Rise from nine to eleven percent: Study: Corona crisis fuels undeclared work

Millions of people are on short-time work in the Corona crisis, and many have even been unemployed. To increase their income, many illegal jobs could go. For the state, this means a loss of billions of tax dollars.

According to experts, undeclared work in Germany is on the rise more than previously assumed due to the corona pandemic. According to a new calculation by the economist Friedrich Schneider from the Johannes Kepler University in Linz for "Welt am Sonntag", the share of undeclared work in the gross domestic product has increased from around nine to eleven percent this year. This corresponds to an increase over the previous year of 32 billion euros to approximately 348 billion euros.

Schneider regularly provides an estimate of undeclared work with the Institute for Applied Economic Research in Tübingen. At the end of May, he had forecast an increase to around 344 billion euros, in February the experts had assumed 322 billion euros.

According to earlier information, the shadow economy in Germany has declined annually since 2003 – except for 2009 during the financial crisis. Schneider explains this as follows: If the situation on the labor market is good, employees are desperately needed and the economy grows, there is less undeclared work. Because of the current economic downturn, people tried to earn some extra money in addition to short-time work. In the "Welt am Sonntag" Schneider emphasized: "People have more time through short-time work and sometimes substantial loss of income, which drives them into the shadow economy."

In this context, the head of the "business practices", Lars Feld, criticized the bill passed by the Federal Cabinet, according to which work contracts and agency work should be banned in the meat industry. "The state should refrain from using additional measures under the guise of the corona crisis to drive workers into the informal economy," the economist told the newspaper.

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