Bulgaria's public finances lose BGN 3 billion annually due to undeclared employment

Bulgaria's public finances lose nearly BGN 3 billion per year due to unpaid taxes and insurance due to undeclared employment. This was stated by the executive director of the Association of Industrial Capital in Bulgaria (AICB), Dobrin Ivanov, during the Information session of the European Labor Authority on the topic "Employers' awareness - a way to prevent undeclared work".

The event, which is an initiative of the European Labor Authority and organized by the IA "Main Labor Inspectorate", was opened by Deputy Minister of Labor and Social Policy Natalia Efremova. The representatives of the Ministry of Labor and Social Policy (MLSP), IA "Main Labor Inspectorate", social partners and other interested parties took part.

According to the assessments of employers and employed persons from the latest AICB survey for the calculation of the composite index "Economy of light" and the sub-index "Employment of light", the typical manifestations of undeclared employment are work without an employment contract, work under a contract with fictitious clauses, as well and disguised employment contracts. And the highest levels of use of such practices were found in the agriculture, tourism and construction sectors.

"For more than 20 years, the main priority for AICB has been the reduction of the gray economy and undeclared employment. We have developed various tools and practices to reduce their levels and their negative impact on the pursuit of sustainable economic development in Bulgaria. The biggest problem for Bulgarian companies is the unfair competition and competitive advantages secured by dishonest employers. For workers, the main problem when participating in undeclared employment is the violation of their social and labor rights," added the executive director of AICB.

According to him, the data from the Association's studies show that there is a permanent tendency to lighten the economy, and for the last 13 years it has reached a level of 63.35 points out of 100 to 78.58 points out of 100 in 2022.

Dobrin Ivanov added that the share of the gray economy in Bulgaria is still high compared to the northern countries of the EU, but it is approaching the average levels of the gray economy in the southern EU countries.

For AICB, in the medium and long term, numerous reforms are needed that will brighten the Bulgarian economy. The judicial system, the pension system, health care, internal security and defense, public administration, and reforms to increase the effectiveness and efficiency of public spending are in urgent need of reform. It is necessary to reduce administrative burdens for businesses and simplify the determination and payment of taxes.