All Southern European countries appear to be heavily informal, with 37% to 53% of economically active and marginally attached population working informally in Israel, Greece, and Cyprus; in Spain, Italy and Portugal this proportion is between 19% and 22%<sup>13</sup> . These six countries together with Ireland (33%), the UK and Poland (22% each), and Austria (20%) constitute the ̳highly informal‖ part of working Europe.

On the other extreme is Lithuania with estimated 6.4% of extended labor force working informally, followed by Latvia, Sweden, and Hungary with 8.0% to 9.4%; Estonia, France, and Belgium feature just slightly higher level of informality around 10%<sup>14</sup> . In other countries covered by the study (Finland, Denmark, Norway, Germany, Netherlands, Switzerland, Romania, Russia, Slovakia, Czech R., Bulgaria, Slovenia, and Ukraine) 11% to 14% of the extended labor force are working informally.

Classifying the Baltic countries and Hungary as low-informality countries based on data referring to the time of crisis, which was much deeper in these countries than elsewhere in the EU, should be taken with care. Indeed, Latvia was among the top ten countries regarding informal dependent employment in 2007, whilst Lithuania was just outside the top 10 in terms of both dependent and total informal employment in 2005 (see Table A3). By contrast, informality rate has been always low in Hungary and, according to most estimates, in Estonia. Furthermore, Latvian State Labor Inspectorate (2011) reports a substantial increase in the incidence of unregistered employment in the post-crisis period (along with falling unemployment).

As a robustness check, in Table A3 we compare ESS-based proportions of employees working without contracts and proportions of all informally employed persons in total employment for 2004-2006 with similar indicators calculated from the Fourth European Working Conditions Survey<sup>15</sup> conducted in 2005. Cyprus, Greece and Ireland, with very high rates, occupy the top three positions in informality ranking by each of the two criteria in both surveys. Top ten countries by the total prevalence of informal employment are also the same for both surveys; the list repeats the one given above for 2008-2009, excluding Israel (not represented in EWCS) and adding Bulgaria<sup>16</sup> . With regards to work without a contract, nine

> 13 Actual level of informality in the South might be even higher, as seasonal immigrant workers (e.g. fruitpickers) are mostly not covered by ESS surveys. This remark applies also to France, Germany, Ireland and UK.

> 14 Recall that our analysis is restricted to the form of employment relationship, while envelope wages (or _quasiformal employment_ , see Williams (2009)) are not considered; according to _Eurobarometer_ survey on undeclared work conducted in 2007,  Lithuania, Latvia, Hungary, and Estonia are among the countries with  relatively high prevalence of envelope wages, see Riedmann & Fischer (2008), Williams and Renooy (2008). 15 The difference between  the two surveys in handling the contract question is minor: EWCS provides answer options „A temporary employment agency contract‖,  „An apprenticeship or other training scheme‖ and „Other‖ (which we of course do not treat as informal); on average these account for 3.2% of all responses, although this proportion varies between 4% and 6% in six countries and between 6% and 8% in the Czech R. and Greece.

> 16 Romania is missing from the ESS results on 2004-2006 and hence is excluded from the EWCS top ten.

14