Croatia takes action against undeclared labour

20/02/2014

A special hotline for reporting cases of undeclared employment will open and inspections will be increased.

By Selena Petrovic for Southeast European Times in Zagreb -- 20/02/14

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Undeclared employment is a growing problem in Croatia. [AFP]

Efforts by the Croatian Ministry of Labour to reduce undeclared work are being lauded by the EU, which plans to initiate a European platform to establish co-operation on the issue.

"Policies that aim to reduce incentives for employers to use undeclared work and for workers to engage in such activities should be designed in harmony with already existing practical measures and different policies that influence the prevalence of undeclared work, such as employment, migration and taxation policies," Jonathan Todd, the European Commission spokesman for employment, social affairs, and inclusion, told SETimes.

"This spring, the commission will propose a new initiative to establish a European platform on undeclared work. The aim of this platform will be to improve EU level co-operation. It would help member states prevent and deter undeclared work more effectively and efficiently," Todd said.

The Croatian Labour Ministry recently revealed plans to try to increase public awareness about the negative effects of undeclared labour on workers and the economy.

The most common forms of unreported work, according to the labour ministry, are hiring workers without employment contracts and without paying social security contributions for them, work based on bogus contracts, violating regulations related to working hours, and illegally hiring foreign citizens.

"In co-operation with our social partners, and on a national and local level, we plan to organise a number of public forums and workshops to educate both employers and employees about the benefits of legal work and consequences of unreported employment," the ministry said in a statement.

In addition, a special hotline for reporting cases of undeclared employment will be opened and labour inspection will take place based on the information received.

The ministry also hopes to bring an end to unreported work by using legislative and other measures.

"We plan to propose concrete measures to suppress undeclared work after discussing all the key issues with the public, including experts and stakeholders, in order to get their opinion on the causes of this form of work and on proposals for possible solutions," the ministry said.

According to an analysis by US-based AT Kearney consulting company, the shadow economy, which is comprised of undeclared work and under reporting of income, made up 28 percent of Croatia's GDP in 2013. The figure was 29 percent in 2012 and 30 percent in 2009.

Although the percentage is decreasing, it is still much greater than the EU average of 18 percent, the report said.

Trying to lessen their expenses, some employers choose not to declare their workers or not to declare employees' total wages to avoid paying social security and other contributions for them.

Penalties for employers who neglect to declare their workers range from 8,000 euros to 13,000 euros.

Marinko Ucur, a professor at the University of Rijeka Faculty of Law, said the problem of undeclared work cannot be viewed separately from other provisions regulating labour and labour relations.

"Therefore, these [announced actions] are probably only political measures, and they will not bring anything," Ucur told SETimes. "This should be about creating a completely new culture, which he [the minister] cannot turn into a legal provision, as the culture of labour is a result of the culture of relations which comes first."

Darko Seperic, an adviser for social policy at the Union of Autonomous Trade Unions of Croatia, said unreported employment represents a complex problem and the action against it should include the government as a whole, not just the labour ministry.

"It requires co-ordination and synergy of a number of departments and other participants in the labour market," Seperic told SETimes.

The public is divided on the issue.

"What are people supposed to live off if they don't make some money on the side? Let [officials] first organise the state, and then tackle other issues," Zlatko Mehin, 55, from Zagreb, told SETimes.

But Milica Kozjak, 48, from Zagreb, wants the problem of undeclared work to be resolved.

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"Unreported work is something we don't need. People who work honestly are suffering because of it," she added.

Vladislav Ilić, an artist in his early 30s, said the government's plan deserves praise, but he is sceptical about its implementation.

"I want to see results. Many things have been promised in the past 20 years, so I have to see it first to believe it."

What can governments do to prevent unreported labour in the region? Tell us your thoughts in the comment section.

This content was commissioned for SETimes.com.
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