Why workers engage in quasi-formal employment? Some lessons from Croatia

• Main Author: Josip FRANIC
• Format: Article
• Language: English
• Published: Alexandru Ioan Cuza University of Iasi 2020-11-01
• Series: Eastern Journal of European Studies
• Subjects: quasi-formal employment; under-declared employment; envelope wages; croatia; qualitative research
• Online Access: https://ejes.uaic.ro/articles/EJES2020_1102_FRA.pdf

Although quasi-formal employment has become a constituent part of labour markets around Europe, there is still limited understanding of the exact mechanisms underlying this illicit scheme. The lack of knowledge is particularly pronounced when it comes to the rationales for workers to accept such jobs regardless of all pitfalls attached. To fill the gap, this paper elaborates on the most important findings from qualitative interviews with 30 quasi-formal workers in Croatia. Besides low employment prospects, this study conducted in 2015 also highlights distrust in institutions, low intrinsic willingness to pay taxes, lack of deterrence and misperception regarding financial gain as the key factors shaping the decisions of labour suppliers in this respect. Apart from sizeable theoretical contribution, the findings presented in this paper are also expected to assist policymakers in Croatia and beyond in their endeavours to reduce the attractiveness of wage underreporting for workers.