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Tackling undeclared work in the agricultural sector: a learning resource A learning resource

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On 24 January 2019, the European Platform Tackling Undeclared Work organised a seminar in Brussels on Tackling undeclared work in the agricultural sector, with a focus upon seasonal workers and horticulture. The seminar brought together Platform members or designated representatives from EU Member States (MS) representing labour inspectorates and social security, tax and customs authorities, and national and European social partner representatives from the agricultural sector. The intention was to provide participants with an opportunity to engage in mutual learning and exchange knowledge on how to tackle undeclared work in the agricultural sector and transform undeclared into declared work. Participants reflected on the pros and cons of different national and bilateral efforts to tackle undeclared work in agriculture more effectively, especially in relation to seasonal workers and horticulture. They also assessed transnational initiatives. This learning resource paper describes the outcomes of the seminar, which builds upon an earlier Platform report on tackling undeclared work in the agricultural sector (Williams and Horodnic 2018) as well as the background paper prepared before the seminar (Williams 2018a). The first section briefly reviews the views of participants on the extent and drivers of undeclared work in the agricultural sector. This is followed by a review of various policy measures for tackling undeclared work in the agricultural sector reported at the seminar, particularly in relation to undeclared seasonal workers and horticulture, along with the resultant discussions and learning outcomes.
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European Platform Undeclared Work
Tackling undeclared work in the
agricultural sector: a learning
resource
Colin C Williams
A learning resource from the Agricultural Seminar of
the European Platform Undeclared Work
Brussels, 24th January 2019
LEGAL NOTICE
Neither the Commission nor any person acting on behalf of the Commission is responsible for the use which
might be made of the following information.
The information contained in this publication does not necessarily reflect the official position of the European
Commission.
This learning resource paper is part of the work programme 2019-2020 of the European Platform tackling
undeclared work established through Decision (EU) 2016/344. The information contained in this publication
does not necessarily reflect the official position of the European Platform.
For any use of material which is not under the European Union copyright, permission must be sought directly
from the copyright-holder(s) indicated.
This publication has received financial support from the European Union Programme for Employment and
Social Innovation EaSI (2014-2020). For further information please consult:
http://ec.europa.eu/social/easi
Table of contents
EXECUTIVE SUMMARY ........................................................................................ 1
1 EXTENT AND DRIVERS OF UNDECLARED WORK IN THE AGRICULTURAL SECTOR . 2
2 POLICY APPROACHES TO TACKLING UNDECLARED WORK IN AGRICULTURE ........ 4
3 DEVELOPING EFFECTIVE COOPERATION ......................................................... 6
4 DIRECT POLICY APPROACH: DETERRENCE MEASURES ...................................... 7
5 DIRECT POLICY APPROACH: INCENTIVE MEASURES ........................................10
6 INDIRECT POLICY APPROACHES ...................................................................14
7 KEY LEARNING OUTCOMES ..........................................................................17
REFERENCES ...................................................................................................18
1
EXECUTIVE SUMMARY
On 24 January 2019, the European Platform Tackling Undeclared Work organised a
seminar in Brussels on Tackling undeclared work in the agricultural sector, with a focus
upon seasonal workers and horticulture. The seminar brought together Platform
members or designated representatives from EU Member States (MS) representing
labour inspectorates and social security, tax and customs authorities, and national and
European social partner representatives from the agricultural sector. The intention was
to provide participants with an opportunity to engage in mutual learning and exchange
knowledge on how to tackle undeclared work in the agricultural sector and transform
undeclared into declared work. Participants reflected on the pros and cons of different
national and bilateral efforts to tackle undeclared work in agriculture more effectively,
especially in relation to seasonal workers and horticulture. They also assessed
transnational initiatives.
This learning resource paper describes the outcomes of the seminar, which builds upon
an earlier Platform report on tackling undeclared work in the agricultural sector (Williams
and Horodnic 2018) as well as the background paper prepared before the seminar
(Williams 2018a). The first section briefly reviews the views of participants on the extent
and drivers of undeclared work in the agricultural sector. This is followed by a review of
various policy measures for tackling undeclared work in the agricultural sector reported
at the seminar, particularly in relation to undeclared seasonal workers and horticulture,
along with the resultant discussions and learning outcomes.
Key findings:
There was agreement that undeclared work is more prevalent in the agricultural
sector than in the EU economy in general, but also agreement that its magnitude is
difficult to measure. Third country migrants or EU mobile workers were also
considered to constitute a larger proportion of the workforce in agriculture than in
the EU economy in general, and undeclared work was considered particularly
prevalent among third country migrants and EU movers involved in seasonal
agricultural work.
The prevalence of undeclared work in the agricultural sector is in large part due to
agricultural and horticultural producers being pressured to keep production costs low
and quality high by food retailers and the food processing industry. Although the
strategies of agricultural and horticultural producers for keeping production costs low
can range from high road strategies (e.g., technological innovations) to low road
strategies (e.g. illegitimate labour practices, including undeclared work), the high
prevalence of undeclared work suggests that low-road strategies often
predominate.
To tackle undeclared work in the agricultural sector, there was recognition that a
holistic approach is required. This joins up the policy fields of labour, tax and social
security law at both strategic and operational level, and includes social partners, and
uses the full range of direct and indirect policy measures to transform undeclared
work into declared work.
To achieve this, participants recognised that greater cooperation between all the
stakeholders is essential. This involves both cross-border and intra-national
cooperation between tax, social security and labour authorities, as well as between
state authorities and social partners, at the policy, enforcement, awareness raising
and data mining levels.
No one single magic bullet policy will resolve undeclared work in agriculture.
Instead, there is a need for a full range of both direct controls that seek to alter the
costs of undeclared work and/or benefits of operating on a declared basis, as well as
indirect controls that seek either to educate and raise awareness about the
unacceptability of undeclared work or to tackle the formal institutional failures that
lead to undeclared work in the agricultural sector.
2
To take forward the learning from this event, there is a need for continuing effort on
many long-standing issues in this sector (e.g., developing effective cooperation,
issuing written contracts before the first day of work, administrative simplification).
Some new initiatives were also identified, ranging from a very practical initiative of
organising annual meetings at MS level between social partners and enforcement
authorities involved in the agricultural sector, to a higher-level initiative of
conducting a preliminary study of the feasibility of attaching conditionality to
Common Agricultural Policy (CAP) payments based on the fulfilment of certain
workers’ rights or recent compliance of agricultural holdings with tax, social security
and labour law.
1 EXTENT AND DRIVERS OF UNDECLARED WORK IN THE
AGRICULTURAL SECTOR
Key question:
What is the prevalence and drivers of undeclared work in the agricultural sector?
1.1 Prevalence and characteristics of undeclared work in the agricultural
sector
Participants in the seminar concurred that undeclared work is more prevalent in the
agricultural sector that in the EU economy in general. There was disagreement,
however, on the precise level of undeclared work in the agricultural sector, which by its
nature is difficult to accurately measure.
A presentation by the ILO reported that some 61.2 per cent of the EU agricultural labour
force are engaged in informal employment
1
, compared with 11.5 per cent of the
manufacturing workforce and 15.4 per cent of those working in the service sector (see
Table 1). As reported by the ILO the estimated proportion of the agricultural workforce
in informal employment varies markedly across the EU from 3.4 per cent in Sweden to
91 per cent in Poland.
Table 1. Share of informal employment by sector: EU data
Total
Industry
Services
EU
16.3
11.5
15.4
Austria
10.0
4.2
10.6
Belgium
13.5
9.2
13.7
Bulgaria
15.9
8.7
15.8
Croatia
13.0
8.8
11.6
Cyprus
15.1
16.7
13.4
Czech Republic
9.2
7.9
9.9
Denmark
11.2
9.2
11.0
Spain
27.3
12.4
31.0
Estonia
6.9
3.3
7.7
Finland
6.3
5.9
4.9
France
9.8
5.4
10.2
Germany
10.2
7.2
11.1
Greece
32.8
26.7
25.2
1
The ILO defines informal employment as persons whose main jobs lack basic social or legal protections or
employment benefits. Persons in informal employment include: (a) own-account workers self-employed in
their own informal sector enterprises; (b) employers self-employed in their own informal sector enterprises;
(c) contributing family workers; (d) members of informal producers’ cooperatives; (e) employees with
informal jobs in formal sector enterprises, informal sector enterprises, and paid domestic workers employed
in households; (f) own-account workers engaged in self-provisioning, if considered employed in the sense
that the production makes an important contribution to household consumption (ILO, 2012, 2013).
