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Cyprus to get tough on undeclared work

The Labour Ministry says that new laws are in place to step up the battle against undeclared work in Cyprus.

Speaking to state radio on Monday morning, Andis Apostolou – who is a senior official at the Department of Labour Relations – said clampdowns on undeclared work had increased since the banking crisis of 2013 but that more needs to be done.

“This year, we have seen between 6,500 and 7,000 cases of undeclared work across Cyprus,” said Apostolou.

“The cabinet recently gave the green light for new legislation that will allow labour inspectors to better combat the problem of undeclared work. That will include more labour inspectors, better tools to operate, more random checks on businesses and employees and the harmonisation of different laws so that prosecutions can be easier.”

The most common type is work carried out in a formal undertaking, partially or fully undeclared. Partially undeclared work is sometimes also called “under-declared work”, “envelope wages” or “cash-in-hand”.

Another type is undeclared “own account” or self-employed work, where self-employed persons provide services either to a formal enterprise or to other clients, such as households.

Undeclared work occurs in all kind of economic sectors, both within countries and across borders. It is often carried out in sectors like construction, renovation or repair works, gardening, cleaning, provision of childcare or HORECA (Hotel / Restaurant / Catering – food services).

“This is a problem that has been going on for many years and was unfortunately not being dealt with adequately until we had the economic crisis back in 2012-2013,” continued Apostolou.

“With the crisis, came a surge in unemployment and that forced the Department of Labour Relations to end its complacency. In 2009, around 15% of work was undeclared and that figure then rose to 25% and concerned various sectors including those working weekends or in the restaurant and hotel business.”

“We will continue to be vigilant. With every per cent we save, we help our fellow citizen who is unemployed and struggling.”

He added: “The fines can range between €500 per employee for the employer to around €900 for self-employed individuals.”

The fight against undeclared work relies mostly on three types of enforcement bodies:

  • Labour inspectorates addressing abusive behaviour regarding working conditions and/or health and safety norms;
  • Social security inspectorates fighting fraud on social insurance contributions;
  • Tax authorities dealing with tax evasion.

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