Dhe high rate of inflation and the weaker economy are likely to fuel undeclared work in Germany noticeably. That’s what labor market researchers Bernhard Boockmann from the Institute for Applied Economic Research at the University of Tübingen and his Linz colleague Friedrich Schneider expect. In February they had predicted a decline for this year in a “shadow economy forecast”. In the meantime, however, the framework conditions have changed significantly, said Boockmann.
Lower economic growth coupled with rapidly rising prices makes it more difficult for providers to pass on their own higher costs to customers. In trades, for example, this increases the incentive to offer lower prices through offers without taxes and social security contributions. But there are many factors to consider, added Schneider.
Since 1997, labor market researchers have been using various data to calculate the proportion of undeclared work in the economy as a whole. In 2003, the shadow economy reached a peak with a share of 16.7 percent of the official gross domestic product (GDP). According to the calculations, the volume of undeclared work will have fallen to 9.5 percent of GDP by 2021, which corresponds to 338 billion euros.
For this year, Boockmann and Schneider had expected a further drop to 8.7 percent compared to the official GDP, the volume of undeclared work would then have been 326 billion euros. In the meantime, however, an increase by a two-digit billion amount is conceivable, said Schneider.
According to labor market researchers, war refugees who have arrived from the Ukraine do not play a significant role in undeclared work in Germany. A large proportion of the refugees are women, including many mothers with children, emphasized Schneider. However, it is usually young men who offer their labor in the informal economy. Boockmann added that war refugees are often very concerned about their residency status. In addition, Ukrainians have been included in German unemployment insurance since June.