3
Total
Industry
Services
Hungary
12.2
9.1
11.2
Ireland
13.4
12.7
10.8
Italy
19.0
15.4
19.4
Latvia
13.2
8.3
12.1
Lithuania
12.6
8.9
10.1
Luxembourg
1.2
0.3
1.1
Malta
8.1
7.5
7.8
Netherlands
9.4
8.1
9.3
Poland
38.0
24.6
35.0
Portugal
12.1
8.3
11.3
Romania
28.9
8.9
12.6
Slovakia
16.7
18.6
15.4
Slovenia
5.0
3.1
4.6
Sweden
8.2
1.8
9.1
United Kingdom
13.6
16.4
12.6
Source: ILO calculations based on EU Statistics on Income and Living (SILC) data
(Pintado Nunes, 2019).
Other estimates reported at the seminar of the proportion of the EU agricultural
workforce engaged in undeclared work were somewhat lower. The presentation by the
European Federation of Food, Agriculture and Tourism Trade Unions (EFFAT)
estimated that some one-third of the EU agricultural workforce are not recorded, which
is in line with the estimates in the Platform report on the agricultural sector that used
Eurobarometer and European Working Conditions Survey data (Williams and Horodnic,
2018).
Examining the types of undeclared work being used in the agricultural sector, the broad
consensus of the seminar speakers was that wholly undeclared work is primarily used
where the employment relationship is not declared to the authorities for tax, social
security and/or labour law purposes. The use of bogus self-employment and under-
declared employment was viewed as relatively less prevalent. However, many
presenters recognised the need for better evidence on the prevalence and
characteristics of undeclared work in the agricultural sector.
Turning to who engages in undeclared work in the agricultural sector, seminar
participants again agreed that a much higher proportion of the workforce in the
agricultural sector are third country migrants or EU movers than in other sectors.
Indeed, EFFAT estimate that 40 per cent of agricultural workers are internal EU or third
country migrants. Differentiating between EU mobile workers and third country
migrants, moreover, it is estimated that 20 per cent of migrants w orking in agriculture
are from third countries and 80 per cent are EU mobile workers. In some Member States
and regions, a large proportion of these migrants are engaged in undeclared work. They
not only suffer from a lack of access to social security but also access to information
about their rights and a lack of support.
1.2 Drivers of undeclared work in agriculture
During the seminar, participants drew attention to how the agricultural sector in general,
and the horticultural industry in particular, is part of a supply chain that primarily sells
its output either to manufacturing industries (e.g., food processers) or directly to retail
service businesses (e.g., supermarket chains). Over the past few decades, there has
been an increased concentration of the retail food industry and the food processing
4
industry.
2
There has also been greater pressure on agricultural producers to keep
production costs low and quality high from food processors and retailers higher up the
supply chain.
To keep their production costs low, the presentation by Oxfam outlined a spectrum of
options available to agricultural and horticultural producers, ranging from low road
strategies (involving a whole series of illegitimate labour practices, including forced
labour and the use of undeclared labour) through to high road strategies, involving
technological innovations to replace labour in terms of production and harvesting
technologies. The overarching evidence presented during the seminar on the prevalence
of undeclared work suggests that low road strategies have often predominated in the
EU agricultural sector, including horticulture.
A key driver of undeclared work is therefore the intense pressures on agricultural and
horticultural producers to keep production costs low (and quality high) from food
processors and retailers higher up the supply chain. As a speaker from European
Commission’s Directorate General for Agriculture and Rural Development
reported, the power imbalance between agricultural producers and these manufacturing
and service businesses higher up the supply chain has sometimes led to the emergence
of practices that deviate from good commercial conduct. Farmers and small operators
in the food supply chain, often lacking bargaining power, have been subjected to unfair
trading practices such as short-notice order cancellations, retroactive changes to
contracts, and late payments.
Therefore, how can undeclared work in the agricultural sector be tackled?
2 POLICY APPROACHES TO TACKLING UNDECLARED WORK IN
AGRICULTURE
Key question
What approaches are available for tackling undeclared work in the agricultural
sector?
Decision 2016/344, establishing the European Platform Tackling Undeclared Work,
asserts that Tackling the complex problem of undeclared work requires a holistic
approach. This involves national governments adopting a whole government approach
by joining up the policy fields of labour, tax and social security law at both strategic and
operational level, and cooperating with social partners and other key stakeholders. It
also means using the full range of direct and indirect policy measures available with the
objective of transforming undeclared work into declared work in an effective manner.
3
As Table 2 highlights, direct policy tools tackle undeclared work by ensuring that the
benefits of declared work outweigh the benefits of undeclared work. This is achieved
either by using deterrence measures (sticks) to increase the costs of undeclared work
and/or by making the conduct of declared work more beneficial and easier using
incentives (carrots). Indirect policy tools, meanwhile, seek either to change the
norms, values and beliefs regarding the acceptability of undeclared work, so that these
are in symmetry with the laws and regulations (e.g. using awareness raising campaigns
and educational initiatives), and/or to change the formal institutional failings that lead
to undeclared work. The Platform consensus which has emerged is that most effective
approach for tackling undeclared work is to concurrently use the full range of direct
measures alongside the full range of indirect measures.
2
See www.europarl.europa.eu/RegData/etudes/STUD/.../IPOL_STU(2016)578981_EN.pdf
3
Williams, C.C. (2017) Developing a Holistic Approach for Tackling Undeclared Work: a learning resource,
European Commission, Brussels.
5
Table 2. Policy approaches for transforming undeclared work into declared
work in the agricultural sector
Approach
Tools
Example initiatives in agricultural sector
Direct
approach:
deterrents
Improved
detection
Improved workplace inspections
Better data mining and data sharing
Joint operations
Supply-chain due diligence
Written contract by first day of employment
Improved
penalties
Proportionate sanctions
Black lists
Direct
approach:
incentives
For employers
Simplification of compliance
Simplified contracts for employing seasonal
workers
Co-employment/employee sharing
Formalisation support and advice
White lists
For workers
For customers
Smoothing transition to formalisation
Making compliance easy
Service vouchers
Labelling initiatives,
Targeted direct or indirect tax incentives to
purchase declared goods
Indirect
approach
Change
employers,
workers &
consumers
attitudes
Education
Normative appeals
Awareness raising of benefits of declared work
and costs of undeclared work
Change formal
institutional
failings
Address unfair trading practices (UTPs)
Conditionality of CAP payments based on
compliance with tax, social security and
labour law
Examples of these initiatives are elaborated later in this report.
Rather than apply the same approach to all sectors when tackling undeclared work, the
Platform has recognised that sector-specific approaches are required. The Platform’s
glossary of terms defines this as an approach where the direct and indirect policy
measures are specifically designed and targeted at one sector whose characteristics in
terms of undeclared work are different from other sectors and whose problems and risk
factors require a specific approach. Depending on the specific problems of the sector
and its unique risk factors, greater priority is therefore given to some policy measures
than others, and each policy measure is tailored to address the specific and unique
characteristics of the sector being targeted.
The holistic approach applied to the agricultural sector is therefore composed of two
types of action. A first type of action is the use of the full range of policy measures, but
these are tailored to match the sector-specific characteristics and drivers of undeclared
work in the agricultural sector. The second action, discussed next, is to join-up on the
policy and enforcement level of both strategy and operations the fields of labour, tax
6
and social security law, and involve social partners and other stakeholders. These are
discussed in detail below.
3 DEVELOPING EFFECTIVE COOPERATION
Many participants in the seminar identified the lack of cooperation between different
state authorities, and between state authorities and the social partners, both at the
intra-national and cross-border level, as a principal barrier to tackling undeclared work
in the agricultural sector. It was therefore agreed that, if undeclared work in the
agricultural sector is to be tackled, there is a need to develop more effective cooperation
at various levels, including:
Intra-national cooperation between tax, social security and labour authorities on
the level of policy, planning and intervention, not least to facilitate a customer-
friendly approach whereby agricultural employers avoid duplication of effort.
GEOPA-COPA stated during the seminar that it is not uncommon for an employer
to be asked for more than one statement with similar content when
establishing the same employment relationship due to multiple administrations
managing this type of information (e.g., employment services authority, social
security institutions, tax authorities). Integration between public IT systems to
avoid unnecessary duplication is therefore required;
Intra-national cooperation between the state authorities and social partners at
the policy and enforcement levels. Indeed, EFFAT suggested that at the national
level, an annual meeting between labour inspectorates and the national
employer federations and trade unions responsible for agriculture, such as to
exchange information, could be a useful way forward. EFFAT also suggested that
state authorities having one single contact person would be a step forward.
Intra-national cooperation between state authorities at the level of data mining
and risk analysis. Indeed, several participants at the meeting and in evaluation
feedback after the seminar noted that there was very little evidence of data
mining being used in relation to undeclared work in the agriculture sector, and
little understanding of what proxy indicators might be used to identify risky
agricultural holdings in relation to undeclared work;
Cross-border cooperation between state authorities at the level of policy as well
as planning and conducting operations;
Cross-border cooperation between state authorities and social partners, such as
via the European Platform Tackling Undeclared Work and potentially the
European Labour Authority;
Cross-border cooperation at the level of data sharing; and
Cross-border cooperation on education and awareness raising activities.
