Tackling the undeclared economy in the European construction industry

What is it about?

Despite the widespread recognition that many businesses and employees in the European construction industry engage in off-the-books practices, there has been little attempt so far either to provide evidence of the prevalence and nature of this undeclared economy in the European construction industry or to evaluate what needs to be done to tackle this phenomenon. This article fills these gaps.

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Why is it important?

To evaluate the extent and character of the undeclared economy in the European construction industry, this article reports the findings of a 2007 Eurobarometer survey on the undeclared economy conducted in 27 European Union member states. This will reveal its widespread prevalence across the European construction industry along with its heterogeneous forms and uneven distribution both spatially and across different population groups. Attention then turns to evaluating the potential policy approaches for tackling the undeclared economy in the European construction industry, namely laissez-faire, deterrence and facilitating declaration. The finding is that a laissez-faire approach should be rejected because it leaves intact the existing negative impacts of the undeclared economy on construction businesses, customers and governments, whilst deterring such work is found to be neither effective nor necessarily desirable since most governments wish to move such endeavour into the declared economy rather than simply eradicate it. Only facilitating the declaration of undeclared work practices is found to be a viable possible policy approach. The article then details a wide range of policy measures which could be used in the European construction industry to facilitate the declaration of undeclared work practices.

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