Crisis could cause more illegal work

A downturn of the economy could lead to an increase of illicit work in Austria, an expert on the issue has warned.

Friedrich Schneider of the Johannes Kepler University Linz (JKU) said yesterday (Tues) he expected illicit employment to decline by 1.1 per cent this year compared to 2011 if the domestic economy stabilised. Schneider explained that the illegal trade had already inched back in 2011 and 2010.

The job market expert added that illicit labour operations shot up by three per cent from 2008 to 2009 due to the crisis. He warned that it could grow again this year if the Austrian economy failed to block negative effects caused by European uncertainties.

Schneider stressed that people generally preferred legal and official work against illicit actions if enough suitable positions were on offer. His institute found that illicit work could generate 7.7 per cent of the gross domestic product (GDP) in Austria this year. Switzerland could record around the same share (7.6 per cent), he added.

Greece is doing badly in fighting unregistered labour (24.8 per cent), according to Schneider. The university lecturer said the situation would be similar in Italy this year as 21.6 per cent of the country’s GDP was created by illicit business operations.

Schneider’s investigations show that two other economically challenged countries follow closely behind Greece and Italy. He said Portugal’s illicit labour trade was in charge of providing services and manufacturing products worth 19.4 per cent of the state’s official GDP. Spain has a rate of 19.2 per cent, according to the labour market expert.

His warnings about a possible increase of such actions in Austria come one day after the Viennese Institute for Economic Research (WIFO) said the Austrian economy would not grow by two per cent or more before 2014.

The institute announced it expected the GDP to grow by 0.4 per cent from 2011 to 2012 before a rise of 1.6 per cent was possible in 2013. WIFO explained the domestic economy had chances to grow by two per cent from 2013 to the next year – given that the European economy recovered from the worst effects of the current setback.

Already last month, WIFO said the average GDP of the 17 Eurozone members would not grow at all in 2012. The research group believes that an improvement of 1.3 per cent could be achieved from this to next year. The Eurozone’s member countries’ economy grew by 1.7 per cent on average from 2010 to 2011, according to WIFO.

Austria was also among the first 12 European Union (EU) states which introduced the Euro in 2002. Recent research by Gallup and Eurostat as well as a poll for Austrian TV channel ATV show that young Austrians are more optimistic about the future of the currency than elderly residents of the country. Around 91 per cent of Austrians aged between 15 and 29 think that the Euro will survive the crisis. Seventy-five per cent of Austrians aged 50 and above agreed.