehensive review of the policy approaches and measures being used to tackle undeclared work in Europe and globally.
2. Empirically evaluating the measures for facilitating the shift of undeclared work into the declared economy in the selected target region of the Balkans through carrying out six surveys: three population (6000 respondents) and three business (1500 respondents), nine focus groups with stakeholders, including inspectorates, Ministries of Labour, social partners.
3. Designing policy recommendations for possible new policy approaches and measures that will facilitate the shift of undeclared work into the declared economy in the Balkans, based on rigorous analysis through modelling of the data obtained through the surveys, and complemented by hard statistical data.
4. Raising awareness on the causes and consequences of undeclared work, and on possible policy solutions with policy-makers (Members of European Parliament, Labour Inspectorates and other national institutions, social partners), expert and academic community, and the general public (through press conferences and media appearances) through carrying out two international conferences, participating in four panels in other international fora, convening four international workshops, and two summer schools.
5. Creating long-term sustainable local capacity building through carrying out two summer schools for young experts from across Europe, helping them deepen and widen their understanding of under-declared work and informality, and understand how policy responses can be designed and implemented.
6. Enlarging the pool of knowledge for capacity building and awareness-raising on tackling undeclared work through producing a repository of more than 30 academic papers, dedicated to tackling the undeclared economy, the policy approaches towards undeclared work, the cross-national transferability of policy measures, as well as the methods for designing survey methods and focus groups to evaluate the undeclared economy. The papers specifically note the role of stakeholder collaboration in building trust and improving policy-making while evaluating policy measures to tackle undeclared work.
7. Mapping regional stakeholders on undeclared work and establishing valuable contacts with representatives of relevant ministries, and the expert community.
8. Capacity-building. A group of Marie Fellows have undergone training and achieved several milestones including receiving postgraduate degrees and published academic papers on undeclared work in the Balkans region. These young experts have facilitated knowledge transfer activities and now represent a clear addition to the pool of expert academics and practitioners in the field of undeclared work in Europe.
Key empirical findings and impact
• Undeclared work is socially accepted and widely practiced in Bulgaria, Croatia, and the FYR of Macedonia.
• More than 1 in 5 adults in these countries acknowledge that they have bought goods and services on the undeclared economy in the prior year.
• More than 1 in 12 report that they have undertaken undeclared work, and more than 1 in 10 declared employees report that they receive from their employer in addition to their declared salary an additional undeclared ‘envelope’ wage.
• Undeclared work differs across and within the three countries. For every 1 working undeclared due to their exclusion from the formal economy, there are 3 that have chosen to exit the formal economy, which varies across countries.
• Deterrence policy measures are not significantly associated with reducing undeclared work. Levels of vertical and horizontal trust have a strong and significant association with the likelihood of participation in undeclared work.
• The results directly impact onto the European Platform Tackling Undeclared Work. Drawing upon the results of this project, the Platform is implementing a holistic approach towards tackling undeclared work which shifts beyond a deterrence approach, and uses direct incentive measures to make declared work easier and beneficial.
• The findings have resulted in the Croatian government in 2017 developing a new national action plan for tackling undeclared work. This moves beyond a deterrence approach and pursues indirect policy measures to align the norms and values of citizens with the laws and regulations.
Policy Recommendations
• Evidence points to the need to shift away from using solely the conventional deterrence approach that uses direct controls to tackle undeclared work to ensure that the pay-offs from undeclared work are outweighed by the costs.
• Evidence demonstrates a need to utilise direct and indirect control measures in combination across different institutional contexts. It is important to develop a range of policy measures which are transferable and can be used to reduce the undeclared economy in each of the three countries.
• Evidence highlights the strong association between institutional asymmetry and participation in undeclared work and therefore the need to use indirect controls that reduce the asymmetry between formal and informal institutions.
• Policy makers need to prioritise policy measures to improve vertical trust (in institutions) and horizontal trust (among people), complementing measures to improve detection and deterrence.
This research is directly relevant to the European Platform Tackling Undeclared Work and national governments (including national enforcement authorities) seeking to develop national action plans for tackling undeclared work.
For more information see: http://www.grey-project.group.shef.ac.uk/; Principal Contact: Prof. Colin Williams, c.c.williams@sheffield.ac.uk
1. Conducting a comprehensive review of the policy approaches and measures being used to tackle undeclared work in Europe and globally.
