Page 84 - Työpoliittinen aikakauskirja 2 2018

English Summaries
Työpoliittinen aikakauskirja 2/2018
Depicting shadow economy in construction industries in Finland
Erkki Laukkanen, PhD (economics), Mäntsälä
In the 2000’s, a set of new laws and practices have contributed to decrease in tax eva- sion. In this article, we focus on the concept
of shadow economy, consisting of tax evasion, undeclared work and corruption in construc- tion. First, we present our comprehension of shadow economy in public procurement, its context and the prevalence of the forms of its existence. Second, we construct a set of policy propositions, arising from the Finnish discus- sion, regarding the ways of restricting shadow economy in construction. Third, we ask the sample persons, the representatives of 531 construction enterprises, to respond whether they agree or disagree with our policy proposi- tions. The results suggest that all asked forms of shadow economy exist in substantial numbers, around one half of all observations arise from undeclared foreign work, and that most of the observations come from micro enterprises with less than 5 employees. The results regarding the
policy propositions suggest that entrepreneurs favour register-based services, making possible to check all the things needed for instituting competition neutrality in public procurement. The key result suggests that firm size matters. The position of big enterprises, focusing on the primary contracting, is very different from that of small enterprises, focusing on sub-contract- ing. We conclude that this finding should be included in the work against shadow economy by means of so called chain responsibility, i.e. joint responsibility over the whole supply chain.
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