Series:CSD Economy Papers

Background Analysis on the Spread and Trends of Hidden Economy in Macedonia

Background Analysis on the Spread and Trends of Hidden Economy in Macedonia

Author(s): Ana Mickovska-Raleva,Emil Shurkov / Language(s): English

Blamed for many of the country’s problems, but at the same time under-researched and ineptly understood, the hidden economy phenomenon has, for many years, been insufficiently tackled by Macedonian academic and political elites. During the past few years, a renewed interest in the topic has led towards its more systematic treatment by institutions, but still largely based on approximations, lack of coordination between institutions and under-evaluation of policy measures. This treatment of the problem opens the floor to many speculations regarding the effectiveness of policies and their actual impact on reducing the size of hidden economy. The analysis, prepared by the Center for the Study of Democracy and the Center for Research and Policy Making (CRPM), involves a review of existing reports and data on the hidden economy in Macedonia as well as the available international sources. It reviews the current policy initiatives and whether these have been evaluated, as well as any planned future initiatives. The document aims to address some of the key issues through representing cross-section of existing data on the hidden economy in Macedonia and relevant policies, with the intention to review and summarize the knowledge-base on the issue and provide recommendations for better tackling the problem.

Background Analysis on the Spread and Trends of Hidden Economy in Macedonia

Извештај за распространетост и трендови на скриената економија во Македонија

Author(s): Ana Mickovska-Raleva,Emil Shurkov / Language(s): Macedonian

Blamed for many of the country’s problems, but at the same time under-researched and ineptly understood, the hidden economy phenomenon has, for many years, been insufficiently tackled by Macedonian academic and political elites. During the past few years, a renewed interest in the topic has led towards its more systematic treatment by institutions, but still largely based on approximations, lack of coordination between institutions and under-evaluation of policy measures. This treatment of the problem opens the floor to many speculations regarding the effectiveness of policies and their actual impact on reducing the size of hidden economy. The analysis, prepared by the Center for the Study of Democracy and the Center for Research and Policy Making (CRPM), involves a review of existing reports and data on the hidden economy in Macedonia as well as the available international sources. It reviews the current policy initiatives and whether these have been evaluated, as well as any planned future initiatives. The document aims to address some of the key issues through representing cross-section of existing data on the hidden economy in Macedonia and relevant policies, with the intention to review and summarize the knowledge-base on the issue and provide recommendations for better tackling the problem.

Background Analysis on the Spread and Trends of Hidden Economy in Macedonia

Raport i hollësishëm mbi përhapjen dhe tendencat e ekonomisë së fshehur në Maqedoni

Author(s): Ana Mickovska-Raleva,Emil Shurkov / Language(s): Albanian

Blamed for many of the country’s problems, but at the same time under-researched and ineptly understood, the hidden economy phenomenon has, for many years, been insufficiently tackled by Macedonian academic and political elites. During the past few years, a renewed interest in the topic has led towards its more systematic treatment by institutions, but still largely based on approximations, lack of coordination between institutions and under-evaluation of policy measures. This treatment of the problem opens the floor to many speculations regarding the effectiveness of policies and their actual impact on reducing the size of hidden economy. The analysis, prepared by the Center for the Study of Democracy and the Center for Research and Policy Making (CRPM), involves a review of existing reports and data on the hidden economy in Macedonia as well as the available international sources. It reviews the current policy initiatives and whether these have been evaluated, as well as any planned future initiatives. The document aims to address some of the key issues through representing cross-section of existing data on the hidden economy in Macedonia and relevant policies, with the intention to review and summarize the knowledge-base on the issue and provide recommendations for better tackling the problem.

Hidden Economy in Macedonia Policy Brief 3: Hunting the Shadows – Tax Evasion Dynamics in Macedonia

Hidden Economy in Macedonia Policy Brief 3: Hunting the Shadows – Tax Evasion Dynamics in Macedonia

Author(s): Author Not Specified,Center for Research and Policy Making CRPM / Language(s): English