A current initiative seeking to explore how this holistic approach based on more
cooperation can be operationalised is RAISE UP
4
(grass-Root Actions, Innovative
approaches and Stakeholder Engagement to tackle Undeclared work Propensity). This
is being coordinated by the FLAI CGIL (Federazione Lavoratori dell’Agroindustria, Agro-
Food Industry Workers Federation). It is seeking to define and build a better shared
understanding of a holistic approach for tackling undeclared work in the agricultural
sector based on both national and transnational cooperation at a policy and operational
level. This initiative was presented during the workshop. However, it is at too early a
4
Co-funded through European Union Programme for Employment and Social Innovation ("EaSI" Progress
Axis) 2014-2020, call for proposals VP/2017/005, activities in the field of undeclared work"
7
stage for lessons to be yet learned on developing more effective cooperation either at
the intra-national or cross-border level. Once the project is complete, it will be useful to
hear the lessons from this initiative on the obstacles confronted when seeking to develop
more effective cooperation and how these have been overcome.
4 DIRECT POLICY APPROACH: DETERRENCE MEASURES
Key question
What deterrence measures have been found to be effective in tackling undeclared
work in the agricultural sector?
Direct controls reduce the costs and increase the benefits of employers and workers in
the agricultural sector operating on a declared basis, while increasing the costs and
reduce the benefits of them operating undeclared. Viewing those employers and workers
participating or considering participation in undeclared work in the agricultural sector as
rational economic actors, who weigh up whether the pay-off is greater than the expected
cost of detection and punishment, the objective is to alter the cost/benefit ratio
confronting them.
To do this, deterrence measures seek to increase the costs. The seminar heard how this
can be achieved by raising the penalties and sanctions for those caught (e.g.
besides fines, innovative forms of sanction are emerging in many countries, such as the
use of black lists which prohibit offenders from applying for public support programmes
or public procurement tenders, or naming and shaming initiatives where the names of
offenders are made public).
At the seminar, both GEOPA-COPA and EFFAT asserted that proportionality as a principle
is required. Sanctions should be proportionate to the type of the misconduct, so that on
the one hand severe sanctions should be issued for major violations or wilful violations
and at the other hand unintentional mistakes, minor violations or omissions
unintentionally should be punished with lighter sanctions. See also GEOPA-COPA/EFFAT
(2017).
There was also a great deal of discussion of how to improve the perceived or actual
probability of detection. To do this, however, some key challenges were highlighted
that need to be overcome. These are related to the difficulties in carrying out workplace
inspections due to the limited access to the workplace (size and dispersion of
workforce, lack of access to premises) and the prevalence of not-written contracts.
Often the inspectors face communication issues because they lack the technical jargon
of the sector, and there may be language barriers. There is also the lack of data related
to undeclared work in the agricultural sector and the so far limited attention given to
identifying proxy indicators of risky agricultural holdings that can be used when data
mining.
The resultant policy solutions discussed regarding improving the perceived or actual
probability of detection arise directly out of these challenges. At the seminar, firstly,
participants revealed that improving the effectiveness of workplace inspections requires
that inspections of agricultural holdings need to be given greater priority in some
Member States. Adequate transport facilities need to be provided for inspectors to
conduct such inspections, the physical safety of inspectors needs to be improved, and
issues related to access to the workplace need resolving. There is also a need to improve
the use of IT in inspections. This includes not only state authorities exchanging and
sharing data using ideally shared IT, but also the greater use of IT for targeting and
preparing operations (e.g., drones, maps).
The ILO 1969 Labour Inspection (Agriculture) Convention (C129) sets out clearly
that each Member State shall maintain a system of labour inspection in agriculture
(article 3) in all agricultural undertakings in which employees or apprentices work,
however they may be remunerated and whatever is the type, form or duration of their
8
contract (article 4). Article 5, nevertheless, makes clear that it is not solely agricultural
holdings with employees which should be subject to inspection. As Article 5 states,
1. Any Member ratifying this Convention may, in a declaration accompanying its
ratification, undertake also to cover by labour inspection in agriculture one or more
of the following categories of persons working in agricultural undertakings:
(a) tenants who do not engage outside help, sharecroppers and similar
categories of agricultural workers;
(b) persons participating in a collective economic enterprise, such as members of
a co-operative;
(c) members of the family of the operator of the undertaking, as defined by
national laws or regulations.
5
As the ILO presentation highlighted, only three EU Member States have accepted this
paragraph of Article 5, namely the Czech Republic (paragraph 1a, b and c), Latvia
(paragraph 1b) and Slovakia (paragraph 1a, b and c). The European Parliament
resolution of 14 January 2014 on effective labour inspections as a strategy to improve
working conditions in Europe (2013/2112(INI)) recognises that there is a problem of
inspecting agricultural holdings and calls on Member States to ensure that rural regions
are properly covered by inspections.
However, paragraph 2 of article 16 in C129 is clear that Labour inspectors shall not
enter the private home of the operator of the undertaking … except with the consent of
the operator or with a special authorisation issued by the competent authority. As the
ILO stated, if inspectors do not have access rights on the basis of national law,
inspectors will need to improve their persuasion skills, to obtain evidence that avoids
them having to enter the household, and/or to improve their working relationship with
the judiciary (e.g., electronic authorisation, use of presumptions allowing access).
Inspections of agricultural holdings might not be the most effective way of tackling
undeclared work in the agricultural sector. This is especially the case in relation to the
intermediaries that are used in agriculture to match demand and supply. The problem
of these intermediaries using undeclared workers was highlighted in many of the
seminar presentations. Box 1 reports a presentation by the Gangmasters Licensing and
Labour Abuse Authority (GLLAA) on how the problem of these intermediaries using
undeclared workers had been tackled in the UK.
Box 1. Licensing Intermediaries: Gangmasters and Labour Abuse Authority,
UK
Following the deaths of migrant cockle-pickers employed by gangmasters, the
Gangmasters (licensing) Act 2004 was implemented to tackle the exploitation of
workers in agriculture, forestry, horticulture, shellfish gathering and food processing
and packaging industries by labour providers known as gangmasters. This created a
Gangmasters Licensing Authority (GLA) to regulate labour providers and employment
agencies. All gangmasters must be licensed and there are eight standards related to:
pay and tax matters; prevention of forced labour and mistreatment of workers;
working conditions; and sub-contracting and using other labour providers. It is an
offence for labour users to employ workers supplied by unlicensed labour providers.
There are some 1000 licence holders in the UK. The benefits are that:
Workers receive fair treatment, the pay, benefits and conditions they are
entitled to.
Labour providers are not undercut by those who pay less than the minimum
wage or avoid tax. Industry standards are raised.
5
See: http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_ILO_CODE:C129
9
Labour users can check their workers come from a legitimate provider and
are informed if their labour provider’s licence is revoked.
Consumers can be assured that their food has been picked and packed in an
ethical environment. Illegal activities which lead to a loss of public revenue
income tax, VAT and NI are reduced.
Since 2006, 284 licences have been revoked, with the number of revocations reducing
from 38 in 2008/9 to 12 in 2017/18, and 247 applications have been refused. Since
2008, there have been 66 prosecutions for acting as an unlicensed gangmaster (i.e.,
the maximum penalty for operating without a licence is 10 years in prison and/or a
fine) and 24 prosecutions for using an unlicensed gangmaster (carrying a maximum
penalty of six months in prison and/or a fine). The outcome is better protection of
workers rights.
A further means of improving the probability of detection of undeclared work in the
agricultural sector is to insist on a written contract by the first day of commencing
work. This is a key recommendation of EFFAT. Indeed, it would make the detection of
undeclared workers far simpler than at present. GEOPA-COPA similarly asserted during
their presentation that a good practice potentially transferable to other Member States
is the LIMOSA system (Belgium), where a declaration is submitted by Belgian employers
before the work starts.
Another means of deterring undeclared work is to adopt joint and several liabilities
in subcontracting chains. The seminar heard about the system of joint and several
liabilities used in Belgium. There exists joint and several liability for the contractor to
monitor the chain of (sub)contractors in a variety of sectors susceptible to fraud,
including in the green sectors. In brief, when a business owner calls upon a
subcontractor to carry out works, the co-contractor (business owner) is responsible for
overseeing payment of the share of wages that have not been correctly paid by the
subcontractor. In the agriculture sector, a collective labour agreement has been signed
which grants the co-contractor the possibility of terminating the contract thus avoiding
the responsibility of having to pay wages in place of the subcontractor. It also states
that it is possible to use part of the amount that has been invoiced for the payment of
wages that have not been paid by the subcontractor. This increases the legal certainty
for employers in the agriculture sector. It also offers social partners the possibility of
signing agreements regarding responsibility in subcontracting chains.
