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Undeclared Work in the Czech Republic and its Implications for the Czech Labor Market

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  • Wadim Strielkowski

Abstract

This paper aims at describing the issue of undeclared work in the Czech Republic and to explain the burdens it represents for the national economy. It also describes what measures can be undertaken in order to tackle undeclared work and uses some real-life examples to illustrate their outcomes. Undeclared work and the so-called "švarc systém" (the employer-employee relations with a person exercising the employer's normal activities not being an employee in legal terms but acting as an independent entrepreneur) are among the biggest issues on the Czech labor market nowadays. According to some estimations, the Czech state loses about five billion CZK annually in the form of uncollected taxes, unpaid revenues and health and social insurance payments. New changes to the Czech labor legislation that came into force in 2012 were envisaged to tackle undeclared work, reduce tax evasions, fight shadow practices on the labor market, and to prevent social deprivation and other threats for the society by shifting the competences to conduct random checks, and controls of firms and businesses were transferred to the State Labor Inspection Offices (SLIO). The changes in the legislation facilitated the identification of the undeclared work and penalizing of its bearers, which minimized the losses from the illegal employment.

Suggested Citation

  • Wadim Strielkowski, 2013. "Undeclared Work in the Czech Republic and its Implications for the Czech Labor Market," Central European Business Review, Prague University of Economics and Business, vol. 2013(4), pages 7-14.
    • Handle: RePEc:prg:jnlcbr:v:2013:y:2013:i:4:id:59:p:7-14
    DOI: 10.18267/j.cebr.59
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    References listed on IDEAS

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    1. Martin Machek, 2012. "Retail Market Structure Development in Central Europe," Central European Business Review, Prague University of Economics and Business, vol. 2012(3), pages 22-27.
    2. Claessens, Stijn & Djankov, Simeon, 1999. "Ownership Concentration and Corporate Performance in the Czech Republic," Journal of Comparative Economics, Elsevier, vol. 27(3), pages 498-513, September.
    3. Karolina Kowalska & Wadim Strielkowski, 2013. "Propensity to Migration in the CEEC: Comparison of Migration Potential in the Czech Republic and Poland," Prague Economic Papers, Prague University of Economics and Business, vol. 2013(3), pages 343-357.
    4. Elżbieta Kawecka-Wyrzykowska, 2013. "Poland's Public Finance Convergence with the Euro Area," Central European Business Review, Prague University of Economics and Business, vol. 2013(2), pages 51-60.
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    Cited by:

    1. Petra Koudelková, 2014. "Innovation in Small and Medium Enterprises in the Czech Republic," Central European Business Review, Prague University of Economics and Business, vol. 2014(3), pages 31-37.

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    More about this item

    Keywords

    Labor market; irregular employment; shadow economy; Czech Republic;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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