1. An evaluation of the diverse varieties of undeclared work in the UK and EU-27
Professor Colin C Williams
University of Sheffield, UK
Technical Workshop on Labour Inspection and Undeclared Work, October 2009, Budapest

2. Definition of undeclared work
Any paid activities that are lawful as regards their nature but not declared to the public authorities, taking into account the differences in the regulatory system of Member States (European Commission, 2007: 2)

3. Nature of Undeclared Work in UK and EU-27
Conventional view: low-paid undeclared waged employment conducted under exploitative working conditions by marginalised groups out of economic necessity as a last resort
Begun to unravel diversity of undeclared work:
Waged employment vs. self-employment
Diverse forms of undeclared waged employment
Envelope wages
Diverse forms of undeclared self-employment
Hidden enterprise culture
Paid favours

4. Configuration of undeclared work
% of all UDW: UK
EU-27
Undeclared waged employment 15 20
Self-employment for family, friends, neighbours & acquaintances 70 55
Self-employment for other private persons/households
Other/don’t know/refusal - 5

5. Spatial variations in the nature of undeclared work
UDW has different meanings in different places.
Waged employment: greater proportion is waged work in southern Europe and East-Central Europe
Higher proportion is self-employment in Continental Europe & Nordic nations
More likely to be for kin, friends and neighbours in Nordic & Continental countries
Envelope wages: heavily concentrated in East-Central Europe

6. Participation rates in undeclared and under-declared work: by EU region
Country
% participating in UDW in last 12 months
Any UDW or envelope wages
Solely UDW
Solely envelope wages
Both UDW and envelope wages
No UDW or envelope wages
All 9 4 1 91
East-Central Europe 18 11 3 82
Nordic nations 12 10 88
Continental Europe 5 95
Southern Europe 8 2

7. Regional Variations in the nature of UDW: EU-27

8. Approach
Method
Measures
Deterrence
Improve detection
Data matching and sharing
Joining-up strategy
Joining-up operations
Increase penalties
Increase penalties for evasion
Enabling compliance
Preventative
Simplification of compliance
Direct & indirect tax incentives
Smooth transition to self-employment
Introducing new categories of work
Micro-enterprise development
Curative/
Stimulating
Demand-side incentives
- service vouchers; targeted direct taxes; targeted indirect taxes
Supply-side incentives
- society-wide amnesties; voluntary disclosure; business advisory services
Fostering commitment
Education
Peer-to-peer surveillance
Tax fairness; Procedural justice; Redistributive justice

9. UK policy measures: return/cost ratios
Approach
Method
Measure
Return/cost ratio
Deterrence
Detection
All detection measures
Tax evasion hotline
5:1
2:1
Enabling
Preventive
Curative
VAT amnesty
23:1
Commitment
Advertising campaigns
19:1