Council resolution on transforming undeclared work into regular Employment
Date: 2003-10-29
Institutions: Council of the European Union
Subjects: EU employment policy, European Employment Strategy, fraud, moonlighting

29.10.2003

EN

Official Journal of the European Union

C 260/1

I

(Information)

COUNCIL

Council resolution on transforming undeclared work into regular Employment

(2003/C 260/01)

THE COUNCIL OF THE EUROPEAN UNION,

Whereas the European Council at successive meetings —
Luxembourg, Lisbon, Stockholm, Nice, Barcelona, Brussels —
reiterated that
the strategy for more and better jobs must
remain the top priority for the European Union and its
Member States;

the Commission Communication on Undeclared
Whereas
Work (1)
indicated that a comprehensive targeted strategy,
involving a policy mix based on prevention,
if
combating undeclared work is to be effective, and invited
Member States to regard combating undeclared work as part
of the overall Employment Strategy;

is essential

of

the

and

the Council

representatives

the
Whereas
Governments of
the Member States, meeting within the
Council of 22 April 1999 adopted Resolution 1999/C 125/01
on a Code of Conduct for improved cooperation between auth-
orities of
the Member States concerning the combating of
transnational social security benefit and contribution fraud
and undeclared work,
transnational
hiring-out of workers (2);

and concerning the

Whereas
the
the Council Decision on Guidelines
Employment Policies of the Member States adopted a specific
guideline on transforming undeclared work into regular
employment;

for

Whereas the Ministers for Employment and Social Affairs of
the European Union, at their informal meeting in Varese on 11
July 2003, recalled that transforming undeclared work into
regular
to achieving full
improving quality and productivity at work,
employment,
strengthening
eliminating
social
poverty traps and avoiding market distortions;

employment would contribute

cohesion and inclusion,

Whereas, given the heterogeneous nature of undeclared work,
it is difficult to estimate the scale of the problem although
studies estimate the size of the informal economy on average
at between 7 % and 16 % of EU GDP;

Whereas undeclared work has strong implications for workers,
for business, for consumers, for gender equality and for social
protection systems;

Whereas the Commission,
in its Communication of 3 June
2003 (3) on Immigration, Integration and Employment, stated
that, as sectors of undeclared work and illegal immigration feed
on one another, there is a clear link between general policies to
combat both undeclared work and illegal immigration;

transforming

undeclared work

Whereas
regular
employment as part of the effective implementation of the
Employment Guidelines requires active participation by the
social partners, at all stages, from designing policies to their
implementation;

into

the social partners

Whereas
in their multi-annual work
programme agreed to hold a seminar on undeclared work in
2005:

1.

RECALLS:

1.1.

Employment Guideline No 9 on undeclared work, as
adopted on 22 July 2003;

combine

‘Member States should develop and implement broad
actions and measures to eliminate undeclared work,
which
business
simplification
removing disincentives and providing
environment,
appropriate incentives in the tax and benefits system,
improved law enforcement and the application of
sanctions. They should undertake the necessary efforts
at national and EU level to measure the extent of the
problem and progress achieved at national level.’

the

of

1.2.

the 1998 Commission Communication on undeclared
work, in which it is defined as ‘any paid activities that
are lawful as regards their nature but not declared to the
public authorities, taking into account differences in the
regulatory system between Member States’.

2.

CALLS ON MEMBER STATES:

2.1.

To consider this Resolution as a reference framework
within which Member
and
can
develop
the European
implement policies in the context of
Employment Strategy while respecting national circum-
stances and priorities;

States

(1) COM(1998) 219.
(2) OJ C 125 of 6.5.1999, p. 1.

(3) COM(2003) 336 of 3.6.2003.

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Official Journal of the European Union

29.10.2003

2.2.

the actions outlined in this
To take account of
Resolution in reporting on the principal measures
taken to implement their employment policies in the
light of the specific guideline on undeclared work in
their future National Action Plans;

2.6.

2.3.

To work together to examine the common features of
undeclared work across the Member States which might
best be addressed by a common approach in the
framework of the European Employment Strategy;

PREVENTIVE ACTIONS AND SANCTIONS AIMED AT ELIMINATING
UNDECLARED WORK:

2.4.

To develop a comprehensive approach in keeping with
the European employment strategy based on preventive
actions, encouraging all employers and employees to
operate within the formal economy and in the context
of regular employment; these measures should respect
the sustainability of public finance and social protection
systems, and may include:

— the

a

of

and

creation

administrative
legal
environment which is favourable to the declaration
of economic activity and employment,
through
simplifying procedures and by reducing the costs
and constraints which limit the creation and devel-
in particular start-ups and
opment of businesses,
small undertakings;

— strengthening incentives and removing disincentives
to declare work on both the demand and the supply
sides:

— reviewing and, where appropriate, reforming tax
and benefit systems and their
interaction to
reduce high marginal effective tax rates and,
where appropriate, the tax burden on low-paid
workers,

— setting up suitable employment policies vis-à-vis
beneficiaries of social-protection measures which
will help them to participate in the regular
labour market, and

— reducing the risk of unemployment and poverty
interactions

traps by eliminating undesirable
between tax and benefits systems;

through cooperation between the
undeclared work,
relevant authorities (inter alia tax offices, labour inspec-
torates, police), according to national practice;

context of

and having

the individual,

in the
capability

an improved
To strengthen,
law-enforcement
regard to
European and national legislation protecting the rights
of
transnational cooperation between
competent bodies in different Member States, as far as
transnational economic activities are concerned,
in
particular cooperation between the competent bodies
designated by the Member States with a view to
combating social security fraud and undeclared work,
in accordance with Resolution 1999/C 125/01 of the
Council and of the representatives of the Governments
of the Member States, meeting within the Council;

2.7.

to enhance the
To raise social awareness in order
through providing
efficacy of
this mix of measures,
information to the public about
the negative impli-
cations of undeclared work for social security and the
consequences of undeclared work for solidarity and
fairness;

NECESSARY EFFORTS TO MEASURE THE EXTENT OF THE
PROBLEM AND PROGRESS ACHIEVED:

2.8.