The Center for the Study of Democracy, in collaboration with the Center for Research and Policy Making (CRPM) elaborated a series of policy briefs analyzing the hidden economy in Macedonia. The topics encompass the issues of countering undeclared labour, tax evasion and fraud, media reporting on hidden economy and corruption, etc. According to estimates in 2013 the European Union lost around 1 trillion EUR in public revenues annually due to tax evasion and fraud. Given that EU's GDP summed up to 12.7 trillion EUR in 2013, tax evasion and fraud represented 7.9% of its annual GDP. The current policy brief stresses that as a middle-income country, which is still reforming its tax authority, tax system and related measures against tax evasion and fraud, one can reasonably assume that Macedonia should expect at least a similar rate to GDP of tax evasion and fraud (7.9%) or at least 700 mln. EUR on an annual basis. On the one hand, it negatively affects the competitive position of the companies that pay their taxes vis-a-vis the ones that evade taxes. On the other hand, it affects all citizens, as it undermines the everyday functioning of public services, (like healthcare, education, security, infrastructure etc.), which otherwise would have had better quality and extent. The authors underline several key points: tax revenues from pension and disability, and healthcare contributions in Macedonia have increased recently despite the lowering of tax rates; according to the Public Revenue Office tax evasion and issuance of cash register receipts were the leading causes for reporting irregularities throughout the period 2006-2013; the hidden economy survey among businesses has shown that half of interviewed companies agree that the tax system is good and stimulating for the development of businesses; but less than half (46.7%) of citizens reported to always receive receipts when buying groceries; and 1/3 of businesses reported that ‘manipulating VAT’ and ‘employing accounting tricks in order to pay lower taxes’ happens in their sectors.

Hidden Economy in Macedonia Policy Brief 2: Hit and Miss - The Dynamics of Undeclared Labor in Macedonia

Hidden Economy in Macedonia Policy Brief 2: Hit and Miss - The Dynamics of Undeclared Labor in Macedonia

Author(s): Author Not Specified,Center for Research and Policy Making CRPM / Language(s): English

The Center for the Study of Democracy, in collaboration with the Center for Research and Policy Making (CRPM) elaborated a series of policy briefs analyzing the hidden economy in Macedonia. The topics encompass the issues of countering undeclared labour, tax evasion and fraud, media reporting on hidden economy and corruption, etc. The current policy brief underlines that undeclared work, being one of the main manifestations of hidden economy, becomes the bull’s-eye for many countries focusing on reshaping their social and economic policies in order to tackle this issue, especially since the onset of the economic crisis that hit Europe and the World in 2008. The most recent economic indicators coming from Europe show that this crisis has not concluded and European economies are yet to deal with its mid and long-term consequences. Macedonia and other Western Balkan countries are not exempt from this process, with job creation and policies targeting unemployment (28.2% as of Q2 2014) being a major concern and a focal point of political activity. Low growth prospects in the EU and sluggish economic conditions forecasted in 2014 are also limiting Macedonia’s growth prospects, which at this point are still positive at around 4% GDP growth annually (4.3% as of Q2 2014). The authors highlight several key points: According to results from the population survey, the proportion of employees with a primary employment receiving ‘envelope’ payments or temporary service contracts in addition to their salary is about one-third of the employed population; Almost 7% of employees work without a contract and are not being paid social security contributions. Combined with the abovementioned fact, this indicates the salary of about 40% of employees with a primary employment is partially or completely undeclared; More than half of employers confirm that signing contracts with ‘hidden clauses’ happens in their sector; Macedonia’s main focus in tackling undeclared work, just as most Eastern European Countries, is on Labor Law violations). Repressive measures and others aimed at improving detection are the dominant policy approach.

Hidden Economy in Macedonia Policy Brief 2: Hit and Miss - The Dynamics of Undeclared Labor in Macedonia

Погодоци и промашувања – динамика на непријавената работа во Македонија

Author(s): Author Not Specified,Center for Research and Policy Making CRPM / Language(s): Macedonian

Keywords: Hidden Economy; Sshadow economy;

