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Undeclared employment and the under-the-table economy in Spain represent 18.6% of the GDP

Undeclared employment and the under-the-table economy in Spain represent 18.6% of the GDP, which makes up more than 1.9 billion euros, according to a report on job flexibility in 2014 completed by Randstad, a job placement agency.

The study, presented today, indicates that more than 1.8 billion unemployed people from countries in the OECD have some type of undeclared work, that is, 60% of the total workers (3 billion people).

In addition, the rate that this under-the-table economy represents for the GDP in Spain is practically double that registered in France (9.7%), or the United Kingdom (9.9%).

The newparper El Mundo has launched a digital map in which, when clicking a region ( ie-Madrid – Valencia – Barcelona) It pops the estimated percentage of “under-the-table” economy per region: In this link is the map (on the right of the page. 

In this map, the under-the-table economy represent in Madrid 16.3% , in Valencia 24.10%, in Barcelona 23.10%, in Granada 30.20%, in Malaga 26.80% … just pick a region and see the estimated average. The total is €253 millions.

On average, in Europe, the under-the-table economy derived from undeclared employment is around 18% of the GDP, a fact that is due to there being a greater number of people in this situation in the countries to the East, like Bulgaria (31%), Romania (28%), and Hungary (28%), while others are much lower, like Austria (7.5%) and Luxembourg (8%).

Outside of Europe, the United States, Canada, Japan, Australia and New Zealand have rates lower than 10%.

The report distinguishes between two ways of fighting the under-the-table economy, regarding the state and government models of each country.

On one hand, the liberal stance defends, at a minimum, less tax pressure, deregulation, and an intervention of the state to stop the under-the-table economy, while the structuralist model fights for more state regulation of the labor market, more social protection and more governmental intervention efficiency.

The European Commission considers undeclared employment to be any type of paid activity that is not declared to the pertinent authorities, something that is an obstacle for tax collection, that harms the Social Security system, and that fosters unfair competition.

The study detects that the countries with elevated rates of corruption in the public sector have a greater undeclared work presence within the labor market.

This is due, as it indicates, to under-the-table employment, which supposes an “escape route for those facing corruption when talking about developing their activities within the law.”

It also considers that the protection on the part of the State of the most vulnerable groups reduces, in a significant way, under-the-table employment, even if there are other variables that affect it,  like tax burdens.

The report detects that the countries that this can recur in the most easily are those with seasonal employment, and those that have more efficient and regulated employment services present less rates of the under-the-table economies.

CONCLUSIONS

In a country with so so many economic problems, with locals struggling to cover the basic needs, a highly corrupted political class, and a ridiculous tax system … people try to do their best.

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