**Figure 1: What are in your opinion the primary reasons for doing undeclared work? (share of respondents who mentioned this reason as the main reason)**

<!-- Start of picture text --> Salaries in the regular businesses are too low<br>Taxes and/or social security contributions are too high<br>Lack of control by authorities<br>50% Lack of regular jobs on the labour market<br>45%<br>40%<br>35%<br>30%<br>25%<br>20%<br>15%<br>10%<br>5%<br>0%<br>EU27 BE BG CZ DK DE EE EL ES FR IE IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK<br><!-- End of picture text --> _Source:_ Undeclared Work in the European Union‖ Eurobarometer survey, October 2007 15. Relatively low regular salaries together with relatively high taxes on labor, may also explain why in the new EU countries undeclared work often takes the form of underdeclaration of income by paying part of the wage to registered workers on a cash-in-handbasis (so-called envelope wage) or registration as self-employed, both of which result in more opportunities to evade taxes. Employers who pay envelope wages not only evade labor taxes but will also have to conceal some of their taxable sales in order to receive unregistered cash. For Estonia, the Estonian Institute of Economic Research (Eesti Konjunktuurinstiituut) estimated that in 2008, 12 percent of employees received unreported wages (of which 6 percent received unreported wages on a regular basis and 6 percent only occasionally); the share of employees who received part of their wage undeclared declined from 16 percent in 2003 to 11 percent in 2006 before increasing again in 2007 to 14 percent. The decline to 12 percent in 2008 may not be sustainable given the recent deterioration of the economy. The decision not to report wages to the authorities appears to largely stem from employers, while the employees have little influence on the decision (Staehr, 2009). Some 31 percent of employees who received undeclared wages were satisfied with the situation, while 45 percent were not. Among those that were dissatisfied, 55 percent believed that they would lose their job if they would not accept this form of payment (European Foundation for the Improvement of Living and Working Conditions, 2006).

16. In 10,671 face-to-face interviews in eleven Eastern European countries, Williams (2008) found that 10 percent of all employees received envelope wages, but that there are large differences across countries. While in the Czech Republic only 3 percent of employees had received envelope wages in the previous 12 months, in Slovenia it was 5 percent, in Poland and Lithuania this figure was 11 percent, in Latvia 17 percent, and in Romania 23 percent. In Romania, employees received about 70 percent of their wage in this manner while in the other countries the share of the undeclared wage as a percentage of total wage is much smaller. Another form of underreporting income is the ―gratitude payment‖ for services of some professions, notably medical doctors. In Hungary, Kornai (2000) interviewd medical staff and the general public and found that such cash-in-hand payments are deeply engrained in the medical system; gratitude payments are most common for obstetrician services, heart 7