efficient_combating_the_informal_economy.doc

Finding workers who would want to be legally employed

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finding workers who would want to be legally employed but agree to fewer earnings than they would receive in illegally operating enterprises that tend to evade payment of income tax and benefits for the workers as well as other liabilities towards the state. Large enterprises complain about the impossibility of technological development due to reduced revenues caused by informal practices. Moreover, availability of goods offered to consumers via informal channels avoids quality control systems; lowering the rating of Belgrade as tourist destination due to poor quality of private lodgings illegally rented to foreign tourists. Due to informal sector practices, 14 survey participants (6.17%) were forced to partially or entirely terminate their business operations. 2.8. Informal economy localities As regards to the scale of informal practices in the region, all survey participants (100%) have cited their immediate environment as the region of vast informal sector activity, which indicates a large scope of this phenomenon in Serbia. Noticeably, administrative border with Kosovo was frequently mentioned as a source of illegal import. Many complaints referred to illegal exchange of goods on the borders with Bosnia, Former Yugoslav Republic of Macedonia, Bulgaria and 49
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Romania and fewer complaints to illegal import from Hungary and Croatia. Survey participants often mentioned Novi Pazar as a town with a very active informal sector. Occurrence of illegal exchange of consultant services is mostly associated with big cities, primarily Belgrade and Novi Sad. 3. Perception of state’s relationship to informal economy 3.1. What are the reasons for sustaining of informal economy? To the question relating to pertinence of informal economy in Serbia, the majority of participants (46.70%) stipulated poor activity of market and financial inspections, 66 participants (29.07%) cited lack of political will to resolve this issue as reason for such extent of informal economy, 44 participants (19.38%) suggested that Ministry of Internal Affairs is insufficiently engaged in combating the informal economy, 39 (17.18%) blamed it on the corruption, 26 (11.45%) brought up poor activity of customs departments, whereas according to 10 participants (4.41%), the problem is lack of effective legislation. 50
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Chart 3.1. What enables sustaining of informal economy in the Republic of Serbia? 3.2. Inspection authorities’ activity evaluation Activity of inspection authorities was evaluated by 227 survey participants. Eighty-six participants (37.89%) evaluated the performance of inspection authorities as “unsatisfactory”, 126 (55.51%) as “insufficient”, 15 (6.61%) as “medium good”. None of the survey participants evaluated the performance of inspection authorities as efficient. 51 What enables sustaining of informal economy environment 66 - 29.07% 39 - 17.18% 26 - 11.45% 44 - 19.38% 10 - 4.41% 106- 46.70% 0 20 40 60 80 100 120 Lack of political will Corruption Poor customs activity Poor MIA activity Defficiences in legislation Poor inspection services activity number of responses
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Chart 3.2. Inspection services activity evaluation 3.3.
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