2. Empirically evaluating the measures for facilitating the shift of undeclared work into the declared economy in the selected target region of the Balkans through carrying out six surveys: three population (6000 respondents) and three business (1500 respondents), nine focus groups with stakeholders, including inspectorates, Ministries of Labour, social partners.
3. Designing policy recommendations for possible new policy approaches and measures that will facilitate the shift of undeclared work into the declared economy in the Balkans, based on rigorous analysis through modelling of the data obtained through the surveys, and complemented by hard statistical data.
4. Raising awareness on the causes and consequences of undeclared work, and on possible policy solutions with policy-makers (Members of European Parliament, Labour Inspectorates and other national institutions, social partners), expert and academic community, and the general public (through press conferences and media appearances) through carrying out two international conferences, participating in four panels in other international fora, convening four international workshops, and two summer schools.
5. Creating long-term sustainable local capacity building through carrying out two summer schools for young experts from across Europe, helping them deepen and widen their understanding of under-declared work and informality, and understand how policy responses can be designed and implemented.
6. Enlarging the pool of knowledge for capacity building and awareness-raising on tackling undeclared work through producing a repository of more than 30 academic papers, dedicated to tackling the undeclared economy, the policy approaches towards undeclared work, the cross-national transferability of policy measures, as well as the methods for designing survey methods and focus groups to evaluate the undeclared economy. The papers specifically note the role of stakeholder collaboration in building trust and improving policy-making while evaluating policy measures to tackle undeclared work.
7. Mapping regional stakeholders on undeclared work and establishing valuable contacts with representatives of relevant ministries, and the expert community.
8. Capacity-building. A group of Marie Fellows have undergone training and achieved several milestones including receiving postgraduate degrees and published academic papers on undeclared work in the Balkans region. These young experts have facilitated knowledge transfer activities and now represent a clear addition to the pool of expert academics and practitioners in the field of undeclared work in Europe.
Key empirical findings and impact
• Undeclared work is socially accepted and widely practiced in Bulgaria, Croatia, and the FYR of Macedonia.
• More than 1 in 5 adults in these countries acknowledge that they have bought goods and services on the undeclared economy in the prior year.
• More than 1 in 12 report that they have undertaken undeclared work, and more than 1 in 10 declared employees report that they receive from their employer in addition to their declared salary an additional undeclared ‘envelope’ wage.
• Undeclared work differs across and within the three countries. For every 1 working undeclared due to their exclusion from the formal economy, there are 3 that have chosen to exit the formal economy, which varies across countries.
• Deterrence policy measures are not significantly associated with reducing undeclared work. Levels of vertical and horizontal trust have a strong and significant association with the likelihood of participation in undeclared work.
• The results directly impact onto the European Platform Tackling Undeclared Work. Drawing upon the results of this project, the Platform is implementing a holistic approach towards tackling undeclared work which shifts beyond a deterrence approach, and uses direct incentive measures to make declared work easier and beneficial.
• The findings have resulted in the Croatian government in 2017 developing a new national action plan for tackling undeclared work. This moves beyond a deterrence approach and pursues indirect policy measures to align the norms and values of citizens with the laws and regulations.
Policy Recommendations
• Evidence points to the need to shift away from using solely the conventional deterrence approach that uses direct controls to tackle undeclared work to ensure that the pay-offs from undeclared work are outweighed by the costs.
• Evidence demonstrates a need to utilise direct and indirect control measures in combination across different institutional contexts. It is important to develop a range of policy measures which are transferable and can be used to reduce the undeclared economy in each of the three countries.
• Evidence highlights the strong association between institutional asymmetry and participation in undeclared work and therefore the need to use indirect controls that reduce the asymmetry between formal and informal institutions.
• Policy makers need to prioritise policy measures to improve vertical trust (in institutions) and horizontal trust (among people), complementing measures to improve detection and deterrence.
This research is directly relevant to the European Platform Tackling Undeclared Work and national governments (including national enforcement authorities) seeking to develop national action plans for tackling undeclared work.
For more information see: http://www.grey-project.group.shef.ac.uk/; Principal Contact: Prof. Colin Williams, c.c.williams@sheffield.ac.uk