Working in the informal sector not only does not increase income, but also has a negative impact on careers

Over the nearly three years of the implementation of the project Development and implementation of innovative tools aimed at combating the problem of unregistered labor in institutions jointly responsible for minimizing the shadow economy on the labor market (SzaWER) we have trained more than 200 people – including the unemployed, employers and foreign nationals – on the consequences of working in the shadow economy, i.e. without a written contract or the right to stay and work, in the case of foreign nationals.

Research confirms that working in the informal sector not only does not increase one’s income, but also has a negative impact on careers. This phenomenon is called the scar effect. Lack of documented seniority makes it difficult to find legal employment and gain promotion in the future. Employers may also treat undocumented workers badly, which can result in reduced self-esteem and negatively affect motivation to develop and seek legal employment.

As part of the project we developed and implemented a number of new solutions to reduce the likelihood of working in the shadow economy. Three original scenarios of on-site trainings and five online trainings were created, the latter ones available now free of charge on the platform www.naumowe.pl. We have also developed a manual for trainers “Undeclared work. Causes and consequences” („Praca nierejestrowana. Przyczyny i konsekwencje”).

The online trainings are addressed to different groups of recipients: foreigners (in three language versions: Polish, Russian and English), the unemployed, young people and employers. In addition to factual and practical information, they also contain short videos, presenting in an accessible way selected issues related to the consequences of working in the shadow economy, as well as e-books, with a synthesis of topics covered during the courses. The platform www.naumowe.pl is open, which means that the trainings are available free of charge for all people, including those who want to use them in their training or educational activity.

Both online and on-site trainings were first tested, then refined and finally implemented in selected partner organisations. In addition, to facilitate the work of trainers and educators, we have also developed training manuals that can be downloaded from the CASE website.

The manual for trainers is aimed at people conducting various information activities, promoting registered work (i.e. work under a contract, with all formalities completed) and raising awareness of the risks related to performing or commissioning undeclared work. It is therefore addressed in particular to employment counsellors employed in public employment offices and Voluntary Labour Corps units, who conduct training or group employment counselling for the unemployed, and trainers conducting training for foreigners looking for work in Poland.

The aim of the project was also to assess the PIT gap in Poland to develop a model to forecast the financial effects of innovative fiscal solutions for public finance. Mechanisms and solutions developed as part of the project will help to reduce the shadow economy in Poland.

The project “Development and implementation of innovative tools aimed at combating the problem of unregistered labor in institutions jointly responsible for minimizing the shadow economy on the labor market” was implemented by CASE (project leader) and partner organisations. The consortium consisted of the following institutions: the Institute of Labour and Social Studies (IPiSS), the Institute of Public Finance (Croatia), National Fiscal Administration, Maguire Policy Research Ltd (Great Britain), Voluntary Labour Corps – Headquarters, Association for Legal Intervention, Voivodeship Labour Office in Katowice and Voivodeship Labour Office in Olsztyn. The project was co-financed by the European Union under the Operational Programme Knowledge Education Development 2014–2020.