To improve knowledge about the extent of undeclared
work by estimating the scope of the informal economy
and undeclared work at national level, on the basis of
such data as is available to Social Security Institutions,
Tax Authorities, Ministries or National Statistical Offices;

2.9.

To contribute to the development, as appropriate, of the
measurement of undeclared work at EU level in order to
trans-
gauge progress in achieving the objective of
forming undeclared work into regular employment;

2.10. To seek cooperation between National Statistical Offices
on methodology and foster the exchange of expertise
and know-how on this issue.

3.

INVITES THE SOCIAL PARTNERS:

at European level:

2.5.

To strengthen surveillance, where appropriate with the
active support of the social partners, and the application
of appropriate sanctions,
in particular in respect of
those who organise or benefit from clandestine labour,
whilst ensuring appropriate protection for the victims of

3.1.

To consistently address the issue of undeclared work in
the context of their jointly agreed multi-annual work
programme;

3.2.

To further deal with undeclared work at sectoral level in
the context of the sectoral social dialogue committees;

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Official Journal of the European Union

C 260/3

at national level:

3.3.

To promote the declaration of economic activity and
employment and combat the incidence of undeclared
work through awareness-raising and other actions such
as, where appropriate, collective bargaining undertaken
in accordance with national traditions and practice, in
ways which contribute inter alia to the simplification of
the business environment, particularly as far as small
and medium-sized enterprises are concerned.

4.

4.1.

4.2.

INVITES THE EUROPEAN COMMISSION:

the
To highlight developments on the basis of
experience of Member States in the context of
the
European Employment Strategy, including through the
organisation of peer reviews;

assess methodological

To
description of
taking into account recent research on the subject.

the
the problem and monitor progress

improvements

in

COUNCIL CONCLUSIONS

of 20 October 2003

on open coordination for adequate and sustainable pensions

(2003/C 260/02)

THE COUNCIL OF THE EUROPEAN UNION

RECALLING THAT:

to the

(1) The European Council, in accordance with the integrated
socio-economic strategy defined in Lisbon in March 2000
and in response
Joint Report by the
Commission and the Council on Adequate and Sustainable
Pensions, stressed the need for maintaining the momentum
for cooperation in this area through continued application
of the open method of coordination and called for further
reforms focusing in particular on increasing employment
rates for older workers.

first

(2) The need to accelerate the reform of pension systems with
the aim of ensuring that
they are both financially
sustainable and meet their social objectives, also through
a gradual
increase by 2010 of about five years in the
effective average age at which people cease work in the
the
European Union, was
Barcelona European Council.

especially underlined by

(3) The Joint Report by the Commission and the Council on
‘increasing labour participation and promoting active
ageing’ (March 2002) made a strong plea for a preventive
and lifecycle approach in the framework of a compre-
hensive and integrated strategy to tackle the challenge of
ageing populations and looked at all
factors enabling
people to enter the labour market and workers to remain
longer at work.

(4) The Joint Report by the Commission and the Council on
Adequate and Sustainable Pensions, having examined the
implemented by the Member States,
various policies
underlined how balanced progress
in addressing both
social and financial concerns is the key to ensuring the
political acceptability of pension reforms and invited
Member States to maintain the impetus of
the reform
process and to implement credible and effective strategies;

effective

the
retirement
raising the
employment rate for older workers represents a powerful
tool for addressing both concerns.

and hence

age

(5) The future adequacy of pensions in some Member States
also increasingly depends on the ability to earn sufficient
supplementary pension rights, but this is made difficult for
people who change jobs or interrupt
their careers by
conditions for the acquisition, preservation and transfer
of occupational pension rights which may also represent
the
to the mobility
major
Commission has addressed a consultation document on
this matter to the social partners.

of workers;

obstacles

(6) The Commission Communication ‘Strengthening the social
dimension of the Lisbon strategy: streamlining open coor-
dination in the field of social protection’ proposed that the
open method of coordination for pensions should be
pursued after 2006 within a streamlined framework, on
the basis of an evaluation of work undertaken in the
different processes
social protection domain,
including that of pensions.

in the

strongly

objective

endorsed

(7) The Opinion of
the Social Protection Committee on
of
streamlining
the
strengthening the social dimension of the Lisbon Strategy
and stressed the need for continued public visibility of the
different elements of the work developed to date on social
protection policies,
the Social
Protection Committee has also invited the Commission to
indicate how the mutual
the open
method of coordination can be reinforced in the area of
pensions.

including on pensions;

learning aspect of

(8) Ways of

improving and strengthening cooperation on
pensions, based on the open method of coordination,
were
of
the
Employment and Social Policy Ministers in Varese on 11
July 2003,

Informal meeting

discussed

during