Minister of Labour Lauri Ihalainen: Government is taking steps to tackle grey economy
The government is stepping up its activities to tackle non-observed economic activity and economic crime with its decision-in-principle issued on 19 January 2012. The projects within the area of responsibility of the Ministry of Employment and the Economy are related to the reform of the Act on the Contractor’s Obligations and Liability When Work Is Contracted Out and to the grey economy in labour-intensive sectors.
‘Prevention of grey-economy activities supports healthy competition and strengthens entrepreneurship and employment. We have launched rapidly moving measures, and some of our projects are already well under way. For example, government proposals on amendments to the Act on the Contractor’s Obligations and Liability When Work Is Contracted Out concerning the construction industry and on amendments to the Act on Public Contracts will be submitted this spring,’ says Minister of Labour Lauri Ihalainen.
Under the changes proposed for the Act on the Contractor's Obligations and Liability When Work Is Contracted Out, a contractor in the construction industry shall, in future, request accounts and certificates from the subcontractor in accordance with said act even if the operations of the contract partner are established. A certificate of accident insurance will be added to the list of items to be clarified. The efficiency of law enforcement will be improved through adoption of a higher negligence fine for more serious transgressions. The amount of this penalty would be between 16,000 and 50,000 euros. These amendments, together with the introduction of a tax number, will improve efficiency in tackling the grey economy in the construction industry.
At the same time, the reform of the Act on Public Contracts will address the exclusion of public procurement in certain situations in the construction industry. Moreover, a clause on compliance with the minimum terms of employment in the employment contract will become statutory in municipal construction contracts. This will promote contractors’ liability in the public sector.
Furthermore, the Ministry of Employment and the Economy will investigate the need to reform the Act on the Contractor’s Obligations and Liability When Work Is Contracted Out and prepare the necessary proposals in a tripartite process on the basis of the investigations.
The obligation to provide a receipt will be investigated
Labour-intensive sectors wherein services are sold to consumers and a significant proportion of the income comes from cash sales are ‘risk sectors’ in terms of the grey economy.
‘Projects concerning these sectors will be launched soon. One of the objectives is to investigate tradesmen’s obligation to provide a receipt in all cash-based trade. This way, it would be possible to tackle sales that completely bypass the cash register and bookkeeping in the grey economy,’ Minister Ihalainen explains.
The clarification of the obligation to provide a receipt is based on the proposal of a working group that deliberated on prevention of the grey economy in the hospitality and catering industry. In accordance with the working group’s proposals, the Ministry of Employment and the Economy will also launch investigations into the manipulation of cash registers and increasing the efficiency of working-time records in the hospitality and catering industry. The final report of the working group also includes several proposals that can serve purposes such as reducing costs to companies arising from the statutory obligation to provide information.
Moreover, the Ministry of Employment and the Economy will draw up a report on a ban on cash wages. A working group will be established for tackling the grey economy in the hairdressing and beauty industries.
Janne Metsämäki, Secretary of State to the Minister of Labour, tel. +358 10 604 8014
Raimo Luoma, Director General, MEE, tel. +358 10 606 3621
The decision-in-principle on the grey economy is available on the Finnish Government Web site at www.vn.fi/toiminta/periaatepaatokset (in Finnish)
Information about the measures by the Ministry of Employment and the Economy is available at www.tem.fi/harmaatalous (in Finnish)
The report of the working group on minimisation of grey-economy activities in the hospitality and catering industry is available at www.tem.fi/julkaisut (in Finnish)