In many other sectors, a key way in which the costs of undeclared work are increased
is by using data mining to increase the actual probability of detection. However, several
participants noted that data mining was not well advanced in relation to identifying
undeclared work in the agriculture sector. Therefore, some attention will need to be paid
to advancing the method of risk assessment of agricultural holdings when using data
mining. This might be one subject for discussion if the proposal elsewhere in this report
is implemented for annual meetings at the national level between enforcement
authorities and social partners. Social partners, after all, wish to tackle unfair
competition and protect workers rights, and also have the in-depth knowledge of their
sector to be able to help with identifying proxy indicators that might be used to identify
risky agricultural holdings (e.g. higher ratios of credit card to cash payments compared
with other similar farm diversification businesses, lower than average wage levels).
It is not just increasing the costs of participating in undeclared work that can be used
to tackle undeclared work in agriculture. Improving the benefits and ease of engaging
in declared work can also alter the cost/benefit ratio facing employers and workers when
considering whether to engage in undeclared work.
10
5 DIRECT POLICY APPROACH: INCENTIVE MEASURES
Key question:
What incentive measures can be used to make it easier and/or reward declared work
in the agricultural sector?
To enable undeclared work in the agricultural sector to be transformed into declared
work, incentive measures seek to make it easier to undertake, and reward, participation
in declared work. These incentives can be targeted at either employers, workers or
customers.
The seminar discussed initiatives to make it beneficial or easier for employers to
engage in declared work. Among those highlighted were the simplification of
compliance, such as simplified contracts for employing seasonal workers, co-
employment or employee sharing, formalisation support and advice, and the use of
white lists of compliant agricultural holdings (rather than black lists of non-compliant
agricultural holdings) who may, or may not, receive certain benefits for being on the
white list (e.g., access to public procurement contracts, reduced inspections).
In their presentations, both GEOPA-COPA and EFFAT called for the simplification of
administrative burdens in the form of better regulation, not deregulation. Presenters
provided a range of ways in which this could occur. One particularly important
simplification of regulation relates to the ease of registration of seasonal workers to
make it easier for employers and workers to operate on a declared basis. Smaller or
seasonal jobs are often currently conducted undeclared, often as a result the complex
and, often inadequate systems required to declare them. To move such undeclared work
into the declared realm, one option is to introduce simplified regulations for smaller and
seasonal jobs. During the seminar, two examples were presented of how this might
occur. Box 2 presents the simplified regulations for seasonal workers in Hungary and
Box 3 the initiative to simply the regulations for registering short-term seasonal
agricultural work contracts in Bulgaria.
Box 2. Simplification of employment for seasonal workers, Hungary
The 2010 Simplified Employment Act (Egyszerűsített foglalkoztatási törvény) in
Hungary was introduced to make it easier for seasonal and temporary employment
to be conducted on a declared basis. Before this Act, it was necessary to complete in
duplicate an official attendance sheet with 18 pieces of information for every seasonal
worker in a Temporary Work Booklet. This booklet was a breeding ground for various
labour infringements and it was difficult to inspect it effectively because employers
engaged in the erasing and rewriting of contracts, such as by using special inks that
could be erased using heat on the paper.
From 2010, the Simplified Employment Act introduced electronic registration stating
the exact data and time of registration. Since 2017, there has been a mobile app.
This enables the mutually agreed simplified work contract to be notified either by: a
simple text message (SMS) or electronically via the Client Gate System after they are
registered and in the system (https://ugyfelkapu.magyarorszag.hu/). All obligations
are fulfilled by entering two codes into the text message or into the Client Gate
System.
This makes it much easier to conduct inspections and declare workers. There is a clear
overview for inspectors and a separate database for this kind of registration (EFA
Simplified Employment Database). Workers can also be easily unregistered if they do
not show up. It is therefore easy to inspect, and there are clear and fast procedures
when detecting infringements.
11
Box 3. Short-term seasonal agricultural work contracts, Bulgaria
To reduce the share of undeclared work in the agricultural sector and encourage
declared work, in 2015 an amendment to the Labour Code in Bulgaria was introduced
- Employment Contracts for Short-term Seasonal Agricultural Work. This provides a
legal tool for more easily hiring workers on a declared basis for short-term seasonal
contract work. It assists anybody over 18 years old (including registered unemployed
persons) to engage in legally regulated work, while guaranteeing a degree of social
protection for these persons, since all taxes and social security contributions must be
paid in advance.
An employment contract for short-term seasonal agricultural work is signed between
a worker and a registered farmer for one day’s work (and from 2018, this can be for
either four or eight hours). The employer and worker sign a separate contract for each
day worked. For the individual worker, the number of contracts of this kind must not
exceed more than 90 days in one calendar year. The areas in which these types of
employment contract can be signed include the manual processing of plants and
collecting the harvest of fruits, vegetables, roses and lavender.
Employers, who must be a registered farmer, who wish to hire a worker in this way,
can access the necessary forms for this type of employment contract from the Labour
Inspectorate by post, or via the internet since 2017. The advantage for unemployed
persons in particular is that they can work on this type of labour contract without the
need to end their registration as unemployed persons and for all other workers they
can do so easily and with their taxes and social contributions paid in advance.
Following an awareness raising campaign, the measure became popular among
farmers because it allows the recruitment of workers for short-term agricultural
activity during the short season. Workers can work legally and their registration as
unemployed is not affected despite short-time employment. As the graphic below
shows, the number of single employment contracts issued has increased each year.
So too has the number of farmers who use these contracts increased.
The lessons are that the key conditions for success include the following:
12
The employers should be informed via an awareness campaign before the peak
agricultural season about the measure, how it works and how to access the
forms for this type of employment contract.
An online tool for the administration of the measure is crucial.
An inspection campaign in rural areas during the peak agricultural season should
be undertaken.
A further measure to simplify compliance in the agricultural sector is what is variously
termed employee sharing, joint employment, employee groups or co-
employment. This is where the same worker, under a single employment relationship,
can work for more than one employer. It provides flexibility in that multiple employers
can use in agreement with each other and with no restrictions, the services of the same
employee under a single employment relationship. From a regulatory perspective, there
are two parties to the employment relationship (employer and employee), although the
contract can have multiple individuals who are legally classified as employers.
Platform Seminar participants heard about a variant of this, joint employment in Finland
(see Box 4). For a review of other variants, see Williams and Horodnic (2018).
Box 4. Co-employment, Finland
In Finland, co-employment, which is an employment contract between one employee
and more than one employer, is useable on smaller farms and enterprises unable to
employ full-time workers on their own, but still need a permanent workforce. This model
of co-employment is possible under the Employment Contracts Act.
Most agricultural employment in Finland remains based on the one employer model.
However, co-employment is legally possible and interest in such an arrangement is
growing.
There are three different ways to organize this co-employment or what might be termed
employers’ (farm) ring systems where one employee is employed by two or more
employers:
1. One employer model: this is where two or more farms form an employer ring where
one employer acts as the main employer, and therefore oversees all legal duties
(withdrawing tax, social security fees and other social insurance fees). Both employers
must take care of occupational health and safety aspects. The sharing of employment
costs between employers is contractually agreed by the employers themselves.
2. Two employers model: two (or more) farms employ the same worker together and
there is a common/joint employment contract. Each has their own employment contract
with the worker, acting independently one from the other in relation to the obligations
they have towards the employee. Both pay wages and social security fees
independently. There is still need for agreement between employers such as to define
working time, annual leave, sick pay etc. during the employment.
3. Organised employer model: the employers form an enterprise, company or
cooperative, which acts as a normal employer. In this case the new legal entity acts as
the formal employer, overseeing all obligations, and the employee works for both farms
who have constituted the new legal entity.
The advantages of co-employment are that it is suitable for smaller enterprises (family
farms) which may not have possibility to employ full-time workers. For employees,
meanwhile, it makes possible an open-ended employment contract with full-time salary,
and enhances rural employment and rural economic development.
13
Until now, however, it has not been a very common practice. There is, nevertheless, a
Kimpparenki (joint employment) project operated by ProAgria running from 1.1.2016
31.3.2019.
Several presentations at the seminar, moreover, voiced the possibility of another
potential supply-side incentive initiative that perhaps requires further investigation. This
relates to the Common Agricultural Policy (CAP) and the principle of conditionality. The
view was that that making CAP payments conditional upon the fulfilment of certain
workers’ rights or upon recent compliance of agricultural holdings with tax, social
security and labour law might be one useful future way forward. The concluding sessions
of the seminar summed up the feeling of the seminar in stating that this requires much
greater exploration, not least in terms of what form of conditionality might be involved,
and who would inspect that these conditions are being achieved.
