Undeclared work is a way to earn income and evade income tax and social contributions.
Undeclared work may range from small jobs to full-time illicit gainful employment that do not comply with fiscal law, social insurance law, competition law and laws applicable to foreigners.
"The question of
undeclared labour has been referred to in community policy for many years. As far back as 1993, the
White Paper on Growth, Competitiveness and Employment spoke of reintegrating marginalized workers and those performing
clandestine work into the formal labour market. Some studies carried out in the European Union estimate that the informal economy represents between 7 and 16 per cent of GDP."
(Daza, J., L.,
Informal Economy, Undeclared Work and Labour Administration, Social Dialogue, Labour Law and Labour Administration Department, 2005, visited 2009-05-12)
"The trade unions, in particular those representing employees particularly affected by illegal employment practices (such as in the construction industry and road-haulage sector), have repeatedly raised the problem of organised social security and tax fraud, mainly in the form of information campaigns using their own press. Unions believe that the illegal practices of fraudulent employers not only damage the national economy and the state budget, they also threaten standard wage rates and employment conditions (as laid down in collective agreements) in whole branches of the economy and may - in the case of large-scale evasion of social insurance contributions - cause considerable social damage to many employees."
(Eurofound,
Thematic Feature - Industrial Relations and Undeclared Work, 2004, visited 2009-05-12)
Illicit Work vs. Undeclared Work
The term
undeclared work should be distinguished from illicit work. Although the act of not declaring a situation of employment is illicit, the nature of the work itself is not necessarily illegal. Illicit work, however, is necessarily undeclared as the nature of the work itself is illegal (e.g. arms or drug trafficking).
Illicit employment occurs when an employer requires that a worker neglect to declare his or her work as a condition of employment.