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A trivial offense for many: undeclared work accounts for 28.72 billion euros this year

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This means that approval has increased by 3 percentage points since 2021. And around a fifth of Austrians have resorted to the services of a bungler in the past 12 months, according to the current study by Friedrich Schneider, professor at the Johannes Kepler University in Linz. Schneider already reported on his findings on the subject of undeclared work in the OÖN column “Understanding the Economy”:

Two-thirds of the population therefore have the impression that, especially during the crisis, many things can no longer be afforded without undeclared work. First and foremost, “bunglers” are used in and around the house or apartment. Undeclared workers would continue to be used primarily for electronic work (20 percent), cars (20 percent) and beauty care and massage (15 percent). But work around the house and garden is also in demand, as is tutoring.

20 euros per hour

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According to the survey, at least one person in a tenth of households is active in bungling. The average hourly wage is estimated at 20 euros.

With the crisis, trust in state institutions has also fallen. Because only 43 percent are satisfied with the range of goods and services offered by the federal government. In the surveys in previous years, it was still 70 percent of those surveyed.

7.2 percent of GDP

Since real incomes have fallen due to high inflation and high energy costs, a significant increase in the shadow economy can be expected in the current year. According to Schneider’s forecast, it will therefore increase this year by a nominal 3.2 percent or 900 million euros to 28.72 billion euros. According to Schneider, this corresponds to around 7.2 percent of the forecast gross domestic product (GDP). In terms of the share of the shadow economy in GDP, Austria comes off best compared to the EU-27 countries and Great Britain. Romania, Bulgaria, Croatia and Romania bring up the rear with GDP shares of over 30 percent.

The state is the biggest loser

According to Schneider, the biggest loser in undeclared work is the state, which would lose out on social security contributions. Schneider put this at 2 to 3.5 billion euros. But the health insurance would also kiss the hand because they would have to bear the treatment costs of the bunglers.

Whereby 66 percent of the bunglers are also officially employed. About 16 percent went to organized crime and 17 percent to early retirees and the unemployed. But 40 percent of undeclared work would not be in demand, according to the survey on official tariffs. And 25 percent of this work would otherwise be done themselves.

What to do against undeclared work?

In addition to increased penalties, Friedrich Schneider recommends incentive-based measures to curb undeclared work. By abolishing the cold progression, he expects the botch to be reduced by 700 million euros a year. The introduction of tax deductibility for household-related services and household investments of up to around 2,000 euros would reduce the botch by a further 800 million euros.

The shadow economy could also be slowed down by reducing non-wage labor costs. Another measure would be to block companies from awarding public contracts for several years if they work illegally or allow them to work.

Source: Nachrichten

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