Another similar supply-side incentive that has already been experimented with is the
use of white lists (compliant lists). Black lists (non-compliant lists) are used to name
and shame non-compliant agricultural holdings. However, there is some evidence that
those named and shamed are more likely to re-offend unless help with rehabilitation is
provided (see Williams, 2018b). An alternative approach is to produce a white list
(compliant list) and to offer incentives for those listed as compliant, such as access to
public procurement contracts or a reduced likelihood of inspections taking place. An
example given one presentation is the Quality Agricultural Work Network in Italy (for
more detail, see fiche, and Williams and Horodnic, 2018).
A similar white list initiative is a social label initiative in Belgium, that the presentation
at the seminar by GEOPA-COPA listed as a good practice. The mushroom growing sector
in Belgium was experiencing difficulties due to low prices. Together with social partners,
a plan for the sector’s future was put in place. Employers who sign up (i.e., they must
sign a declaration each year) to respect Belgium’s social legislation and not to resort to
systems involving posting abuses and bogus self-employment, and who agreed to keep
the number of permanent workers at 2011 levels, could use seasonal workers for up to
100 days per seasonal worker per year instead of the usual 65 days. The social partners
have been responsible for drawing up the list of companies eligible to make use of this
expanded regime. The Minister for Social Affairs approves the list of social label
companies. The social label system has increased the number of companies in the
mushroom growing sector.
Indeed, this use of social label initiatives whereby agricultural products received a
social label if workers’ rights were respected was mentioned in several presentations at
the Seminar as a potential way forward. The common view is that this enables
consumers to challenge supermarkets and other retailers to be transparent about their
supply chains and the origin of the food they sell, respect the rights of small-scale
farmers and workers in their supply chains.
Another labelling scheme presented by Oxfam is the Supermarkets Scorecard in the
UK to support decent work. This promotes a race to the top among the largest
supermarkets by raising awareness among consumers on their supply chains on human
rights allegations, using the supermarkets public reported policies and actions in their
supply chains in relation to transparency and accountability, workers, farmers and
women.
This Oxfam initiative presented at the Seminar is one example of a wider call for
retailers to map their supply chain and perform a due diligence assessment of their
direct suppliers, namely the processing companies (Ethical Trading Initiative
Norway (IEH), Ethical Trading Initiative (ETI) and Danish Ethical Trading Initiative
(DIEH), 2015). This would include the location of the supplier and subsequent likelihood
of manual harvesting, measures in place to respect trade union and workers’ rights, and
the extent to which the supplier can provide product traceability to farm level. Retailers
14
would then assess conditions at farms and cooperatives (for more detail, see Williams
and Horodnic, 2018).
The UN Guiding Principles on Business and Human Rights, moreover, state that a
business has a responsibility to respect human rights and shall put into place measures
that ensure that its activities and relationships do not have negative impacts on people’s
rights. Supply chain due diligence is therefore a method, or process, through which
a business can assure stakeholders that it is not infringing upon the rights of others,
which in this case include workers in the supply chain of food production.
6 INDIRECT POLICY APPROACHES
Key question:
What indirect controls can reduce undeclared work in the agricultural sector?
Indirect approaches recognise that citizens, workers and employers are not just rational
economic actors (purely calculating the costs and benefits). They are also social actors
who engage in undeclared work because their norms, values and beliefs do not align
with the laws and regulations, for example due to a lack of trust in the state and what
it is seeking to achieve.
To align them, two approaches are pursued. On the one hand, indirect policy approaches
seek to change the norms, values and beliefs regarding the acceptability of
participating in undeclared work, so that these are in symmetry with the laws and
regulations (e.g. using awareness raising campaigns and educational initiatives). On the
other hand, there is a need to reform the formal institutions by tackling the formal
institutional failures that lead to undeclared work being undertaken.
A presentation on the equine industry in Ireland provided an insight into the culture
of non-compliance with labour law in this sector, which is long-standing and heavily
embedded. Grounded in a discourse of a love of horses, workers and employers often
find it difficult to conceptualise that labour law applies to their employment relationships,
resulting in labour law violations. Since 2017, therefore, an education and awareness
raising campaign has been targeted at the equine industry about the need for
compliance with labour law, largely among trainers and stable staff, which included
employer briefings, presentations, trade journal articles, and inputs to industry training
courses, as well as notification that there was to be greater seeking of compliance. This
was then followed up with enforcement initiatives for those failing to comply. Criminal
convictions resulted for many of those failing to comply and one outcome was that a
change occurred to event-times and the number of events in the 2019 season, due to
the long working hours which would have been involved for what were now recognised
as workers (rather than people doing the tasks due to their love of horses).
Given this embedded culture of non-compliance in the equine industry, seminar
participants reflected on whether there are other sub-sectors of the wider agricultural
sector or sub-sets of workers (e.g., family farms) where similar views exist that the
workers should be and are exempt from complying with labour laws.
Education and awareness raising campaigns therefore have a key role in tackling
undeclared work in the agricultural sector. Indeed, this is a policy measure where social
partners can be heavily involved in leading and supporting. Such education and
awareness raising campaigns can be targeted at either agricultural employers,
intermediaries, seasonal migrant agricultural workers, food processors,
grocery retailers, or consumers. Until now, education and awareness campaigns
have been targeted at most of these groups.
An example of a good practice educational tool targeting employers provided at the
seminar by GEOPA-COPA was a self-inspection tool in the Netherlands which is strongly
promoted by employer organisations in the agricultural sector and allows agricultural
employers to check online their compliance with the rules, such as on housing foreign
15
seasonal workers and labour conditions. There are also notable examples of education
and awareness raising campaigns targeted at consumers (i.e., labelling initiatives),
intermediaries (e.g., Gangmasters licensing education initiatives), grocery retailers
(Oxfam’s Supermarkets Scorecard), and seasonal agricultural workers (see Box 5).
However, no education and awareness raising campaigns targeted at food processors,
who are one of the major stakeholders forcing down production costs on agricultural
holdings, were highlighted during the seminar.
Box 5. Education and awareness raising campaigns for seasonal migrant
agricultural workers in Germany
The European Migrant Workers Union (EMWU), established in 2004 by IG BAU,
administers several free advisory centers for workers from Eastern European
countries in the regional states of Bavaria, Hessen and Rhineland-Palatine. These are
financed through mainly public funds from the federal and regional states in Germany.
In 2016, there were 286,300 seasonal workers picking crops in Germany, most of
whom came from Member States in Central and Eastern Europe (e.g., Poland,
Romania, Bulgaria, Croatia). They have usually employment contracts directly with
the farmers and are employed as short-term employees (kurzfristige Beschäftigung).
They are exempted from social contribution fees if the seasonal work is not the main
source of income and if it does not last more than 70 days.
To educate these seasonal workers about their rights, on-the-field face-to-face
education and awareness raising campaigns have targeted seasonal workers picking
crops in Spring (e.g. strawberries and asparaguses) and in Autumn (e.g. grapes).
Using short conversations with workers and leaflets produced in different languages,
information is provided on the minimum wage, work contracts, working hours, board
and lodging, safety at work, and social protection.
The campaign slogan is Only those aware of their rights can claim them. The
campaigns have a preventive purpose since most seasonal workers are not aware of
the rules, especially regarding fair payment, work contracts and social protection. An
evaluation by PECO-Institut für nachhaltige Entwicklung e.V. in 2017 and 2018
reveals that the major problems confronting these seasonal workers are:
Circumvention of the minimum wage, non-transparent documentation of
working-hours and pay;
Long working-hours;
Lack of written contracts;
Unlawful deductions from salary for board and lodging or for work materials;
Lack or insufficient health and safety measures.
Impacts of the campaign
On workers: raised awareness and knowledge of their rights;
On trade unions: more understanding on the specific problems of seasonal
workers;
On the public: raised awareness through media coverage;
On the employers: some improvements (e.g. some farmers are now hanging
up work contracts in the mother tongue of the workers in the housing
facilities).
This education and awareness raising campaign approach is transferable to other
Member States with high numbers of seasonal migrant workers in agriculture.
However, external funding is crucial.
The main challenges are that it is difficult to provide effective support in cases of
abuse due to: short notice periods; short stays in Germany (up to 70 days); lack of
membership in trade unions, and disputes often arise shortly before departure.
Therefore, campaigns cannot substitute for inspection controls.
16
Indirect policy approaches also seek to change the formal institutions, not least by
tackling the formal institutional failures that lead to undeclared work being undertaken.
