Combatting Undeclared Work in Cyprus
In a recent statement, Labour Minister Yiannis Panayiotou highlighted a significant challenge facing Cyprus: undeclared work. With an estimated 40,000 individuals, or eight percent of the workforce, engaged in illegal employment, the nation’s social insurance fund is suffering an annual loss of revenue amounting to €10 million.
The Cypriot government has resolved to take a firmer stance on this issue, approving a comprehensive plan to intensify measures to combat the prevalence of undeclared work. A key feature of this plan is the implementation of a system for imposing extra-judicial fines on employers who fail to declare their workers. This move is set to replace the current regimen of administrative fines, with penalties for each instance of non-compliance rising from €500 to €1,000. Should an employer reoffend, this fine will be doubled.
Panayiotou underscored the broader implications of this issue, stating, “Undeclared and illegal work negatively affects healthy economic competition, smooth labour relations, the sustainability of the pension system and the management of illegal migration flows.” Recent inspections conducted at construction sites and other businesses revealed that 13 percent of the 7,935 workers checked were employed illegally.
To curb this worrying trend, the government plans to ramp up inspection efforts, targeting specific worksites and times. These efforts will be coordinated between various departments, including labour and migration, and will leverage interconnected IT systems and databases for optimal use of data. Additionally, staffing will be bolstered to support these initiatives.
An outreach campaign is also in the works, aimed at third-country nationals residing legally in Cyprus but not registered as legal workers. Moreover, authorities will probe employers hiring undeclared workers for potential connections to people-smuggling networks.
Legislative changes are on the horizon as well, with draft bills proposed for creating a digital census of all employees, detailing their wages and social insurance contributions. These bills will also seek to establish liability for both main contractors and subcontractors in cases of undeclared work.
Panayiotou expressed a firm resolve to address these issues head-on, emphasizing the detrimental impact on public interest and the government’s determination to drastically tackle the problem. The upcoming Labour Advisory Council meeting will include this topic on its agenda, with hopes for substantial and mutually beneficial outcomes through the support and cooperation of social partners.
