An Investigation of Supply and Demand for Undeclared Work: The Case of Greece

The Greek economy has been between Scylla and Charybdis during the 2010s, from economic depression to anemic recovery and to recession caused by the pandemic crisis. Although the strong post pandemic recovery has decreased the record-high levels of unemployment, labor market slack is still among the highest levels in the EU. The economic hardships of the previous decade increased the number of studies on the Greek informal economy and led the Greek Government to endorse a Diagnostic Report from ILO on undeclared work to enable the transition to declared work. The aim of this study is to investigate the determinants of undeclared work in Greece amid economic depression. To achieve this, employers’ (entrepreneurs) information on undeclared work is explored through primary data from the Greek Shadow Economy Observatory in order to get insights on the factors determining the supply and demand for undeclared work and the groups of people and areas of economic activity affected by the phenomenon. The findings indicate that policies should be oriented towards strengthening the authorities performing audits and the size of penalties, since the practice of undeclared work is not differentiated for employers not facing financial difficulties. Equally if not more important is the provision of lowering the tax burden and addressing issues that would improve the level of tax morale.