Unpaid social insurance contributions in Bulgaria vary between 500,000 and1 billion euros annually, the President of the Confederation of Independent Trade Unions in Bulgaria, Plamen Dimitrov, said at an international conference on informal economy and undeclared work. Dimitrov has shown data suggesting that undeclared work in the EU private sector reaches 11.6 percent on average, and according to the World Bank, the gray economy is 18 percent. The president of CITUB also recalled that the flat tax introduced in this country 10 years ago has not led to bringing economy to the white zone. Currently gray economy reaches 30 percent in Bulgaria, with 16 percent of all employees working in the gray sector. "The EU is losing about 25 billion as a result of companies operating in the gray sector and this is not to be underestimated. As a financial effect, we are already talking about the lack of needed contributions both in the tax system and social insurance, which brings the other big question related to the rights of all those working in the gray sector," Plamen Dimitrov warns.

Informal economy and undeclared work bring losses to all sides, but workers are most affected. “They may now be happy that they have more money coming from unpaid taxes and social security contributions, but in the future with their income from benefits and pensions, they will be on the verge of survival,” Labor and Social Policy Minister Bisser Petkov said. According to him, "reduced tax and social earnings limit opportunities to invest in vital public systems."

"A new European body is being set up after the European Platform tackling undeclared work and at this backdrop, it is important to coordinate at the national level, to have a single body and to strengthen the presence of the state and law in the field of the gray economy, respectively undeclared work," Chavdar Hristov, vice president of the Confederation of Independent Trade Unions, told BNR. The organization offers some minor changes that can be immediately applied in practice. Some of them are related to Bulgarians working abroad, such as local registration of seasonal workers, hired by companies for temporary work abroad. The state currently has no information on how many these people are, where they went and what they are doing. According to trade union figures, about 90% of them are involved in undeclared work. "This information can be received when people are leaving the country, instead of later looking for information from other countries. We should care about our compatriots in the EU the same way we do for those who work here," Chavdar Hristov says. According to trade unions, it was of the utmost importance to explore the causes that lead to numerous manifestations of the shadow economy, often rooted in poor law or in poor control when applying regulatory requirements.

Editor: Gergana Mancheva

English: Alexander Markov