Magazine article The Wilson Quarterly

Europe's Envelope Economy

Magazine article The Wilson Quarterly

Europe's Envelope Economy

Article excerpt

THE SOURCE: "The Hidden Economy in East-Central Europe: Lessons From a Ten-Nation Survey" by Colin C. Williams, in Problems of Post-Communism, July-Aug. 2009.

ASK A SPECIALIST ABOUT THE importance of the underground economy in Eastern and Central Europe during the Soviet period, and your terminology is likely to be corrected: Underground activity was the economy. A new study of 10 formerly Soviet-dominated states that have joined the European Union reveals that the EU is a long way from wiping this form of commerce out.

One of every five workers in Eastern and Central Europe labors off the books or receives under-the-table supplemental payments, writes Colin C. Williams, a public policy professor at the University of Sheffield, in England. The prevalence of undeclared or underdeclared employment--off the books for tax, social security, or labor law purposes--ranges from 35 percent of randomly selected residents over the age of 15 in Romania to eight percent in Slovenia.

While shadow employment is hardly unknown in any country, Eastern Europe has developed its own special version--"envelope" work. In a Eurobarometer survey, 10 percent of 5,084 workers with formal jobs reported receiving "envelope" payments amounting, on average, to 42 percent of their total wages. …

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