Parliament endorsed draft EU legislation establishing a “European platform” to enhance cooperation in combatting undeclared work in a vote on Tuesday. The platform would enhance cooperation among EU member states’ labour ministries, trade unions and employers’ associations about how best to tackle a problem that is damaging the EU economy and distorting the labour market. The undeclared economy accounts for 18% of EU GDP.
MEPs approved amendments to a draft proposal, incorporating a compromise reached with member states’ representatives in talks late last year, by 619 votes to 69, with 7 abstentions. In a debate before the vote Georgi Pirinski (S&D, BG), who steered draft legislation through Parliament, said “The platform’s purpose is to enlarge the capabilities of member states to tackle the multiple and painful problems stemming from undeclared work by enhancing mutual cooperation. Its mission will be preventing, deterring and combating undeclared work as well as promoting the transformation of such work into declared work.”
“Undeclared work” generally means any paid activity that is lawful in nature, but not declared to public authorities such as tax offices or labour inspectorates. The platform should encourage practical, effective and efficient cross-border actions and develop a reliable and efficient system of rapid information exchange between national bodies.
However, it would neither interfere with member states’ own actions, nor seek to harmonise their rules, says the text, which notes that relevant definitions and regulatory systems differ from one EU country to the next.
The long-term goal is to help improve working conditions and integrate undeclared workers into the labour market. The platform would deal with all forms of undeclared work, including bogus self-employment.
The platform will be composed of senior representatives nominated by all the member states, a maximum of four representatives of EU-level cross-industry social partners, split equally between workers and employer’s organisations (with no voting rights) and the Commission. Employers’ and workers’ representatives, Eurofound, the European Agency for Safety and Health at Work (EU-OSHA), the ILO and representatives of EEA States will be permanent observers.
The platform will meet at last twice a year and specific working groups will be established to deal with different aspects of undeclared work. The platform’s estimated yearly funding needs of €2.1 million will be met out of the PROGRESS axis of the EU Programme for Employment and Social Innovation (“EaSI”).
Undeclared workers often suffer hazardous working conditions, low wages and violations of their labour rights. Undeclared work can contribute to social dumping, particularly in cross-border cases. The platform should also help to eliminate abuse of the free movement principle through undeclared work.
According to Eurofound figures, the size of the undeclared economy averages over 18% of EU GDP, ranging from below 8% of GDP (Austria) to over 30% (Bulgaria). Undeclared work is most prevalent in the building industry, but is also widespread in household services, private security, industrial cleaning, agriculture, and the hotel, restaurant and catering industry.
The decision as voted by Parliament still needs to be formally approved by the Council of Ministers. It will enter into force after its publication in the EU Official Journal.