The Center for the Study of Democracy, in collaboration with the Center for Research and Policy Making (CRPM) elaborated a series of policy briefs analyzing the hidden economy in Macedonia. The topics encompass the issues of countering undeclared labour, tax evasion and fraud, media reporting on hidden economy and corruption, etc. The current policy brief underlines that undeclared work, being one of the main manifestations of hidden economy, becomes the bull’s-eye for many countries focusing on reshaping their social and economic policies in order to tackle this issue, especially since the onset of the economic crisis that hit Europe and the World in 2008. The most recent economic indicators coming from Europe show that this crisis has not concluded and European economies are yet to deal with its mid and long-term consequences. Macedonia and other Western Balkan countries are not exempt from this process, with job creation and policies targeting unemployment (28.2% as of Q2 2014) being a major concern and a focal point of political activity. Low growth prospects in the EU and sluggish economic conditions forecasted in 2014 are also limiting Macedonia’s growth prospects, which at this point are still positive at around 4% GDP growth annually (4.3% as of Q2 2014). The authors highlight several key points: According to results from the population survey, the proportion of employees with a primary employment receiving ‘envelope’ payments or temporary service contracts in addition to their salary is about one-third of the employed population; Almost 7% of employees work without a contract and are not being paid social security contributions. Combined with the abovementioned fact, this indicates the salary of about 40% of employees with a primary employment is partially or completely undeclared; More than half of employers confirm that signing contracts with ‘hidden clauses’ happens in their sector; Macedonia’s main focus in tackling undeclared work, just as most Eastern European Countries, is on Labor Law violations). Repressive measures and others aimed at improving detection are the dominant policy approach.

Hidden Economy in Macedonia Policy Brief 1: The Economics of Blurs and Shadows – The Hidden Economy in Macedonia

Hidden Economy in Macedonia Policy Brief 1: The Economics of Blurs and Shadows – The Hidden Economy in Macedonia

Author(s): Author Not Specified,Center for Research and Policy Making CRPM / Language(s): English

he Center for the Study of Democracy, in collaboration with the Center for Research and Policy Making (CRPM) elaborated a series of policy briefs analyzing the hidden economy in Macedonia. The topics encompass the issues of countering undeclared labour, tax evasion and fraud, media reporting on hidden economy and corruption, etc. The current policy brief underlines that undeclared work, being one of the main manifestations of hidden economy, becomes the bull’s-eye for many countries focusing on reshaping their social and economic policies in order to tackle this issue, especially since the onset of the economic crisis that hit Europe and the World in 2008. The most recent economic indicators coming from Europe show that this crisis has not concluded and European economies are yet to deal with its mid and long-term consequences. Macedonia and other Western Balkan countries are not exempt from this process, with job creation and policies targeting unemployment (28.2% as of Q2 2014) being a major concern and a focal point of political activity. Low growth prospects in the EU and sluggish economic conditions forecasted in 2014 are also limiting Macedonia’s growth prospects, which at this point are still positive at around 4% GDP growth annually (4.3% as of Q2 2014). The authors highlight several key points: According to results from the population survey, the proportion of employees with a primary employment receiving ‘envelope’ payments or temporary service contracts in addition to their salary is about one-third of the employed population; Almost 7% of employees work without a contract and are not being paid social security contributions. Combined with the abovementioned fact, this indicates the salary of about 40% of employees with a primary employment is partially or completely undeclared; More than half of employers confirm that signing contracts with ‘hidden clauses’ happens in their sector; Macedonia’s main focus in tackling undeclared work, just as most Eastern European Countries, is on Labor Law violations). Repressive measures and others aimed at improving detection are the dominant policy approach.

Hidden Economy in Macedonia - The Economics of Blurs and Shadows

Економија на маглини и сенки – скриената економија во Maкедонија

Author(s): Author Not Specified,Center for Research and Policy Making CRPM / Language(s): Macedonian

he Center for the Study of Democracy, in collaboration with the Center for Research and Policy Making (CRPM) elaborated a series of policy briefs analyzing the hidden economy in Macedonia. The topics encompass the issues of countering undeclared labour, tax evasion and fraud, media reporting on hidden economy and corruption, etc. The current policy brief underlines that undeclared work, being one of the main manifestations of hidden economy, becomes the bull’s-eye for many countries focusing on reshaping their social and economic policies in order to tackle this issue, especially since the onset of the economic crisis that hit Europe and the World in 2008. The most recent economic indicators coming from Europe show that this crisis has not concluded and European economies are yet to deal with its mid and long-term consequences. Macedonia and other Western Balkan countries are not exempt from this process, with job creation and policies targeting unemployment (28.2% as of Q2 2014) being a major concern and a focal point of political activity. Low growth prospects in the EU and sluggish economic conditions forecasted in 2014 are also limiting Macedonia’s growth prospects, which at this point are still positive at around 4% GDP growth annually (4.3% as of Q2 2014). The authors highlight several key points: According to results from the population survey, the proportion of employees with a primary employment receiving ‘envelope’ payments or temporary service contracts in addition to their salary is about one-third of the employed population; Almost 7% of employees work without a contract and are not being paid social security contributions. Combined with the abovementioned fact, this indicates the salary of about 40% of employees with a primary employment is partially or completely undeclared; More than half of employers confirm that signing contracts with ‘hidden clauses’ happens in their sector; Macedonia’s main focus in tackling undeclared work, just as most Eastern European Countries, is on Labor Law violations). Repressive measures and others aimed at improving detection are the dominant policy approach.

