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The aim of this paper is to evaluate the impact on service sector businesses of competitors’ undeclared work practices and the policy measures service enterprises perceive as most effective in tackling such noncompliant behaviour. The results of a survey with 1,130 service sector businesses reveals that illegal competition is the most common major obstacle for their activity and more than a half are severely affected by competitors undertaking undeclared work. However, the proportion of businesses perceiving competitors undertaking undeclared work as a major obstacle varies across different service industries, as do the policy measures that businesses view as required to tackle undeclared work. The paper concludes by discussing the policy implications and calling for a shift from the dominant deterrence approach aimed at eradicating undeclared work to measures aimed at supporting the transition to declared work.

Employer perspectives on undeclared work in the service sector: impacts and policy responses