The payment of unreported wages has become more commonplace in Estonia over the past year, and such payments are posing a particular problem in construction and transport, the results of a survey conducted by the Estonian Chamber of Commerce and Industry suggest.
"The share of respondents who estimate that just one to five percent of wages in their sector are paid in cash has decreased, and the share of those who believe that it is 20 percent or more has grown," said Mait Palts, director of the Chamber of Commerce and Industry.
Half of respondents in the construction sector believe the share of unreported wages to be under 20 percent, while half believe that it is over 20 percent.
"Of different sectors, the construction sector remains the biggest concern, along with transportation and storage," Palts said.
Another problem is a perceived increase in the share of workers who receive their entire pay unreported. While this spring, 17 percent of respondents in the construction sectore estimated that 20 percent of employees in their sector receive their entire pay in cash and three percent that 30 percent of employees are paid fully in cash, these numbers jumped in the fall to 23 and 15 percent, respectively.
On a positive note, the survey highlights that the percentage of business-owners who are willing to abandon their cooperation partner if it is revealed that the latter pays unreported wages has increased by six percent to 64 percent.
"As the problem of unreported wages has aggravated, the number of those who do not wish to tolerate it and are prepared to take steps themselves has increased as well," Palts noted.
According to the businesses surveyed, the payment of unreported wages could be reduced primarily through the educating and informing of employees, but also improved oversight of businesses and tougher punishments for violators.
According to an amendment to the Public Procurement Act taking effect on Jan. 1, 2018, the tenderer in a public procurement tender for a construction contract as well as the contractors listed by the tenderer must have paid their employees at least 70 percent of the sector's average wages for the last six months. Should this not be the case, the contracting authority must ask for explanations, and if the explanations are not sufficient for justifying the payment of lower wages, the tenderer can be removed from the tender.
Editor: Aili Vahtla