Government ramps up crackdown of undeclared work

Around eight per cent of the workforce, or 40,000 people are illegally employed in Cyprus resulting in a loss of revenue to the social insurance fund of €10 million a year, Labour Minister Yiannis Panayiotou said on Friday.

Speaking after a cabinet meeting, the minister said the government had approved a plan to strengthen measures to combat undeclared work, which will include, once ready, a system of extra-judicial fines for employers.

This would replace the current system of administrative fines. The fine for each instance of undeclared work will increase from €500 to €1,000.  This will be doubled in the event of a future offence by the same employer.

“Undeclared and illegal work negatively affects healthy economic competition, smooth labour relations, the sustainability of the pension system and the management of illegal migration flows,” he added.

Panayiotou said the results of almost 3,000 recent inspections at construction sites and other businesses that carried out checks on 7,935 workers, found 1,038 were working illegally. This represented 13 per cent of all the workers checked just in a few months.

“The increasing trend of undeclared work is worrying, and the government is taking additional measures to address it in order to reduce it substantially,” he said.

Panayiotou said authorities would be increasing the number of inspections to target specific work sites and at particular times.

He said that there would also be increased coordinated inspections between the labour department and the migration and civil registry department.

The minister said the government would coordinate in order to interconnect available IT systems and existing databases to make the best use of data and information jointly.  Staffing would also be strengthened.

According to Panayiotou the government would also conduct an outreach campaign for third-country nationals aged 17-65 years old who are legally in Cyprus and are not identified as legal workers.

The government, according to the cabinet decisions, will also investigate employers of undeclared workers for links to people-smugglers.

Panayiotou added legislative changes that would be needed for some of the measures would be submitted to the House.

One of the draft bills will be for the creation of an digital census of all employees, how much they are paid and what their social insurance contributions are.

The bill will also include liability for the main contractor and subcontractor in cases of undeclared work.

“Undeclared and illegal work affects the public interest with multiple negative impacts and the government is determined to tackle it drastically.

“The issue will be included in the agenda of the next meeting of the Labour Advisory Council and I am confident that with the support and cooperation of the social partners the results of this effort will be substantial and mutually beneficial for all,” the minister said.