GREY Working Paper No. 4: Policy Approaches Towards Undeclared Work, a Conceptual Framework

GREY Working Paper No. 4: Policy Approaches Towards Undeclared Work, a Conceptual Framework

Author(s): Colin C. Williams / Language(s): English

This working paper is an output of the European Commission’s FP7 "Marie Curie Industry-Academia Partnerships and Pathways" (IAPP) project entitled "GREY - Out of the shadows: developing capacities and capabilities for tackling undeclared work in Bulgaria, Croatia and FYR Macedonia". The aim of the paper is to provide a conceptual framework for understanding the policy approaches for tackling undeclared work. In doing so, the intention is to provide the structure for a future comprehensive review of the policy measures available for tackling undeclared work.

GREY Working Paper No. 1: Tackling the Undeclared Economy in Bulgaria: a Baseline Report

GREY Working Paper No. 1: Tackling the Undeclared Economy in Bulgaria: a Baseline Report

Author(s): Rositsa Dzhekova,Colin C. Williams / Language(s): English

This working paper is an output of the European Commission’s FP7 "Marie Curie Industry-Academia Partnerships and Pathways" (IAPP) project entitled "GREY - Out of the shadows: developing capacities and capabilities for tackling undeclared work in Bulgaria, Croatia and FYR Macedonia". Ms Rositsa Dzhekova, Center for the Study of Democracy and Prof. Colin C Williams, GREY-IAPP, Sheffield University Management School, University of Sheffield elaborated the report in April 2014. It provides a systematic review of available evidence on the extent and nature of the undeclared economy in Bulgaria, as well as on the institutional actors involved in tackling the phenomenon and their policy approach and measures used. The aim of the GREY project is to provide concrete policy recommendations, based on rigorous empirical evidence, for those seeking to tackle the undeclared economy in Bulgaria, Croatia and FYR Macedonia. The key objectives of our project are: to conduct evaluations of existing policy measures directed at enabling the formalization of undeclared work; to identify good practices and assess the extent to which they might be transferable to other countries or contexts; to develop innovative policy measures and test their effectiveness at tackling undeclared employment in the EU-27; and to train a generation of experts who will be able to act as advisors and implementers of ambitious projects aimed at curbing undeclared work.

Media note: Shedding More Light on the New “Simplified” Electricity Bills

Media note: Shedding More Light on the New “Simplified” Electricity Bills

Author(s): Author Not Specified / Language(s): English

The decision to decrease by 5% the retail electricity prices as of 1 August 2013 is among the topics at the heart of political debates in Bulgaria this autumn. A similar move in 2010 clearly showed that such a politically mandated price decrease was not sustainable in the long run. It ended in the sharp increase (13% y-o-y) of electricity prices in 2012, and subsequent social unrest, which brought down the Bulgarian government in February 2013. The focus on the final consumer bill reduction in the public debate overshadows some of the other structural effects of the decision, which are worth mentioning.

Press Release: Surveying how European workplaces have managed in the economic downturn

Press Release: Surveying how European workplaces have managed in the economic downturn

Author(s): Author Not Specified / Language(s): English

This week Eurofound launches the field work of the third edition of European Company Survey across 32 countries. The sociological and marketing arm of the Center for the Study of Democracy - Vitosha Research will conduct the survey in Bulgaria. It aims at providing an overview of workplace practices and how they are negotiated, human resource management, and conditions of the working environment. It is based on the views of both managers and employee representatives, and takes into account various aspects of the working environment, including working time, work-life balance, and development of social dialogue in the companies.

The Flat Tax: Economic and Social Implications

Плоският данък: Икономически и социални ефекти

Author(s): Konstantin Pashev / Language(s): English

Keywords: Flat Tax;

These however do not necessarily call for the flat rate tax of the design experimented in several of the new market economies. The study argues as well that vertical flattening in itself tends to redistribute the tax burden towards the mid-income groups. Furthermore it cautions that the expectations that the flat income tax will limit tax evasion might be overly optimistic. The paper suggests alternative supply side tax incentives.