One option in this regard, advocated by Oxfam during their presentation, is the
development of alternative agri-food networks such as farmers’ markets to reduce
the pressures that agricultural holdings face of reducing production costs from food
processors and food retailers. This, however, would only by-pass the problem for the
small proportion of agricultural produce which is sold direct to consumers. It does not
tackle the intense pressures on agricultural producers to keep production costs low (and
quality high) from food processors and retailers higher up the supply chain, which leads
to undeclared work being used.
For this to be resolved, unfair trading practices (UTPs) need to be addressed. As a
speaker from DG Agriculture and Rural Development reported, on 12 April 2018,
the European Commission proposed new legislation on unfair trading practices in
business-to-business relationships in the food supply chain (12.4.2018
COM(2018) 173 final).
Unfair trading practices (UTPs) are business-to-business practices that deviate from
good commercial conduct and are contrary to good faith and fair dealing. The
Commission proposal aims to ensure a standard level of protection across all EU
countries using a minimum harmonisation approach.
Article 3 distinguishes between black UTPs which are prohibited whatever the
circumstances, and grey UTPs which are prohibited if the parties do not clearly and
unambiguously agree beforehand:
The prohibited black unfair trading practices are:
1. Payments later than 30 days for perishable agricultural and food products
2. Payment later than 60 days for other agri-food products
3. Short-notice cancellations of perishable agri-food products
4. Unilateral contract changes by the buyer
5. Money not related to a specific transaction
6. Risk of loss and deterioration transferred to the supplier
7. Refusal of a written confirmation of a supply agreement by the buyer, despite
request of the supplier
8. Misuse of trade secrets by the buyer
9. Commercial retaliation by the buyer
10. Transferring the costs of examining customer complaints to the supplier
The prohibited grey unfair trading practices are:
11. Unsold products
12. Payment of the supplier for stocking, display and listing
13. Payment of the supplier for promotion
14. Payment of the supplier for marketing
15. Payment of the supplier for advertising
16. Payment of the supplier for staff of the buyer, fitting out premises
The seminar recognised that this initiative attempts to tackle the broader formal
institutional failures which lead to undeclared work in the agricultural sector in that it
does so in a very targeted manner. Indeed, few other sectors where undeclared work is
prevalent (e.g., tourism, construction) have so far witnessed such a targeted and
tailored approach to dealing with the formal institutional failures that lead to undeclared
work in its sector.
17
7 KEY LEARNING OUTCOMES
Given that undeclared work is far more prevalent in the agricultural sector than in the
wider economy, this is an important sector to focus upon when tackling undeclared work
at the EU level.
The causes of undeclared work in the agriculture sector are systemic. There is a broad
consensus on the need to adopt a holistic policy approach and to use both direct
and indirect measures.
Effective cooperation across government and between government and
representatives of workers and farmers is crucial, for instance, through tripartite
partnerships.
Additional approaches tailored to the sector are needed to develop more
effective inspections. Measures such as whitelisting companies which are compliant
with regulations may be an effective tool (see also the Quality Agricultural Work Network
in Italy). Inspections may by improved with better risk analysis and data mining, which
appear widely underutilised to date, to identify risky agriculture holdings.
It should be easier to comply. Further efforts should be made to simplify rules -
particularly in relation to registering seasonal workers - and provide easily accessible
solutions to work legally. IT tools should be fully utilised to simplify registration
procedures (including the use of apps). This would make it easier for inspections and
detection of irregularities as showed by recent experience in Hungary. Other examples
exist - for instance, co-employment (Finland) or simplified contracts for short term
workers (Bulgaria).
Simplification of procedures goes hand-in-hand with incentives to ensure protection
of employment rights. Initiatives such as whitelisting and product labelling were
mentioned as effective tools to incentivise compliant behaviours. Establishing a
conditionality between receiving subsidies, for example from the Common Agriculture
Policy, and collective bargaining agreements or compliance more generally could also
be utilised to ensure better working conditions in the sector.
It is important to invest in initiatives seeking to change the working culture of
the sector and build trust in authorities. There is a lack of solidarity and trust among
workers as well as towards authorities. Examples of awareness campaigns include
grassroots outreach initiatives, which specifically target workers, for instance the
campaigns conducted by the CGIL in Italy or by the European Migrant Workers Union in
Germany. There are also initiatives which focus on consumer behaviour, aiming to
increase awareness of the quality of the products through labelling initiatives
implemented in cooperation with farmers, workers and retailers.
Tackling the structural causes behind undeclared work is needed using
deterrent measures which consider the business-to-business perspective.
Examples which could potentially be replicated include licencing of businesses or
agencies which operate as intermediaries / gangmasters, as seen in the UK, or liability
schemes tackling the supply chain, as seen in Belgium.
18
REFERENCES
Ethical Trading Initiative Norway (IEH), Ethical Trading Initiative (ETI) and Danish
Ethical Trading Initiative (DIEH) (2015) Due diligence in agricultural supply
chains: Counteracting exploitation of migrant workers in Italian tomato
production, Available at: https://www.ethicaltrade.org/resources/due-diligence-
agricultural-supply-chains-counteracting-exploitation-migrant-workers
GEOPA-COPA EFFAT (2017) Statement of the European social partners in agriculture
GEOPA-COPA EFFAT Social dialogue as the most effective means of combating
social dumping and undeclared work in the agriculture sector. The shift towards
sustainable and high quality jobs. GEOPA-COPA EFFAT, Brussels
Oxfam (2018) Ripe for Change: ending human suffering in supermarket supply chains,
Oxfam, Oxford.
Williams, C.C. (2018a) Tackling undeclared work in the agricultural sector, with a focus
upon seasonal workers and horticulture: a background paper, European Platform
Tackling Undeclared Work, Brussels
Williams, C.C. (2018b) Elements of a preventative approach towards undeclared work:
an evaluation of service vouchers and awareness raising campaigns, European
Commission, Brussels
Williams, C.C. and Horodnic, A. (2018) Tackling undeclared work in the agricultural
sector, European Platform Tackling Undeclared Work, Brussels.
Presentations at European Platform Tackling Undeclared Work Seminar on
Tackling undeclared work in the agricultural sector, Brussels, 24 January
Dooley, P. (2019) Working all hours Undeclared work in the equine industry.
Ivanov, I. (2019) Education and awareness raising campaigns for seasonal migrant
agricultural workers in Germany.
Járai, K. (2019) Experiences of the Hungarian labour authority in inspection of the
agricultural sector with focus upon seasonal workers.
Kantanen, P. (2019) Employee sharing/co-employment in agriculture in Finland.
Lechner, J. (2019) Employers perspective on tackling undeclared work in the
agricultural sector.
Mora, A. (2019) Factors creating demand for undeclared work in Italian agriculture and
remedy measures.
Pintado Nunes, J. (2019) Challenges for Member States in conducting labour
inspections in the agricultural sector: implementing Convention C129 and
Recommendation R204.
Ruffolo, P. (2019) Root actions, innovative approaches and stakeholder engagement.
Salchev, N. (2019) Employment contracts for short-term seasonal agricultural work in
Bulgaria.
Sitar, O. (2019) Unfair trading practices (UTPs) in business-to-business relationships
in the food supply chain.
Spahn, A. (2019) Trade unions perspective on tackling undeclared work in the
agricultural sector.
Urzi, D. (2019) Working conditions of Romanian and Tunisian seasonal workers in the
‘greenhouse’ horticultural industry in Southern Italy.
19
Willems, H. and Stalpaert, B. (2019) Using joint/several liability schemes to tackle
undeclared work in agriculture in Belgium.
Williams, C.C. (2019) Undeclared work in the EU agricultural sector and the available
policy tools.
Willoughby, R. (2019) Ripe for Change- Ending human suffering in supermarket
supply.
Woodliffe, C. (2019) Licensing intermediaries: UK Gangmasters and Labour Abuse
Authority.
... The farmer pays the wages to the gangmaster plus a commission. The gangmaster hires based on demand (Urzi and Williams, 2017;Williams, 2019c). In sum, the triangular employment relationship involving TWAs, employers, and workers leads to participation in the informal economy. ...
... Recent years have also seen the advent of more joint and concerted inspections by enforcement authorities (European Platform Tackling Undeclared Work, 2018d;Markota, 2021;Williams, 2019c). Concerted inspections are those conducted by two or more authorities simultaneously in relation to the same case, but in different places. ...
... For example, in Belgium, in the agricultural sector, there is joint and several liability for the contractor to monitor the chain of (sub)contractors, such as ensuring the subcontractor correctly pays wages (Williams, 2019c). Indeed, Ethical Trading Initiative Norway (IEH), Ethical Trading Initiative (ETI), and Danish Ethical Trading Initiative (DIEH) (2015) have called for food retailers to perform a due diligence assessment of their direct suppliers, namely the food processing companies. ...
... The farmer pays the wages to the gangmaster plus a commission. The gangmaster hires based on demand (Urzi and Williams, 2017;Williams, 2019c). In sum, the triangular employment relationship involving TWAs, employers, and workers leads to participation in the informal economy. ...
