Equal and fair treatment of workers in line with the free movement principle and tackling the issue of undeclared work – social dialogue and the role and challenges for trade unions

From 10 to 12 May 2017 took place in Limassol, Cyprus, a seminar about “Equal and fair treatment of workers in line with the free movement principle and tackling the issue of undeclared work – social dialogue and the role and challenges for trade unions”, organized by KIKEA-DEOK (Cypriot Institute of Training/Education and Employment (KIKEA) - DEOK), with the support of EZA and of the European Union.

The seminar was part of the EZA project co-ordination about “Integrating migrants and refugees in the labour market – the role of workers’ organisations”. The participants – representatives of workers’ organizations – came from Cyprus, Greece, Poland, Austria, Slovakia, Bulgaria, Italy, Netherlands, Lithuania, Romania, Poland, Portugal, Germany and Estonia.

The seminar set the basis to create a training education and discussion forum among European trade union leaders, and high ranking union officers, on a rapidly expanding phenomenon, and hot issue, of non-register and or undeclared work. Also to enhance the understanding of the role of social partners and reinforce their capabilities and responsibility to offer systematic, information and consultation to workers, especially mobile and migrant workers, on issues of equal treatment and undeclared work.

Results

As admitted by the European Commission last year, undeclared work is a pan-European phenomenon. Generally speaking, there is discrimination at the workplace, and specifically in Great Britain after Brexit many people have lost their employment status and unfortunately their only way out is illegal work.

The Minister of Labour, Welfare and Social insurance referred to the Government’s policies to tackle undeclared work. In 2008, unemployment in Cyprus was 3.8% while in 2013, at the peak of the financial crisis, it reached 16%.  Cyprus made every effort to avoid bankruptcy and exit the Memorandum. The country is now on a steady track with growth rates at 3%. Moreover, in 2014, the Government introduced the Minimum Guaranteed Income. In the last two years, studies are being conducted to address undeclared work which creates unfair competition against legally abiding employers and in favour of those who violate the law. Undeclared work leads to decreased contributions to the Social Insurance Fund. Thanks to the knowhow and assistance of Belgium and the ILO, we are making efforts to address the weaknesses of our own control system. The main obstacles are the weak legislation on undeclared work, obsolete procedures which have remained in place over time, the lack of exchange of information between the various Departments and the absence of targeted inspections. In the first phase, measures could include the obligation of employers to report immediately all new recruitments to the competent Ministry. In a second phase, repressive measures could be adopted such as high fines and suspension of the operations of companies that fail to comply with the law. The percentage of undeclared work in Cyprus is 15% and that of illegal work is 8%. The problem cannot be eliminated but efforts should be made to address and improve the situation. The measures envisaged by the Ministry also include the establishment of a Single Body of Inspectors with specialised training.

It was further stated that all European citizens must enjoy the same rights irrespective of the EU country in which they choose to work, the same working conditions, etc. The families of economic migrants have the right to education in the member state where they are residing. The European Commission aims to offer better protection for employees, ensure fair competition, respect for the rights of employees and fair remuneration.

Cypriot social partners are absent from the Platform established by the EU and member states are represented by a civil servant.  Cyprus lacks studies and research on undeclared work. The relevant reasons must be identified, followed by a mapping of the problem and the preparation of proposals and suggestions. The Platform is a positive initiative that puts undeclared work in a context of information exchange and understanding between member states. It should focus on the incentives of employers who violate the law and the reasons why employees accept this.

In Lithuania there is a weak system of control while the tax collection system is inadequate. The social policy and the role of the Ministry do not guarantee the protection of employees. The reasons behind undeclared work are the financial crisis, the high cost of living and low salaries. Also, high taxes lead employees to conceal their income. The State grants the unemployed certain benefits which decrease their motive for work. They do not realise that this is to the detriment of State revenues and at some point in the future it will be difficult to pay these benefits. The absence of unemployment contracts has led to undeclared work, the payment of cash-in-hand, the non-payment of overtime etc. The largest percentage of undeclared work is seen in the construction, agricultural, services and trade sectors. To prevent undeclared work, the State labour inspectorate must organise seminars in schools, businesses, etc.

In France, employers do not respect the minimum salary and labour relations. There are employees who do not have a residence and live in appalling conditions, in the metro stations, etc. The aim of the trade unions is to put an end to this mistreatment and to trafficking. Sanctions must be strict. There are also employees from Romania, Poland, etc. who are paid low salaries; this creates unfair competition between enterprises that respect the rules and those that do not. We also have the phenomenon of the new economy – the digital economy, bogus employment and self-employment. These people do not have access to hospital care, enjoy no benefits and get very poor pension. A solution would be to link employment contracts with the responsibility to ensure the rights of all employees. They must contribute to pension funds and medical care.

Estonia has an electronic record for registering employees before employment begins, in an effort to prevent undeclared work. In the first year of operation of this record, undeclared work decreased by 5%. The Labour Inspection Department sent letters to employers who pay low salaries. Many of them pay the minimum salary and the rest under the table (to the benefit of both sides). In case the competent authorities find out, then employers and employees share the tax burden. The Tax Authority also carries out checks in open fairs, exhibitions, etc, and fines are imposed.

Slovakia also faces the problem of undeclared work. Two relevant studies were conducted in 2003 and in 2004. The most problematic sectors are those of trade, tourism, agriculture and seasonal work. The reasons behind undeclared work are high labour costs compared to productivity, fierce competition, social insurance, high taxes, etc. Other reasons include the increasing number of people willing to work in the shadow economy, administrative limitations or the law. The incomplete national legislation and the lack of cooperation between competent departments are obstacles to fighting undeclared work.

In Greece there was non-compliance with labour regulations and laws even before the crisis. Certain provisions in the law deregulate labour rights. Employees cannot claim their rights due to unfair competition. The insurance system is collapsing and people over 40 do not believe they will get any pension.

Undeclared work affects 4% of Europeans and therefore jobs and prospects need to be created while a new culture and ethos should be fostered. We must work in a spirit of solidarity and contribute to the common good. Legislation must also be improved and cooperation through the European Union must be strengthened.

 

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