CSD Policy Brief No. 37: The hidden economy in Bulgaria: 2011 – 2012
CSD Policy Brief No. 37: The hidden economy in Bulgaria: 2011 – 2012

Author(s): Author Not Specified
Subject(s): National Economy
Published by: Център за изследване на демокрацията
Keywords: hidden economy;
Summary/Abstract: KEY POINTS The hidden economy in Bulgaria has decreased in 2011 – 2012 among both businesses and the population. Yet, the registered gains are modest. Deep structural labor market problems and long-term business environment issues continue to constitute favorable conditions for the development of hidden economic activities in Bulgaria. The Hidden Economy Index results show: ››› decrease in the incidence of undeclared employment due to rising unemployment and lack of re-entry of labor force; the decrease has also come partially from the increase of employment in the informal (self-subsistence) economy; ››› decline in tax evasion as a positive result of the government’s focus on administrative and control measures in the tax compliance area. In the short-run, government measures countering the hidden economy seem to be more productive in the tax evasion area while the economic environment positively affects the undeclared work situation. Publicized frequent statistical errors recently raised concerns about the quality of the supplied statistical data for decision-making. While implementation of control measures has achieved some success, very little has been done for the introduction of positive reforms to reduce incentives for the development of the hidden economy. Implementation of structural (e.g. changing the regressive character of social security and tax system) and administrative (e.g. promoting better service delivery as opposed to more controls) reforms is lagging behind

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