Cyprus Mail

Cyprus in EU top ten for undeclared work

By Jean Christou

Cyprus is among the top ten EU countries with the highest rates of undeclared work with a percentage of around 25 per cent of Gross Domestic Product (GDP), MPs at the House labour committee heard on Wednesday.

The committee was hosting Frederic Lapeyre, the head of unit for combating the black economy from the International Labour Organisation (ILO).

Lapeyre was due to speak later on Wednesday evening at a workshop organised by ruling DISY at the University of Nicosia on ‘Undeclared Work – Risks and Challenges’.

Speaking after the meeting, Lapeyre said he spoke with MPs about how undeclared work affected the financing of social protection systems, the financing of pension systems, fair competition and the tax system.

“Tackling undeclared work is a major priority for EU countries and the ILO which in June adopted a package of proposals which include guidelines to member states in how to address undeclared work through a new, more pragmatic and comprehensive approach,” he said.

The ILO defines undeclared work as “any paid activities that are lawful as regards their nature but not declared to the public authorities”.

EDEK MP Nicos Nouris, who was also due to speak at the conference, said undeclared work affected not only state institutions but the economy itself.

He said that in 2011 the state lost €40 million from the Social Insurance Fund due to undeclared work.

“The numbers show that Greek Cypriots comprise 25 per cent of undeclared workers and third-country nationals comprise 17 per cent and non-Cypriot EU nationals 55 per cent,” he said.

“From our side we estimate there needs to be two pillars of action. The first involves reforms to the legislative framework to reduce red tape by setting up a single body to manage the problem,” Nouris added.

“Beyond that we should implement a series of measures to reduce undeclared work, some of which should involve motivating employers to reduce the phenomenon.”

Labour Minister Zeta Emilianidou, who was also due to speak at the conference revealed last month that one in five workers in the construction sector did not have social insurance. Emilianidou noted that while the number of workers without social insurance stood at 21 per cent, it had dropped from 26 per cent in 2009. But it was still high, she said.

“Undeclared work corrodes both the economy and the worker relations. Additionally, it breeds unfair competition which damages not only the workers but all businesses and employers that are known for their professionalism,” she said.

Emilianidou said the government had introduced a clause in government contracts stipulating that companies found guilty of employing undeclared workers would be excluded from public sector tenders.

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