Undeclared Work Is Commonest Informal Practice on Labour Market

Undeclared Work Is Commonest Informal Practice on Labour Market

Undeclared work is the most common informal practice on the labour market, Bulgarian Industrial Capital Association (BICA) Board Chairman Vassil Velev said during a presentation of a survey entitled "National Map of Undeclared Work in Bulgaria" at a roundtable here on Monday.

Velev recalled that since 2010 BICA has been assessing the share of the grey economy through a Business to the Rules Composite Index. The share of the informal economy in Bulgaria has decreased from 36.65 per cent in 2010 to 21.48 per cent in 2020 but nevertheless remains far above the EU average, said Velev.

Among other reasons, work goes undeclared because this is the best way to evade taxes and social-security contributions, the BICA Chairman explained. The tax burden on labour costs in Bulgaria is as high as 53 per cent, said Velev, specifying that employers have to pay 53 leva in social security and taxes for each 100 leva that a worker nets as a labour remuneration.

The BICA Chairman believes that employers and trade unions should interact through a minimum wage bargaining machinery and coordinating and drawing up common positions in order to curb these unlawful practices.

According to the survey, employers estimated the share of undeclared work in the Bulgarian economy in 2020 at 25.3 per cent, while workers' estimates stood at 32.9 per cent. This share is tending downwards.

At the forum, Deputy Labour and Social Policy Minister Lazar Lazarov said that undeclared work had declined over the years due to measures implemented by the government to roll back the informal economy. In this respect, Labour Code amendments adopted in late 2020 will play an important role. The Deputy Minister singled out addressing undeclared work as a priority of the Chief Labour Inspectorate. Lazarov identified wholesale and retail trade, repair of motor vehicles and motorcycles, construction, agriculture and tourism as problematic in this respect.

As sectors vulnerable to work with undocumented pay in cash, employers list manufacturing; transport, storage and communication; accommodation and food services; and administrative and support service activities, whereas workers identify construction, transport, storage and communication; wholesale and retail trade, repair of motor vehicles and motorcycles; accommodation and food services; agriculture, forestry and fisheries; and extractive industry.

Economic and Social Council Chair Zornitsa Roussinova said that measures for the prevention of the informal economy and undeclared work will highlight the Council's efforts in 2021.

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