Evaluating cross-national variations in envelope wage payments in East-Central Europe

Abstract

This article seeks to explain the cross-national variations in the tendency of employers to under-declare salaries by paying formal employees an undeclared ('envelope') wage in addition to their official declared salary. Analysing the prevalence, size and nature of envelope wage payments across ten East-Central European countries using data from a 2007Eurobarometer survey, envelope wage payments are found to be less common, smaller and more likely to be for extra work in wealthier, less corrupt and more equal nations with higher levels of taxation, social protection and effective redistribution via social transfers. The theoretical and policy implications are then discussed.

Illegitimate Economic Practices in Croatia: Findings from a Representative Survey of 2,000 Citizens

“…wage which is decided on the basis of an unwritten agreement beyond the formal written contract (Kedir, Fethi, & Williams, 2011;Sedlenieks, 2003;Williams, 2015b;Horodnic, 2015b, 2017;Woolfson, 2007). Only one part of the wage is therefore paid officially, while the rest is given under-the- Given the limited knowledge about this illegitimate wage arrangement, both in Croatia and elsewhere, the intention of the household survey was not only to try understanding roots of the problem, but also to grasp some key elements supporting this practice.…”

Tackling employment in the informal economy: A critical evaluation of the neoliberal policy approach

“…Indeed, the only attempts to do so are a paper focusing upon the cross-national variations in informal employment in the European Union (Williams, 2013) and a study focusing upon the variations across Eastern and Central European nations in the tendency of formal employers to pay their formal employees an undeclared (envelope) wage in addition to their declared salary (Williams, 2014b). These both find no evidence to support the neoliberal explanation but do find evidence supporting the modernisation and political economy explanations (Williams, 2013(Williams, , 2014b. No studies, however, have so far evaluated the validity of the neoliberal explanation beyond the European context.…”

“…Until now however, and despite the growing dominance of this neoliberal explanation and policy approach, the only studies evaluating critically its assertions are a paper focusing upon the cross-national variations in informal employment in the European Union (Williams, 2013) and a study focusing upon the variations across Eastern and Central European nations in the tendency of formal employers to pay their formal employees an undeclared (envelope) wage in addition to their declared salary (Williams, 2014b). Neither finds evidence to support the neoliberal approach.…”

Informal employment in Poland: an empirical spatial analysis

“…Results of these studies can be divided into two parts: the first one focuses on explaining the cross-country disparities in informal work. Williams (2015a) analyses Central and East Europe (CEE) countries and indicates that in more developed, less corrupt and more equal economies with a higher level of taxation, social protection and more effective redistribution via social transfers, envelope wages are less popular and are mainly associated with overtime work. Moreover, analysing the prevalence of informal employment Williams (2015b) shows that in wealthier, less corrupt and more equal economies with higher level of taxation, social protection and more effective redistribution via social transfers, the level of informal employment is also lower.…”