Underground economy: Germany is the European champion in undeclared work. Was this the “engine” of economic growth in the most important country in the EU?

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A report by the Institut der Deutschen Wirtschaft (The German Economic Institute) – IW, dated September 16, 2023, shows how corrupt the German economy is, especially in terms of declaring the work of immigrants and the taxation of private households, and not only these, by the authorities.
The IW study should not remain without echoes in the economic and statistical, but also political system of the EU, considering that Germany has always shown itself to be one of the most correct and efficient state administrations.
I knew it wasn’t like that, because I reported several times the humiliations that German companies and German zippers subjected and still subject Romanian workers to humiliation.
In Germany, according to IW “The proportion of undeclared work is higher in private households than in all other sectors of the economy (Enste, 2017). For years, the number of domestic workers who are unregistered and working illegally without insurance and accident insurance has been over 90%, according to our estimates. For the calculations, the latest figures from official statistics are compared with data from the SOEP – a regular survey of more than 22,000 households in Germany. SOEP data published at the beginning of August 2023 show that around 3.31 million households in Germany employ help regularly and around 1.02 million occasionally. This means that in 4.33 million households, someone cleans and helps with the shopping. However, statistics from the mini-jobs center show that only 287,099 households registered a mini-job in March 2023. According to the Federal Employment Agency (2023), only about 2023.45 employed persons are subject to contributions to social security in private homes…”

Employers and illegal workers alike have little to gain by registering with authorities that regulate part-time jobs.

“Even though it is not unusual for housekeepers to work in the household for many years and a good relationship of trust is built, households often do not want to enter into contractual obligations,” said Dominik Enste, author of the IW research.
The IW report also highlights the causes of illegal work. The main cause is the evasion of fiscal obligations: “… For many, the private household is not a job like any other: the continuous payment of wages in case of illness or during the domestic helper’s vacation is an unusual and unwanted obligation. Paying social security contributions is unattractive to many people… They also avoid bureaucratic obstacles. Thus, the underground economy continues to flourish in and around private households. If you want to take advantage of a legal offer, you have to search for a long time or book professional help through a platform or a commercial provider – at significantly higher prices than before,” says the IW report.

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