With increasing levels of undeclared work being recorded in Europe since the recent economic and social crisis, its reduction has been prioritized by the European Union as a major policy objective for increasing job creation, job quality and fiscal consolidation. Moreover, the Europe 2020 strategy highlights measures to promote the transition from informal or undeclared work to regular employment as critical in achieving inclusive growth, with more and better jobs.
In this context, the International Organization of Employers was invited to a two-day conference hosted by the Lithuanian Ministry of Social Security and Labor from September 17 to 18.
Participants were drawn from EU member states, the European Free Trade Area (EFTA), International Labor Organization, European Commission, the OECD, and from European and international social partners. Among other issues, the conference discussed informal work and the transition to formality; how to facilitate the sharing of information and exchange of best practice; and other policy measures national authorities have implemented to address the problem.
Speaking in a roundtable discussion chaired by ILO Director General Guy Ryder, IOE Senior Adviser Frederick Muia called on EU governments to “use a two-pronged approach in addressing informality and undeclared work.” While recognizing that many EU governments preferred to bring about compliance through detection and punishment for non-compliance with the law, he said it was important for governments “to address the barriers to formalization, including assessing the rigidity of legislation and regulation to ascertain whether it lacked the necessary flexibility for employers, particularly SMEs.” Such an approach would enable the right ecosystem for businesses and promote compliance through incentives, which would encourage the transformation of undeclared work to formal employment.
Muia reiterated the importance of providing an enabling environment for new formal jobs to be created, particularly by SMEs. Recognizing the key role of entrepreneurship, start-ups and micro-enterprises, he further called for the promotion of the approach proposed by the Employers’ group during the 2014 International Labor Conference on transitioning from the informal to the formal economy. Access to education, work-readiness programs for young people, lifelong learning and skills development would all enable workers to be well equipped for formal employment. Equally important, he added, was the need to promote access by SMEs to finance and credit, business development services, markets, infrastructure and technology.
Staff contact: Ariel Meyerstein