Ministers Haatainen and Pekonen: Active cooperation between companies, organisations and the authorities required to tackle undeclared work

Undeclared work is a growing phenomenon in Finland, as evidenced by increasingly frequent contacts with occupational safety and health authorities and the observations made by the authorities during workplace inspections. In times of crises, there is a higher risk of undeclared work and abuse. The best way to combat undeclared work is to encourage cooperation between various actors, and to share information.

In its most serious forms, undeclared work may involve gross underpayment, extortionate work discrimination, or trafficking in human beings. An employer using undeclared labour may simultaneously commit several different offences related to taxation, social insurance, occupational health and safety, and labour law.

“In addition to having a negative economic impact on society, the shadow economy may, at its worst, involve serious employee mistreatment. We must take determined action in multiple sectors to eradicate this phenomenon, including measures to improve occupational safety and health supervision,” says Minister of Social Affairs and Health Aino-Kaisa Pekonen.

“The Government has expanded its range of actions to combat the shadow economy. Among other things, we are taking stringent measures to tackle the exploitation of foreign labour. We must be able to ensure a fair labour market for all,” Minister of Employment Tuula Haatainen emphasises.

In June 2020, the Government adopted a new strategy and action plan for tackling the grey economy and economic crime. The Government is investing approximately EUR 15 million to enhance these actions during this parliamentary term. Actions to tackle the grey economy will focus on prevention, more effective access to information and cooperation between authorities.

Higher risk of abuse during times of crises

Crises affecting the economy and employment, such as the coronavirus epidemic, may result in an increase in undeclared work. Companies’ weakening operating conditions and employment situation may lead to unfair competition and employee mistreatment with regard to terms of employment and pay.

During the coronavirus crisis, special attention has been paid to the status of seasonal workers and safe working and living conditions.

Undeclared work does not respect national borders

There are a number of factors contributing to an increase in undeclared work, including the free movement of foreign labour, freedom to provide services within the EU, global markets, and long subcontracting chains. The European Labour Authority (ELA), established in summer 2019, will intensify efforts to combat undeclared work and abuse in cross-border situations.

The European Labour Authority, together with its member states, will organise a #EU4FairWork communications campaign to disseminate information on actions taken to tackle undeclared work and on reasons why declaring work is in the interests of everyone.  In Finland, the campaign will involve a comprehensive network of participants, including ministries, supervisory authorities and organisations. To join the discussion on social media, use hashtag #EU4FairWork.

What is undeclared work?

• Payment is usually made in cash and not reported to the Incomes Register.
• The employer does not pay social security contributions such as the employment pension, unemployment insurance and accident insurance premiums.
• Undeclared work is particularly common in labour-intensive industries, such as the construction, restaurant and cleaning sectors and in temporary agency work.
• In the Eurobarometer survey in autumn 2019, almost 25 per cent of the Finnish respondents said they personally knew someone who works without reporting their income to the authorities.

Inquiries:

Juho Orjala, Special Adviser to the Minister of Social Affairs and Health, tel. +358 2951 63424
Timo Nevaranta, Special Adviser to the Minister of Employment, tel. +358 50 340 9483
Päivi Kantanen, Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 0295 048 938
Kirsi Kyrkkö, Senior Specialist, Ministry of Social Affairs and Health, tel. +358 295 163 487