Varieties of Undeclared Work in European Societies
| Date | 01 March 2009 |
| Published date | 01 March 2009 |
| DOI | http://doi.org/10.1111/j.1467-8543.2008.00711.x |
| Author | Birgit Pfau‐Effinger |
Varieties of Undeclared Work in
European Societies
Birgit Pfau-Effinger
Abstract
Until recently, undeclared work was understood as largely the result of tax
evasion by employers and workers. However, this viewpoint fails to do justice to
the complexity of the phenomenon. The category of undeclared work covers
several distinct types of employment relation which arise from different motives
and strategies of firms, workers and contractors, and their interplay. There is no
uniform logic of development. This article introduces a new typology of unde-
clared work and shows how the development of the different types of undeclared
work can be explained by the ways in which they are embedded in a variety of
institutional, cultural and socio-structural contexts.
1. Introduction
Max Weber described the development of modern societies as a broad
process of social rationalization, in the course of which states of disorder and
unruliness are increasingly converted into order and rule (Weber 1976). Scott
(1999) illustrates this process using the development and worldwide imple-
mentation of scientifically founded forestry in the late nineteenth century:
from the complex ecosystem of the forest, with its multitude of plants and
dense and rampant undergrowth, there emerged what can effectively be
called ‘streets of trees’ in forests ‘emptied’ of undergrowth and consisting of
monocultures and ‘norm trees’. This was the effect of the application of
scientific methods of shaping the forest according to rational principles.
We might also see this process as paradigmatic for the course of devel-
opment of the employment system: in the historical development of
capitalist societies, employment conditions were gradually standardized and
subjected to uniform rules. Ascertaining the number of jobs has become a
central foundation for tax-raising and a main indicator of the prosperity of
economies.
Nevertheless, Western European economies are not without ‘under-
growth’: undeclared work has survived in niches and remains important at
Birgit Pfau-Effinger is at the University of Hamburg.
British Journal of Industrial Relations doi: 10.1111/j.1467-8543.2008.00711.x
47:1 March 2009 0007–1080 pp. 79–99
© Blackwell Publishing Ltd/London School of Economics 2009. Published by Blackwell Publishing Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
the beginning of the twenty-first century. Available data show that unde-
clared work constitutes a relevant and problematic phenomenon in Western
European societies (European Commission 2007; Pfau-Effinger et al. 2009;
Renooy et al. 2004). Its supposed increase is a frequent cause of public
discussion concerning the problems of the EU’s open borders. It is argued
that undeclared work, by evading official statistical coverage, payment
of taxes and social security contributions, inflicts substantial damage on
national economies, quite apart from its undermining of wage and price
standards, which distorts competition and puts serious market participants
under pressure. The European welfare states and the EU are therefore pur-
suing the objective of converting this type of work into formal employment
(Mateman and Renooy 2002; Renooy 2008).
In this article, factors are analysed that are relevant for explaining the
development of undeclared work in European societies. The concern is not
with a uniform problem, but rather a complex field of differing forms of work
relations that are based on different motivations of the actors involved, and
the evolution of which is determined by different sets of factors in each case.
A typology is introduced that will help to explain the varieties of undeclared
work and the diversity of social, cultural and economic factors that influence
the development of each of these varieties.
Section 2 offers a definition of undeclared work and gives an outline of the
main features. In Section 3, various approaches towards providing an expla-
nation are outlined. In Section 4, I develop a typology of different types of
informal work and present the most important factors influencing each of the
types. Section 5 discusses some EU member-state policy measures which have
been applied in response to the apparent growth of undeclared work, and
their impact.
2. Definition and main features of undeclared work
According to the common consensus on the definition of ‘undeclared work’,
the term means all remunerated activities that are in principle legal but are
hidden from the state in that they are not declared to the public authorities
even if their declaration is required by the regulatory system of the state
concerned. They are part of a broader category of ‘informal work’, which
includes all paid and unpaid forms of work that are not reported to the public
authorities. Paid work in which the good or service itself is illegal is not
included in the definition of ‘undeclared work’ (European Commission 2007:
8; Renooy 2008: 250; Thomas 1992; Williams and Windebank 2005: 83).
Undeclared work can take different forms and be based on self-
employment (as in the notion of the ‘worker–entrepreneur’) or dependent
employment (or the ‘employee’). In addition to referring to work carried out
for remuneration, it can also be work provided in return for payment in kind
(European Commission 2007; Mingione 1991; Pedersen 2003). Even if ‘unde-
clared work’ means, in general, that no taxes or social security contributions
80 British Journal of Industrial Relations
© Blackwell Publishing Ltd/London School of Economics 2009.
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