BERLIN, Feb. 6 (Xinhua) -- Illegal employment and black-market activity in Germany will continue to decline in 2018 thanks to the country's sustained economic momentum, a joint study published on Tuesday by the Tuebingen Institute for Applied Economics (IAW) and the University of Linz finds.
The researchers expect the ratio of black market activity to official gross domestic product (GDP) to fall from 10.1 percent in 2017 to below 10 percent in 2018. The study estimated the resulting value of illicit economic activity at 323 billion euros (400 billion U.S. dollars).
As a consequence, Germany still ranks below average among the highly-industrialized OECD countries for the share of GDP which bypasses fiscal authorities. Greece has the highest ratio of black market activity to official GDP with 20.8 percent.
Nevertheless, clandestine work is significantly more widespread among Germans than it is in the United States or Switzerland. IAW expert Bernhard Boockmann attributed this circumstance to the comparatively dense network of regulations governing Germany's labor market, including its national minimum wage and the strong protections offered to employees against their dismissal.
"If a labor market has strong regulations, the incentives for employers to try to evade these in the black market rise correspondingly," Boockmann argued.
The study noted that the phenomenon of illegal employment is particularly widespread in the German construction and domestic work sectors.
"According to estimates, more than three quarters of cleaning staff in households are illegally employed," Boockmann said. He proposed simplifying the process of worker registration to ameliorate the situation.
Additionally, the study authors suggest that eliminating the so-called "solidarity tax" would further reduce illegal employment by up to 10 billion euros in 2018. All of the parties currently involved in the final stage of "grand coalition" negotiations have signalled their desire to at least partially reform the current system.
However, the Federation of German Trade Unions (DGB), which also campaigns against illegal employment, questioned whether workers' interests in lowering their tax bills could fully explain the extent of black market activity.
"If a barber is still cutting hair at night, they are doing this because they don't earn enough money from regular employment," Martin Kunzmann, DGB regional director in Baden-Wuerttemberg, told the press.
"The best way to combat illegal employment is to pay people a decent wage," he added. Kunzmann also criticized that responsibility for illicit work was shared between the employer and the employee.
In the case of domestic cleaning staff for example, the employers were often wealthy households who could actually afford to officially register their clandestine workers and pay related taxes. (1 euro=1.24 U.S. dollar)
