Botch is still considered a trivial offense in Austria and really thrives in times of crisis. Since the corona pandemic and the war in Ukraine, the share of undeclared work in the economy has increased sharply. According to the Linz economist Friedrich Schneider, there are signs that the botch will grow by ten percent this year compared to the previous year.
The reasons for this are high inflation, low economic growth and real wage losses, as Schneider explains in the Ö1 “Morgenjournal”: “The income losses of the lower and middle incomes seem to be greater than many official statistics show and therefore more rotten. “
Black workers want to maintain a standard of living
Undeclared work ranges from helping neighbors to large-scale evasion of taxes and social security contributions. Above all, construction or renovation works on houses and apartments have failed and services from car repairs to private lessons are also being offered illegally. According to studies by the economist who conducts research at the University of Linz, the majority of undeclared workers want to maintain or increase their standard of living.
“The mess is the little man’s tax revolt,” said Friedrich Schneider. “And he says to himself: if I have to pay so much tax and I want to earn something on the side, I don’t want to pay tax for it.” He estimates the size of the so-called shadow economy at almost 32. billion euros this year. Compared to last year, that would be an increase of three billion.
Health insurance shortfall of 3.5 billion
The main losers are the Tax and Customs Administration on the one hand and the social and health insurance funds on the other: the deficit due to lower income and higher expenditure – for example due to accidents – amounts to around 3.5 billion euros here. However, not everything escapes the state: “Because the money earned in the botch is immediately spent again, at least part of it is compensated by additional VAT revenue,” Schneider said on ORF radio. The economy, in turn, is missing out on orders that were placed in a mess and could have been officially done by companies. The professor of economics from Linz estimates the value of these orders at two to five billion.
To reduce the amount of undeclared work, the professor from Linz recommends more incentives. The partial abolition of cold progression and the eco-social tax reform are already important steps, more should follow. Professor Schneider proposes to extend the merchant bonus to household services, for example. “The main reform project would be to reduce non-wage labor costs,” he emphasizes.
Austria is in the best position in the EU average
Undeclared work is flourishing in this country, but in a European comparison Austria performs very well: measured by economic output, the share of undeclared work is less than eight percent. The average of the 27 EU countries, on the other hand, is almost 20 percent.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
