Undeclared labor flourishing as inspections are insufficient

Hundreds of thousands of workers remain invisible to the social security system and the state as they continue to provide undeclared labor to their employers, thereby feeding the deficits of the system and depriving it of at least 2 billion euros per year.

The issue of illegal labor has grown into a nightmare for Greece. The monitoring by the Labor Inspection Squad (SEPE) is limited, on a sampling level, and only highlights a small part of the actual problem. While unions and other entities stress that undeclared labor is at a dangerously high level, the figures from the Labor Ministry’s Artemis database show that the targeted checks by SEPE and the inspectors of the Social Security Foundation (IKA) have managed to put a dent in the phenomenon.

Inspection statistics showed that undeclared labor came to 13.85 percent in 2014: Inspections were conducted at 27,635 enterprises, of which 3,827 were found to be employing undeclared employees. Of a total 135,566 workers at the companies inspected, 6,177 were undeclared (amounting to 4.56 percent) and the fines imposed totaled 64.6 million euros.

Fines have grown in recent years and currently amount to 18 times the minimum salary – i.e. 10,550 euros per undeclared worker. The majority of fines end up in the huge pool of expired debts to the state, as only 25 percent are paid immediately (with a 30 percent discount).

More than one in 10 foreign workers in Greece are believed to be undeclared (10.23 percent), against just 3.03 percent of Greek workers. However foreign employees account for 35.58 percent of all undeclared workers, with Greeks comprising the remaining 64.42 percent.

The highest rates of undeclared labor are to be found at catering institutions (restaurants, cafeterias, bars etc), industrial zones, hairdressers, gas stations, car repair shops, transport companies, retail commerce, construction, tourism accommodation, security services and clothing manufacturing.

The Labor Ministry has targeted undeclared labor as it is estimated to have become a pool of lost revenues for the social security system, but efforts are also focusing on reducing unpaid labor. Within 2014, SEPE identified 13,840 cases of employers who did not pay their employees, of which some 6,700 cases were resolved without having to resort to legislation, through the payment of an estimated 15 million euros.

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