Corporate Governance Assessment Report: 2000

Corporate Governance Assessment Report: 2000

Author(s): Author Not Specified / Language(s): English

The present report has the objective to provide an overview of the general framework and particular dimensions of the corporate governance in Bulgaria. It is published for the first time and the authors intend to continue its publication on an annual basis. In its present form, the study contains information thus far unavailable to the professional community and the media. The evaluations and analyses herein are the first attempt to outline the achievements and the problems in the field of corporate governance in Bulgaria in the years of transition. The authors of the report thus aim to encourage a wider discussion on the subject and that, as a result, practical improvement action will be undertaken.

Corporate Governance Guidelines

Corporate Governance Guidelines

Author(s): Author Not Specified / Language(s): English

The present action plan contains practical measures and proposals for the improvement of the corporate governance in Bulgaria. It was prepared by the expert group, working on projects within the Corporate Governance Initiative in Bulgaria. A substantial part of the proposals were induced by the results and analyses presented in the Corporate Governance Assessment Report:2000, other expert opinions have also been used for the regulatory changes and improvement of the practice in that aspect. The practical steps are grouped in the following problematic fields, in which the attention of the professional community should be focused in order the corporate governance in Bulgaria to improve considerably and get closer to the global standards.

Migration - Europe's Integration and the Labour Force Brain-Drain

Migration - Europe's Integration and the Labour Force Brain-Drain

Author(s): Daniela Bobeva,Ivan Chalakov,Jordan Markov / Language(s): English

The report is aiming to answer the questions: What was going on in the science of Bulgaria in the years of transition and the related to it mass emigration of scientists abroad? Was that an occurrence of 'freedom euphoria', or 'a natural process of science internationalization'? What are the results from that process? What are the 'losses' and the 'benefits'? Who was the one 'to lose' and who - 'to win'? What are the perspectives?

Movement of Capital and Payments. Monetary and Financial Policies and Convertibility of the Bulgarian Lev

Movement of Capital and Payments. Monetary and Financial Policies and Convertibility of the Bulgarian Lev

Author(s): Lubomir Christov,Alexander Mihailov / Language(s): English

Monetary union is the final stage in economic and financial integration among countries, in the specific case analyzed in the present paper among the countries participating in the Treaty of Maastricht providing for the implementation of such a union as the ultimate objective of the convergence toward a unified Europe. Membership in such a union would require the adoption of a common currency and its circulation as a single legal tender (or the final and irrevocable pegging of exchange rates among the currencies of the participating countries), as well as the conduct of common monetary (including foreign-exchange) policy.

Prospects For Foreign Investments in the Bulgarian Privatization Process, December 1994

Prospects For Foreign Investments in the Bulgarian Privatization Process, December 1994

Author(s): Svilen Parvulov,Stephan Hadjitodorov / Language(s): English

Bulgaria welcomes foreign investment in the ongoing process of privatization, including, of course, American investment. This short paper describes Bulgaria’s privatization regulations, the transactions completed to date, the program for 1995, and three new instruments in privatization, namely: (a) the mass privatization scheme, (b) internal debt-for-equity swaps, and (c) foreign debt-for-equity swaps. We hope that this information will be of interest to the participants in the Bulgarian-American Economic Cooperation Forum.

American Investment In Bulgaria, December 1994

American Investment In Bulgaria, December 1994

Author(s): Daniela Bobeva / Language(s): English

From 1990 until the end of September 1994, sixty-nine investments of declared American origin were registered at the Ministry of Finance. Forty-three of them were made in Bulgarian Leva. The total volume of American investment is 18,662,000 USD, or 6.5% of the total foreign investment inflow to Bulgaria (in comparison, Germany invested 177,305,000 USD). The United States place fifth in terms of invested capital in Bulgaria.

Start-Up And Development Of Private Electronic Media In Bulgaria, September 1994

Start-Up And Development Of Private Electronic Media In Bulgaria, September 1994

Author(s): Georgi Sarakinov / Language(s): English

The state monopoly on air frequencies first began to crack as early as 1990 and 1991 when the Council of Ministers consented on several occasions to license the experimental rebroadcasting of foreign radio stations, namely the Voice of America, Radio Free Europe (RFE), BBC, Radio France Internationale and Deutsche Welle on designated channels.