Stepping up the fight against undeclared work (short presentation) 
President
The next item is the report by Pier Antonio Panzeri, on behalf of the Committee on Employment and Social Affairs, on stepping up the fight against undeclared work.
Pier Antonio Panzeri
Mr President, ladies and gentlemen, I am going to be brief, because it seems to be getting quite late.
Obviously my thanks go out to the committees that expressed an opinion and to the shadow rapporteurs with whom we have worked over the past few months. It was partly thanks to their contribution that we were able to produce a text that could be supported by a large majority in the Committee on Employment and Social Affairs.
We have shown that the fight against undeclared work must be seen as a problem that affects all countries and that if Europe wishes to attain the objectives set in Lisbon it must take on this battle.
There are some paragraphs in the text that have been adopted that I consider to be crucial in an issue such as undeclared work which is so extensive: we are talking about some 20% of Europe's gross domestic product. This means that there is widespread illegality, which cannot be tolerated as it generates a strong distortion of competition between companies and territories and makes work and workers less secure.
For this reason, it is only right that we draw attention to the problem, because there needs to be greater awareness of the fact that the failure to seriously combat undeclared work is liable to generate these problems and at the same time to greatly weaken social security schemes in Europe in the near future.
These considerations were the starting point for this proposal being submitted to Parliament. As I said, there are key points in the report, which, if the Commission also commits to them, could deliver positive results and proposals that we consider useful. I think I can say that the European Parliament has done its bit. It is now up to the other institutions to do theirs so that we can achieve the aims of the fight against undeclared work.
Vladimír Špidla
Member of the Commission. - (CS) Ladies and gentlemen, first of all I would like to thank the rapporteur and say a few words about as number of the issues highlighted in the report. The fact is that undeclared work is increasingly becoming a cross-border phenomenon, as the Commission states in its Green Paper on modernising labour law. It is therefore necessary to pay close attention to this issue. In our opinion, establishing a team of experts as well as developing a system of information exchange between social security bodies such as labour inspectorates, are important steps for 'the establishment of some kind of permanent Community structure for cross-border cooperation', as suggested in paragraph 53.
We all agree that greater efforts are needed to solve the problem of undeclared work. However, I think that in general the most appropriate and justified steps would be those taken at Member State level. Our research has shown that undeclared work in the Member States differs from country to country. Consequently, taking measures at Community level should not be considered the immediate priority. The report proposes a 'pact to declare the undeclared', offering more relaxed legislation on a temporary basis, which would stimulate the regularisation of undeclared work. Although this is a good idea, in our opinion the Member States should act in conjunction with the social partners who also include undeclared work among their priority tasks throughout Europe. The Commission would have the authority to support their initiatives through campaigns funded by the PROGRESS programme or through the Structural Funds.
Regarding the call to propose a framework statute for spouses or family members helping in family businesses, I am pleased to be able to say that the Commission recently adopted the proposal for a directive on the application of the principle of equal treatment between men and women, which will replace Directive 86/613/EEC and ensure that spouses or family members helping in family businesses enjoy the same level of protection as self-employed workers.
Within the framework of the PROGRESS programme, the Commission is also working on developing tools and methods for better assessment and monitoring of undeclared work, and on the identification and exchange of good practices that exist at EU level. We are putting more emphasis on the exchange of good practices and we hope that in this way we will acquire the experience necessary to suggest, as soon as possible, a pilot project of interest to as many Member States as possible.
I will not go into detail on the issue of illegal immigration and the proposal for sanctions against employers of illegally staying third-country nationals. We acknowledge the concern expressed in the report about the treatment of the victims of illegal employment and the level of contractors' responsibilities, and we will take it into account in our discussions with the Council. The Commission is extremely pleased to have the support of the European Parliament for its efforts to put an end to the transitional provisions limiting the mobility of workers from the new Member States.
In conclusion, I would like to say that this extremely constructive report will give the Commission and the Council new energy to make the fight against undeclared work more visible and to increase our corresponding objectives.
President
That concludes the debate.
The vote will take place tomorrow.
Written declarations (Rule 142)
Louis Grech  
in writing. - Undeclared work exploits workers, distorts labour markets and provides an unfair competitive advantage to unscrupulous employers, which leads to a low-level underground economy.
One catchment area for undeclared work is to be found amongst illegal/irregular immigrants within a number of Member States of the Union.
This racket of cheap labour is growing at a very fast rate. It is expected to grow further since illegal immigrants would need the money and at the same time would be terrified to report defaulting employers for fear of being expelled from the country by the authorities. I appreciate that some Member States are taking a number of measures to eradicate this flagrant abuse of the law, but on the whole, the record of success in this regard has not been very impressive. The EU and the Member States need to harmonise their efforts and to enact more legislation with a view to taking serious punitive action against those who are in default.
The availability of illegal workers and the culture of underground work, lax legislation, unscrupulous employers, financial and economic crises and falling profitability margins all make it very attractive for exploitative practices.
