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Envelope wages in Central and Eastern Europe and the EU

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  • Colin Williams

Abstract

This article reports the first cross-national evaluation of the prevalence of a little discussed wage arrangement where formal employers pay their formal employees two wages, one declared and the other an undeclared 'envelope wage'. Analysing the results of a 2007 survey conducted in the 27 European Union member states, the finding is that some 5% of employees in formal employment receive an additional undeclared wage from their formal employer which amounts on average to some two-fifths of their wage packet. However, this employment practice is found to be markedly more prevalent in East-Central European countries, where some 11% of formal employees receive an undeclared wage and this is more often paid for their regular employment hours, which is in stark contrast to Continental Europe and Nordic countries, where such wages are less common and received mostly for overtime or extra work performed. The article concludes by discussing how this neglected but nevertheless significant practice might be tackled.

Suggested Citation

  • Colin Williams, 2008. "Envelope wages in Central and Eastern Europe and the EU," Post-Communist Economies, Taylor & Francis Journals, vol. 20(3), pages 363-376.
    • Handle: RePEc:taf:pocoec:v:20:y:2008:i:3:p:363-376
    DOI: 10.1080/14631370802281472
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    References listed on IDEAS

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    1. Bernard Fortin & Gaétan Garneau & Guy Lacroix & Thomas Lemieux & Claude Montmarquette, 1996. "L'économie souterraine au Québec : Mythes et réalités," CIRANO Monographs, CIRANO, number 1996mo-01.
    2. Singh, Andrea. & Capt, Josiane., 2002. "Decent work and the informal economy : abstracts of working papers," ILO Working Papers 993541753402676, International Labour Organization.
    3. Colin C. Williams, 2006. "The Hidden Enterprise Culture," Books, Edward Elgar Publishing, number 3948.
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    Cited by:

    1. Di Nola Alessandro & Kocharkov Georgi & Vasilev Aleksandar, 2019. "Envelope wages, hidden production and labor productivity," The B.E. Journal of Macroeconomics, De Gruyter, vol. 19(2), pages 1-30, June.
    2. Colin C. Williams, 2023. "A Modern Guide to the Informal Economy," Books, Edward Elgar Publishing, number 18668.
    3. Alessandro Di Nola & Georgi Kocharkov & Aleksandar Vasilev, 2017. "Productivity, Taxation and Evasion: An Analysis of the Determinants of the Informal Economy," Bulgarian Economic Papers bep-2017-04, Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski, revised Apr 2017.
    4. Colin C Williams & Junhong Yang, 2017. "Tackling falsely-declared salaries in Bulgaria: evidence from a 2015 survey," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 333-351, September.
    5. Merike Kukk & Karsten Staehr, 2014. "Income underreporting by households with business income: evidence from Estonia," Post-Communist Economies, Taylor & Francis Journals, vol. 26(2), pages 257-276, June.
    6. Colin C. Williams, 2014. "Explaining cross-national variations in the prevalence of envelope wages: some lessons from a 2013 Eurobarometer survey," Industrial Relations Journal, Wiley Blackwell, vol. 45(6), pages 524-542, November.
    7. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.
    8. Jaanika Merikull & Tairi Room & Karsten Staehr, 2013. "Perceptions of unreported economic activities in Baltic Firms. Individualistic and non-individualistic motives," Bank of Estonia Working Papers wp2012-8, Bank of Estonia, revised 04 Feb 2013.
    9. Williams Colin C. & Bezeredi Slavko, 2018. "Explaining and Tackling Under-Declared Employment in FYR Macedonia: The Employers Perspective," South East European Journal of Economics and Business, Sciendo, vol. 13(2), pages 19-31, December.
    10. Vasilev, Aleksandar, 2022. "Decomposing the Grey Economy in Bulgaria: A General-Equilibrium Analysis," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 8(2), pages 7-23.

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