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Cross-National Variations in the Under-Reporting of Wages in South-East Europe: A Result of Over-Regulation or Under-Regulation?

100%
Williams C.
South East European Journal of Economics and Business
|
2012
|
vol. 7
|
issue 1
53-61
EN
This paper seeks to explain the cross-national variations in the tendency of employers in South East Europe to under-report the wages of their employees by paying them two wages, an official declared salary and an additional undeclared envelope wage. Reporting the results of a 2007 Eurobarometer survey of this practice undertaken in five South East European countries, the finding is that the commonality of this illicit wage practice markedly varies cross-nationally, with 23 percent of formal employees in Romania but just 3 percent in Cyprus receiving an under-reported salary. Finding that the under-reporting of wages is more prevalent in neo-liberal economies with lower levels of state intervention and less common in more ‘welfare capitalist’ economies in which there is greater state intervention in work and welfare, the resultant conclusion is that the under-reporting of employees wages by employers is correlated with the under- rather than over-regulation of work and welfare.
2

Evaluating the Impact of the Informal Economy on Businesses in South East Europe: Some Lessons from the 2009 World Bank Enterprise Survey

51%
Hudson J., Williams C., Orviska M., Nadin S.
South East European Journal of Economics and Business
|
2012
|
vol. 7
|
issue 1
99-110
EN
The aim of this paper is to evaluate the variable impacts of the informal economy on businesses and employment relations in South East Europe. Evidence is reported from the 2009 World Bank Enterprise Survey which interviewed 4,720 businesses located in South East Europe. The finding is not only that a large informal sector reduces wage levels but also that there are significant spatial variations in the adverse impacts of the informal economy across this European region. Small, rural and domestic businesses producing for the home market and the transport, construction, garment and wholesale sectors are most likely to be adversely affected by the informal economy. The paper concludes by calling for similar research in other global regions and for a more targeted approach towards tackling the informal economy.
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