The Baltics: How to tackle the shadow economy?

The Stockholm School of Economics has published its latestreport on the shadow economy in the Baltics. It accounted for 20.3 percent of Latvia's GDP, but the trend points to that figure heading downwards. In Lithuania (16.5 percent) and Estonia (15.4 percent), on the other hand, a growing amount of business is taking place behind the tax authorities' back. Media in the Baltic states discuss how to combat the shadow economy.

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Verslo žinios (LT) /

Lithuania's economy put in chains

Verslo žinios is disappointed at the measures Lithuania is planning to tackle the shadow economy:

“The new government promised before the elections that there would be no earthquake on fiscal policy. Businesses, the investors and the country's citizens all want a stable tax system. But what has the new government done to ensure that the economy isn't hurt by superfluous chains, or that our workers are no longer among the most heavily taxed in the entire EU? So far all we've heard is some tax mumbo-jumbo about reforms that even the initiators don't seem to properly understand. … It's clear that not only is this breach of tax laws immoral, it is also a crime, but the politicians need to understand the causes of this phenomenon. The solution lies in their hands.”

Delfi (LV) /

Latvia's building sector needs a minimum wage

Illegal employment is particularly widespread in the Latvian construction sector, leading Baiba Fromane, head of the Partnership of Latvian Construction Entrepreneurs, to write in Delfi:

“We demand that in accordance with Latvian law there should be an agreement between employers and unions regulating minimum wages in the sector. That way the same rules would apply for everyone, and illicit payments would be rendered pointless. ... The introduction of such a system would have a positive impact on everyone in the sector. Workers would receive social guarantees, employers would be guaranteed fair competition. It would be a win-win situation: for employers because they'd receive a good product. For society because it would have safe, high-quality buildings. And for the state because its tax revenues would increase.”