efficient_combating_the_informal_economy.doc

2 informal economy status in the republic of serbia

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2. Informal economy status in the Republic of Serbia – research summary 11
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In regard to the presence of informal economy, the Republic of Serbia is in comparison to other countries no exception. However, what separates Serbia from the majority of countries is a high participation ratio of population employed in the informal economy considering the total economically active population. 1. Based on the survey results, it is estimated that approximately 665,000 of economically active citizens are in some manner engaged in informal activity (as source of extra income in addition to regular work or as sole source of income). 2. Unregistered economic activity in the Republic of Serbia is mainly conducted in the building and construction sector, trading, tourism and catering, craftsmanship and services and is substantially growing in small and medium-size enterprises. 3. According to the survey estimates, Serbian informal economy shows an annual turn of more than 4 billion Euros, amounting to around 30% of total annual turn in goods and services. 4. There are numerous reasons for clandestine employment in the Republic of Serbia that should primarily be sought in the following: - high unemployment rate, particularly high unemployment rate in young people; - low wages and life standard decrease; - lack of complete tax system and weak tax control; - mild sanctions, i.e. low risk compared to projected profits; - underdeveloped market mechanisms and institutions as well as inefficiency of public administration; - dominance of politics over economy, etc. Competent state authorities tend to turn a blind eye to clandestine employment for clandestine work represents a specific social outlet for regulating social tensions induced by long-lasting economic and social crisis. 12
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5. Clandestine work has numerous negative repercussions not only on employees but also on employers, both the ones who properly register their workers with competent authorities as well on those who choose not to do it, and also on the state and the entire society. Employees performing clandestine work, entirely or partially, fail to enjoy legal rights guaranteed by the effective legislation (Labour Law, Law on Occupational Safety and Health, Pension and Disablement Insurance Law, Law on Medical Insurance, Law on Healthcare, Law on protection in case of unemployment, and other laws), collective agreements (General, Individual and Collective Agreement with the employer) and by the employment contract. Clandestine, i.e. unreported worker fails to attain rights ensuing from the employment relationship, such as right to limited working hours, vacations and leaves of absence, protection of life and health at work or right to a paid pension and disablement insurance. Numerous statistical studies indicate that in the building and construction sector, clandestine work tends to be one of the main causes for occupational injuries, not seldom resulting in death or disablement.
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