site.btaSome 17.5% of Working Bulgarians Are in the Shadow Economy - Study

Some 17.5% of Working Bulgarians Are in the Shadow Economy - Study

Sofia, September 2 (BTA) - Some 17.5 per cent of the working Bulgarians are currently employed in the shadow economy, according to a study by the Centre for the Study of Democracy (CSD).

The figure includes both the people who work without a proper employment contract and those who are paid more than what their employment contract says and this money goes undeclared, explained CSD economic programme director, Rouslan Stefanov.

The study was presented Friday at a Sofia forum on new trends in the shadow economy and informal employment in Europe, and how to combat them.

Stefanov said that workers employed without a contract are very few: between 1 and 2 per cent, which puts Bulgaria in a relatively good position compared, for example, to the countries in the Western Balkans, which are not yet EU members.

According to the study, the share of informal employment in Southeast Europe and Turkey varies from a fifth of all employees (in Croatia and Macedonia) to four-fifths (in Kosovo).

One of the problems that is at the core of informal employment, both in Bulgaria and elsewhere in Southeast Europe, is the low confidence in the state institutions. Another, even in countries with low taxes such as Macedonia and Bulgaria, is the feeling of injustice and that lower-income people are getting a bigger tax burden.

"For this reason, one of the important debates that Bulgaria should have is about the justice of its taxation system," Stefanov commented.

Prof. Colin Williams of the Sheffield University Management School commented for BTA that most typically for Bulgaria people are not entirely in the shadow economy and only a portion of their income remains undeclared. This kind of informal employment is very hard to identify, he said adding that it is important to look at the root causes rather than just try to fight the consequences.

The professor also said that people don't see the connection between paying taxes and the public services they expect. He believes that Bulgaria needs an awareness campaign to change both people's mindset and the way state institutions work so that taxpayers can see that they receive something in exchange for their taxes.

Among the participants in the forum were representatives of state institutions, trade unions and employer organizations, MEP Georgi Pirinski and Confederation of Independent Trade Unions in Bulgaria leader Plamen Dimitrov.