... Recent years have also seen the advent of more joint and concerted inspections by enforcement authorities (European Platform Tackling Undeclared Work, 2018d;Markota, 2021;Williams, 2019c). Concerted inspections are those conducted by two or more authorities simultaneously in relation to the same case, but in different places. ...
... For example, in Belgium, in the agricultural sector, there is joint and several liability for the contractor to monitor the chain of (sub)contractors, such as ensuring the subcontractor correctly pays wages (Williams, 2019c). Indeed, Ethical Trading Initiative Norway (IEH), Ethical Trading Initiative (ETI), and Danish Ethical Trading Initiative (DIEH) (2015) have called for food retailers to perform a due diligence assessment of their direct suppliers, namely the food processing companies. ...
... The farmer pays the wages to the gangmaster plus a commission. The gangmaster hires based on demand (Urzi and Williams, 2017;Williams, 2019c). In sum, the triangular employment relationship involving TWAs, employers, and workers leads to participation in the informal economy. ...
... Recent years have also seen the advent of more joint and concerted inspections by enforcement authorities (European Platform Tackling Undeclared Work, 2018d;Markota, 2021;Williams, 2019c). Concerted inspections are those conducted by two or more authorities simultaneously in relation to the same case, but in different places. ...
... For example, in Belgium, in the agricultural sector, there is joint and several liability for the contractor to monitor the chain of (sub)contractors, such as ensuring the subcontractor correctly pays wages (Williams, 2019c). Indeed, Ethical Trading Initiative Norway (IEH), Ethical Trading Initiative (ETI), and Danish Ethical Trading Initiative (DIEH) (2015) have called for food retailers to perform a due diligence assessment of their direct suppliers, namely the food processing companies. ...
... The farmer pays the wages to the gangmaster plus a commission. The gangmaster hires based on demand (Urzi and Williams, 2017;Williams, 2019c). In sum, the triangular employment relationship involving TWAs, employers, and workers leads to participation in the informal economy. ...
... Recent years have also seen the advent of more joint and concerted inspections by enforcement authorities (European Platform Tackling Undeclared Work, 2018d;Markota, 2021;Williams, 2019c). Concerted inspections are those conducted by two or more authorities simultaneously in relation to the same case, but in different places. ...
... For example, in Belgium, in the agricultural sector, there is joint and several liability for the contractor to monitor the chain of (sub)contractors, such as ensuring the subcontractor correctly pays wages (Williams, 2019c). Indeed, Ethical Trading Initiative Norway (IEH), Ethical Trading Initiative (ETI), and Danish Ethical Trading Initiative (DIEH) (2015) have called for food retailers to perform a due diligence assessment of their direct suppliers, namely the food processing companies. ...
... The farmer pays the wages to the gangmaster plus a commission. The gangmaster hires based on demand (Urzi and Williams, 2017;Williams, 2019c). In sum, the triangular employment relationship involving TWAs, employers, and workers leads to participation in the informal economy. ...
... Recent years have also seen the advent of more joint and concerted inspections by enforcement authorities (European Platform Tackling Undeclared Work, 2018d;Markota, 2021;Williams, 2019c). Concerted inspections are those conducted by two or more authorities simultaneously in relation to the same case, but in different places. ...
... For example, in Belgium, in the agricultural sector, there is joint and several liability for the contractor to monitor the chain of (sub)contractors, such as ensuring the subcontractor correctly pays wages (Williams, 2019c). Indeed, Ethical Trading Initiative Norway (IEH), Ethical Trading Initiative (ETI), and Danish Ethical Trading Initiative (DIEH) (2015) have called for food retailers to perform a due diligence assessment of their direct suppliers, namely the food processing companies. ...
... Italy is not an exception, since in most OECD countries, compared to other sectors, agriculture relies heavily on temporary work and, in many countries, as in Italy, this is also linked to the quick growth in migrant labour [13]. Furthermore, in agriculture there seems to be a widespread attitude to pass on to the workers the pressure exerted by retailers and food processors on producers to keep the primary products' costs low, adopting a low level of labour protection [15]. In fact, the level of informal work (because of completely or partially not declared work) in agriculture is higher than in the rest of the economy (in 2021, 23.2% of workers in agriculture were irregular, more than double that in the total economy (11.3%) (ISTAT)). ...
... In fact, employment in farming has become less attractive with the increase in overall educational level [14]. Furthermore, in agriculture there seems to be a widespread attitude to pass on to the workers the pressure exerted by retailers and food processors on producers to keep the primary products' costs low, adopting a low level of labour protection [15]. In fact, the level of informal work (because of completely or partially not declared work) in agriculture is higher than in the rest of the economy (in 2021, 23.2% of workers in agriculture were irregular, more than double that in the total economy (11.3%) (ISTAT)). ...
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Agricultural employment in advanced economies has been suggestively described as a “short and step” pyramid with only limited opportunities for workers to climb to higher positions, especially when they belong to the most vulnerable categories, such as migrants. The presence of poor jobs and living conditions for temporary agricultural workers reported by mass media, trade unions, NGOs, and international observers contrasts dramatically with the idea of a modern and thriving sector, as the Italian agricultural sector should be, and it represents a challenge for the social concerns that have been alongside environmental ones in the definition of sustainability since the Brundtland Report released in 1987 by the World Commission on Environment and Development (WCED). Even mechanisation does not necessarily facilitate better working conditions. In fact, where the workforce is largely replaced by machineries, the remaining opportunities for paid workers are mainly for unskilled, physically demanding, and seasonal jobs. This has brought about the so-called “paradox of prosperity”, where the gap between farm and nonfarm workers in economically advanced countries has widened in terms of wages, benefits, and prospects for upward mobility. This in turn triggers a vicious circle with a structural lack of available workforce for the sector, which has been increasingly provided by migrants with very little bargaining power. On the other hand, the adoption of new technologies and digitalisation in agriculture is leading to an increasing demand for skilled workers, which often remains uncovered because of the low conditions offered. Against this background, the aim of our work is twofold. First, we characterise the role of the foreign workforce in relation to the structural changes in Italian agriculture and considering territorial differences. Second, we examine the main policy instruments to facilitate recruitment and tackle undeclared work and more specifically the Quality Agricultural Work Network (Rete del lavoro agricolo di qualità) launched in Italy in 2016 to tackle undeclared work and exploitative labour. We do so by conducting a literature review and semi-structured qualitative interviews with 16 farmers in Italy carried out in 2022 within the project Rural Social ACT funded by the Asylum, Migration, and Integration Fund (2021–2027). The results show that even though foreign workers are a key resource for agriculture in Italy, there remain severe recruitment issues and segregation in low-skilled and precarious jobs. Overall, it is necessary to improve the awareness of the key role of work in agriculture and to strengthen the effectiveness of tools to enhance the visibility of compliant farms. So far (January 2024), only 6600 farms have joined the Quality Agricultural Work Network, with an overall modest enthusiasm from the farmers interviewed about its current effectiveness. Other instruments are explored such as employee sharing contracts, and there clearly emerges a need for public support of professional training through the Common Agricultural Policy to improve both the bargaining power of foreign workers and the productivity of the sector.
... A notification or "nudge" letter is an enforcement authority communication sent to a worker or business, providing them with information to encourage them towards labour formalization. If effective, this is a cheap means to deter informal employment in the formal sector for tax authorities (Beeby, 2017;Hasseldine et al., 2007) and labour and social security inspectorates (Alm et al., 2019;Williams, 2019). Normally, this communication is sent as a follow-up to a data matching or mining exercise and targets workers or businesses identified as outliers from the norm. ...
Technical Report
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The report compiles existing policy tools and and good practices adopted by Governments in Asia and the Pacific and Latin America and the Caribbean on formalizing informal employment in the formal sector. To provide a framework for understanding the full range of good practices on formalizing the employment of informal workers in the formal sector, the report sets out the integrated strategic policy approach outlined by ILO Recommendation No. 204 on facilitating the transition to formality. The report was prepared in the context of the project, Policymaking for More Inclusive and Sustainable Economies in Asia and the Pacific and in Latin America, implemented by ESCAP, in partnership with the Government of Colombia through the Agencia Presidencial de Cooperación Internacional de Colombia (APC Colombia).