Ona Juknevičien 
The European Union (EU) continues to have an extensive undeclared labour market. With the free movement of workers within the EU, cases of undeclared work have increased. This is disadvantageous not only to people working illegally, but also to countries' finances. Illegal work interferes with the functioning of the internal market, preventing effective competition. People who work illegally are often exploited by their employers; they have no right to benefit from social security or healthcare services. Such cases are particularly common in Member States that still continue to use the transitional measures, limiting the free movement of workers from the new Member States. These restrictions encourage the practice of undeclared work and should therefore be scrapped as soon as possible.
It is regrettable and inexcusable for the EU to hold its citizens powerless hostages to this inexpedient policy. During interviews with Lithuanian emigrants working abroad, complaints about employers who take advantage of their lack of knowledge of local legislation and lack of language skills and fail to pay them for their work are very often heard. To my mind, the EU should take firm, decisive measures in order to tackle undeclared work. At the moment employers who use undeclared labour have little responsibility; they often get away with paying insignificant fines that do not discourage them from hiring undeclared workers.
In my opinion, sanctions with a direct impact on employers' economic interests, such as the suspension or cancellation of their business licences, thereby preventing them from benefiting from access to Member States' or EU funds, would be much more effective. This could reduce undeclared work or even eliminate it altogether.
Katalin Lévai  
in writing. - (HU) The 2007 Eurobarometer end-of-year survey showed that 5% of European Union citizens capable of work (19.7 million persons out of the EU's 392.9 million inhabitants) admitted to working illegally. In some Member States the level of undeclared work reached or exceeded 20% of GDP. Undeclared work is a factor with permanently existing negative economic effects in the European labour market, a vicious circle it is very difficult for the employed, and the work providers, to get out of.
The sectors most under this stress are agriculture, construction, house maintenance, and the hotel and tourism services, where uncertainty and unfavourable wages are typical. For this reason the updating of labour and employment standards and the effort to control this black market cannot remain at the level of empty hypothesis but must be embraced by the Member States. It is my proposal that the Commission should draft a European Union strategy to fight the black market and should shoulder the lion's share of the work of employment and social supervision. The Member States must pursue reforms in the tax and social security regimes, thereby reducing the oppressive tax burden on the labour force.
So that households can purchase services at lower prices, the introduction of EU service vouchers would be proposed; these would ensure payment of both social security contributions and tax payments. For the fight against undeclared work it is however an essential condition that the Member States open up their labour markets to each other's employees, as partial restriction in these areas encourages the formation of regional inequalities as well as divergence from EU principles and the European approach.
Sirpa Pietikäinen  
in writing. - (FI) Mr President, ladies and gentlemen, I would like to thank Mr Panzeri for his excellent report on more effective prevention of undeclared work in the EU.
According to the report, undeclared work accounts for up to 20% of GDP in some Member States. In these countries especially, but also in all the other EU countries, undeclared work is a problem for the country's economy, but at the same time it also violates the entitlement of employees to human work.
The EU is committed to the targets for 'decent work' with its agenda, which threatens not to be implemented in any practical sense unless there is effective control and a clear system of rules. The poor working conditions and non-existent terms and conditions of employment of migrant workers doing undeclared work have created a new form of social slavery in Europe.
To root out the undeclared workforce we can use both a stick and a carrot. There should be more controls in place to make it possible to intervene faster than now in cases of possible abuse. The trade union movement has an important role as one that proposes, monitors and reinforces fair play in working life. National information campaigns for foreign employees are a way to improve workers' awareness of the rules of employment in each country.
The truth is, we will not get rid of the problem of the undeclared workforce merely through regulation. Fair play in employment, decent pay and adequate levels of social security must be guaranteed in every EU country, as well as around the world. People must have the opportunity to earn a decent livelihood and enjoy basic social security, regardless of which country they live in.
Rovana Plumb  
in writing. - (RO) Undeclared work is a phenomenon encountered in all EU Member States and an alarming feature of the European economic market, which goes against flexicurity principles.
The fight against undeclared work is somehow similar to the duel between Microsoft and hackers. The more innovative our methods to fight undeclared work are, the more efficient the tricks used by the employers become. And the best example of this is the emergence of "grey labour” when employers would rather enter into employment contracts for the minimum guaranteed wages while the rest of the money up to the real wages is paid without using legal forms.
In Romania, the phenomenon has become more and more extensive and currently grey labour accounts for 20 - 50% of total employment. The alarming fact is that, if at the beginning the users of this method were small enterprises, now there are well known names which avoid taxes and social security contributions resulting in a very small pension for the employee which will bring him/her close to the poverty threshold.
I have emphasised these aspects because the future strategy for fighting undeclared work as mentioned in the report must take into account the specific situation in each Member State. We need a unified European approach and efficient collaboration between the governmental agencies, labour inspectorates and the social partners.
