How can the reform of the State Labour Inspectorate help combat undeclared work?
How can the reform of the State Labour Inspectorate help combat undeclared work?

Author(s): Stas Madan
Subject(s): National Economy, Labor relations, Socio-Economic Research, Labour and Social Security Law
Published by: EXPERT-GRUP Centrul Analitic Independent
Keywords: Informal employment; Labor relations; Republic of Moldova;
Summary/Abstract: Informal employment and envelope wages are still part of the economic reality of the Republic of Moldova. This is manifested by the fact that almost every 4th employed person works informally. Societal perceptions of envelope wages point to around 30 percent of the labour remuneration fund, and as a result the revenue lost to the public budget exceeds 7 percent of GDP. From a self-interest point of view, it suits both employees (desire for higher income, people's distrust of the social contract, perceptions regarding the quality of public services) and companies (permanence of cash flows, perceptions regarding high compliance costs, low costs of non-compliance). The low costs of non-compliance are also due to the fact that the State Labour Inspectorate (SLI) has no real leverage to fight informal work. This institution may not carry out unannounced checks and may not impose any penalty, which is also in contradiction with the international conventions of the World Labour Organization to which the Republic of Moldova is a party. Thus, the analysis addresses institutional vulnerabilities in countering undeclared and under-declared work and the provisions of the ongoing reform of the State Labour Inspectorate. At the same time, recommendations for the successful and impactful implementation of the given reform are presented.

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