Chapter
This chapter examines the range of e-government tools available to authorities to facilitate the transition to formality. On the one hand, it sets out the digital technologies that tax, social security, and labour authorities can use to enforce compliance with the laws and regulations among businesses, employers, workers, and citizens. These include multifarious deterrence e-tools that increase the real and/or expected costs of participation in the informal economy by improving the risk of detection and sanctions, along with a variety of e-tools to make participation in the formal economy easier and more beneficial on both the supply and demand sides. On the other hand, it sets out a range of digital technologies that can be used by enforcement authorities to encourage voluntary compliance. These are again of two types, namely, education and awareness-raising e-tools to change social norms and various e-initiatives to modernise formal institutions by making them more customer-friendly, not least to improve trust in government. The outcome is a review of the full e-toolbox available to authorities to facilitate the formalisation of the informal economy.KeywordsInformal sectorEnforced complianceVoluntary complianceFormalisationE-governmentDigital government
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Technical Report
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1. INTRODUCTION The aim of this study is to review the range of preventative approaches for tackling undeclared work available to Member States, and to focus upon two types of preventative measure, namely service vouchers and the use of awareness raising campaigns. 2. RATIONALES FOR A PREVENTATIVE APPROACH • The rationale for a preventative approach is to shift away from resolving problems after they have occurred towards preventing non-compliance in the first place. • Article 1 of Decision (EU) 2016/3441, establishing the Platform, explicitly encourages such a preventative approach. It states that ‘”tackling”, in relation to undeclared work, means preventing, deterring and combating undeclared work as well as promoting the declaration of undeclared work’. 3. USE, IMPORTANCE AND EFFECTIVENESS OF PREVENTATIVE APPROACHES IN THE EU • The 2017 survey of Platform members provides a baseline assessment of the progress made towards such a preventative approach in EU Member States. This reveals that the current focus of Member States is still heavily upon ‘deterring’ undeclared work using measures that increase the penalties and risks of detection. Initiatives to ‘prevent’ non-compliance, and ‘promote the declaration of undeclared work’, are less common and seen as less important than deterrence measures. • Preventative measures are currently perceived as less effective at tackling undeclared work than deterrence measures. However, this is not an evidence-based belief. There is currently little ex-ante and ex-post evaluation of either deterrence or preventative policy measures in EU Member States, and a marked lack of pilot studies. • This lack of evidence on what works and what does not, discourages change. • The lack of priority accorded to preventative measures is not simply because Member States prefer to continue with the deterrence measures with which they are familiar, in the absence of evidence on what works and what does not. It is also due to the lack of a holistic strategic coordinated approach in Member States and the persistence of a fragmented departmental ‘silos’ approach, with many enforcement authorities not adopting strategic objectives related to preventing undeclared work and transforming undeclared work into declared work. 4. TYPES OF PREVENTATIVE MEASURE To prevent undeclared work and transform undeclared work into declared work, four types of preventative policy measure are available: (1) Supply-side incentives that transform undeclared work into declared work by making the conduct of declared work more beneficial and easier for employers and workers. These include: simplifying compliance; society-wide amnesties; individual-level amnesties for voluntary disclosure; formalisation support to start-ups; formalisation support and advice to businesses; direct tax and social security incentives; indirect tax incentives, and help with record-keeping; (2) Demand-side incentives that target purchasers of undeclared goods and services with rewards for using declared goods and services. These demand-side incentives include: targeting purchasers with direct tax incentives; targeted indirect tax incentives; service vouchers; incentivising electronic payments and deterring cash payments, and incentives for customers to request receipts; (3) Awareness raising campaigns which change norms, values and beliefs regarding the acceptability of non-compliance; (4) Resolving the formal institutional imperfections which lead to norms, values and beliefs not aligning with the laws and regulations. These measures seek to not only modernise governance (e.g., improving procedural and redistributive fairness and justice) but also address the structural economic and social conditions associated with a higher prevalence of undeclared work (e.g., lower levels of social expenditure, lower levels of expenditure on active labour market policies, ineffective social transfer systems; greater income inequality). 5. AN EVALUATION OF SERVICE VOUCHER SCHEMES • 26% of Member States responding to the 2017 Annual Survey use service voucher schemes, namely Austria, Belgium, France, Greece, Lithuania and Sweden. In Austria, France, Greece and Sweden, the institution responsible was a social insurance/social security institution, but the tax revenue administration was responsible in Lithuania and federal ministries in Belgium. • Overall, such demand-side incentive measures have a low take-up across Member States and are perceived as one of the least effective types of measure for tackling undeclared work. • Service voucher schemes are not all the same, and there are significant differences between the schemes used in different Member States. It is necessary to differentiate between enterprise voucher (EV) schemes used by companies, and social voucher (SV) schemes used by households. • The emergent good practice is that Social Voucher (SV) schemes should be used to: pay for regular and occasional labour; to formalise household services (including caring services), with service vouchers limited to the specific tasks where undeclared work is prevalent in each Member State, and allow the direct employment of a private individual by a household, as well as establish authorised provider organisations which employ service voucher workers. • Enterprise voucher (EV) schemes, meanwhile, should: only be used to pay for occasional labour; and target the agricultural sector and only be used in other sectors if they protect workers’ rights. • Both Social Voucher (SV) and Enterprise Voucher (EV) schemes should: be targeted only at spheres where undeclared work is prevalent; target spheres where labour inspection is difficult (e.g., households); set a limit on the number of service vouchers an employer can purchase, not on the level of income of a service voucher worker; allow users to acquire and submit vouchers online; the price of a service voucher should be the minimum price an employer pays for one hour’s work; be based on prior research to decide the price of service voucher for a user (and level of subsidy required), so that they are competitively priced compared with using undeclared work; and enable workers to gain access to key social security benefits comparable to those held by people employed, and cover unemployment benefits, accident insurance, pension benefits, sickness benefits, maternity leave and health benefits, and ex-ante and ex-post evaluations should be conducted of the extent to which service vouchers reduce undeclared work, and whether they substitute for permanent formal employment contracts. • Although service voucher schemes are an investment by the state (rather than a cost to the state) to transform undeclared work into declared work, with the return on the investment being higher levels of declared work, their wider adoption in the EU is limited by budget constraints. 6. AN EVALUATION OF AWARENESS RAISING CAMPAIGNS • An awareness raising campaign is an organised communication activity that aims to create awareness on a topic (in this case undeclared work), and thus behavioural change. • The most common type used across the EU is that which informs suppliers of the risks and costs of working undeclared (used by 83% of Member States responding). Other types that either inform suppliers of the benefits of declared work, or else target users by either marketing the costs of purchasing from the undeclared economy or the benefits of using the declared economy, are less common (with each used by around half of Member States responding). • Awareness raising campaigns vary in their effectiveness in influencing people’s beliefs and changing behaviour. Given the lack of detailed evaluations in the field of tackling undeclared work, lessons can be learned from other related thematic areas, where more detailed analysis and evaluation has occurred of the key features of successful awareness raising campaigns. • In the field of occupational safety and health (OSH), the European Agency for Safety and Health at Work (EU-OSHA) have produced detailed practical advice on how to plan and run campaigns to help Member States (see http://toolkit.osha.europa.eu/tools/). This provides firstly, a step-by-step guide to planning an awareness raising campaign and secondly, templates, as well as exemplars of good practice, of dissemination tools that can be used and tailored to the national context. • A similar toolkit on how to prepare and run successful awareness raising campaigns on tackling undeclared work could be developed to help Member States in this regard. 7. RECOMMENDATIONS The report provides a series of recommendations for Member States and the Platform. Recommendations for Member States • Governments should shift away from resolving undeclared work after it has occurred and towards preventing non-compliance in the first place. • Governments should engage in ex-ante and ex-post evaluation of both deterrence and preventative policy measures, as well as pilot studies, to develop an evidence-base on what works and what does not. • Governments should consider conducting pilot initiatives using some variant of voucher schemes and evaluate its effectiveness at tackling undeclared work. • Government and social partners should pilot and experiment with different types of awareness raising campaign, drawing upon good practices developed in other Member States but tailored to their specific context, and should actively contribute examples and evaluations of good practice to enable the Platform to develop a repository of good practice as part of its Online Toolkit (see below). Recommendations for the Platform • The Platform should further facilitate a holistic coordinated strategic approach at Member State level, as per the legal decision establishing the Platform, not least through mutual learning. This will speed up the process of modernisation and shift beyond a fragmented departmental ‘silos’ approach, which results in many enforcement authorities remaining focused upon deterrents and not adopting strategic objectives related to preventing undeclared work. • The Platform could support the use of evaluation and ‘pilot exercises’ to identify which preventative measures are most effective and in what circumstances, to foster a culture of evidence-based practice. • The Platform could adopt as a future activity in its work programme the development of an Online Undeclared Work Awareness Raising Campaign Toolkit. This would provide practical advice on how to prepare and run successful awareness raising campaigns and practical examples of various communication tools with tips for their use. • The Platform should consider the feasibility of planning, developing and executing an EU-wide awareness raising campaign on tackling undeclared work, perhaps based on a ‘hub and spoke’ model with a generic EU-wide campaign running alongside coordinated more ‘tailored’ Member State and social partner campaigns.
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