The coronavirus pandemic, short-term employment support schemes and undeclared work: some lessons from Europe

The temporary enforced closure of businesses in response to the coronavirus pandemic has resulted in governments in Europe and beyond offering short-term financial support to the businesses and workers affected. The purpose of this paper is to evaluate a group of workers unable to benefit from the short-term job retention schemes and support to the self-employed made available by governments, namely, those whose paid work is comprised wholly of undeclared work, and how this could be addressed.

To identify those whose paid work is entirely undeclared, a Eurobarometer survey of undeclared work in Europe is reported conducted in September 2019, just prior to the pandemic, and involving 27,565 face-to-face interviews in 28 European countries.

The finding is that the paid work of one in every 132 European citizens is comprised wholly of undeclared work, and these workers are concentrated in non-essential businesses and activities severely affected by the lockdown. These workers whose paid work is comprised wholly of undeclared work are significantly more likely to be widowed or divorced/separated, living in households with three or more adults, without children and most of the time have financial difficulties in making ends meet.

Given that businesses and workers in the undeclared economy are largely unable to work under lockdown, it is argued that providing access to short-term financial support, through a regularisation initiative based on voluntary disclosure, would not only provide the income support these workers need but also bring them out of the shadows and put them on the radar of the state authorities, thus transforming undeclared work into declared work.

This paper shows how in the current or repeat lockdowns, the short-term financial support made available by governments can be used to transform undeclared work into declared work.