Original scientific paper
https://doi.org/10.1080/1331677X.2020.1745083
Dissecting the illicit practice of wage underreporting: some evidence from Croatia
Josip Franic
orcid.org/0000-0002-5383-1735
Abstract
Even though quasi-formal employment has become an integral
part of European labour markets, not much is known about the
functioning of this ingenious tax evasion scheme. To start to fill
this gap, this paper elaborates the most important findings from
qualitative interviews with 30 quasi-formal workers and 9 representatives
of relevant institutions in Croatia. Among other important
issues, this in-depth study, conducted during 2015 and 2016,
aimed to explore the strategies that employers apply to ensure
their workers’ collaboration, as well as the schemes through
which they extract cash for the unreported portion of the wage.
The study revealed that not only can this practice subsist independently
from undeclared work, but in certain circumstances it
can even rely on cash flows that are fully visible to the authorities.
Furthermore, we show that many quasi-formal workers are
actually happy with their employment due to the mistaken belief
that they earn more money this way. In addition to its theoretical
significance, this paper also provides valuable practical information
that could assist the authorities in their fight against
this phenomenon.
Keywords
Quasi-formal employment; under-declared employment; wage underreporting; envelope wages; Croatia; qualitative study
Hrčak ID:
254429
URI
Publication date:
9.2.2021.
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