Undeclared work still tops the list of accepted “minor offences” in Austria – almost two-thirds (63 percent) of Austrians are okay with things being done in a botched way. More than a third (37 percent) of the population doesn’t feel like messing with themselves. This is evident from a representative study commissioned by Linz economist and undeclared work expert Friedrich Schneider.
Austrians usually have electrical work and car repairs carried out by bunglers. But beauty care, massages or activities around the house and garden and tutoring are also popular areas of application for messers.
High tax burden as a reason for undeclared work
Nearly two-thirds of respondents said that many things only become affordable by cheating. Every second person mentioned the high tax burden as a reason for illegal work. Only four percent think that abuses should be reported. 79 percent of the 1,000 respondents believe that the state is wasteful with tax money.
Schneider estimates the size of undeclared work this year at 34.5 billion euros, or about 7.5 percent of official economic output. That is an increase of 1.25 billion or 3.8 percent compared to 2023.
According to Schneider, the shadow economy also serves as a buffer for income losses due to inflation and higher energy prices. Two-thirds of the added value generated by bunglers comes from people who are self-employed or have an official job and pay taxes and levies but do not pay taxes on their ‘black’ overtime. 16 percent of the added value of this business comes from organized crime, for example in prostitution or the construction sector, and 17 percent from officially unemployed people and early retirees.
Many houses would not exist without botched work
According to the economist, 40 percent of the failed activities are not even in demand in the official economy and at official prices. Many houses and private homes would not exist without the failed work. In addition, two-thirds of the money earned would flow back into the official economy of Austria.
Health insurers are suffering from undeclared work
The biggest loser is the state, which loses 1.5 to 2.5 billion euros in taxes and especially social security contributions every year. According to Schneider, however, the tax losses would be limited, because the illegally earned money would be spent immediately in the official economy. Another loser are the health insurers, who have to bear the higher costs as a result of additional accidents or disability of the gangs.
As an economic policy measure to combat undeclared work, Schneider proposes the continuation of the tax deductibility of household services and investments in the household of 2,000 euros per household per year. The craft bonus reduces undeclared work by 900 million euros per year. Another effective measure would be to reduce indirect labor costs. Companies that operate illegally or allow illegal work should be excluded from government contracts for three to five years.
Little undeclared work in international comparison
In European comparison and measured in terms of gross domestic product, there has been little failure in Austria. The share of undeclared work in total economic production is only comparably low in the Netherlands and Luxembourg. Botching, on the other hand, is a popular sport in Bulgaria, Romania and Croatia, where the amount of undeclared work each accounts for around a third of official GDP.
Source: Krone
I am Wallace Jones, an experienced journalist. I specialize in writing for the world section of Today Times Live. With over a decade of experience, I have developed an eye for detail when it comes to reporting on local and global stories. My passion lies in uncovering the truth through my investigative skills and creating thought-provoking content that resonates with readers worldwide.
