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Confronting a legacy of rationalization

DECADES of living under the Communist regime caused people to develop a special survival mechanism based on one's ability to dodge the system. If you could exclude state institutions from your life, you could expect the admiration - not the condemnation - of those around you.

DECADES of living under the Communist regime caused people to develop a special survival mechanism based on one's ability to dodge the system. If you could exclude state institutions from your life, you could expect the admiration - not the condemnation - of those around you. In this environment certain acts, such as buying and selling "off the books" to avoid taxes, were not considered examples of illicit behaviour. Rather, they were understood as something that everyone did, everyone does or everyone will do at a certain point.

In Slovakia, many still view illegal labour as something that might not be entirely above board but is not criminal either.

Illegal labour remains a survival tool for many small firms, especially those in investment-thirsty regions with high unemployment. By comparison, big companies in Slovakia have a negligible share in the illegal employment market.

The motivation to cheat the system through illegal labour is clear: Why not avoid lengthy bureaucratic procedures, especially in cases where both parties - the employer and the employee - stand to benefit? Why involve the state? What workers have failed to understand is the false assumption that they are "benefiting". In fact, illegal employees are losing the most in the process, namely, social security.

A couple of years ago few laws existed to penalize illegal labour. The government pretended not to see that growing grey splotch on the map of Slovakia's economy.

In fact, a clear definition of illegal labour was missing. Even today, many are confused over the term. What is illegal about working hard for someone and then being paid for the work?

Illegal labour, which gives rise to a grey economy, is due to sharpening market conditions. It often happens that less-educated people living in needy regions fall into the trap.

The general secretary of the Federation of European Employers, Robin Chater, said that while immigrants from North Africa and the Middle East make up the main portion of illegal workers in Western Europe, in Slovakia, it is the Slovaks themselves who are illegal, the daily SME wrote.

Sociologists think high unemployment is to blame. In such a climate, people are vulnerable to poverty, making them willing to accept a job despite the conditions. They would rather embrace insecurity and the threat of an instant layoff than face no work at all.

Illegal labour is flourishing in the Slovak construction industry. It is worth mentioning because these workers lack insurance - a problem given that accidents are much more frequent in this sector than in others.

Seasonal work also throws open the door for illegal labour, even if it only temporarily solves the problem of putting food on the table.

To combat illegal labour, the Labour Ministry has started a crusade against illegal employers and employees, and it has already caused panic.

The ministry reported that during the first week of its crackdown (dubbed Vietor, or Wind), more than 30,000 new positions were declared to the state social insurer Sociálna poisťovňa. Previously, these jobs did not officially exist.

Many say that the ministry is only scratching the surface, that employers who rely on illegal labour simply told their "employees" to take a vacation while the threat of labour checks were hanging over their heads.

In the first few days of Wind, 832 people were found to be working illegally - 600 more than the totals for both 2003 and 2004.

The Labour Ministry also erected some legislative barriers to halt the spread of illegal labour. For example, an employer must report a new employee to the state insurer one day before he or she enters into employment.

However, many criticize the Labour Ministry for cracking down on the symptom, not the problem. These critics say the state should offer a fair system of social benefits and securities that the country's economy is able to finance.

Slovakia is among those countries with the highest payroll taxes, which elevates the price of labour and indirectly inspires firms to cheat. European organizations have been asking the Slovak government to cut the payroll tax burden for a while. While this would certainly not solve the problem of illegal labour, it would create better conditions for reducing it.

By Beata Balogová

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