The quality of the business environment and reduction of the hidden economy is a crucial dimension for the fulfilment of the Copenhagen economic criteria and the eventual accession of the Western Balkan countries to the EU. It is therefore imperative that the new investment and economic competitiveness programme of the European Commission for the Western Balkans addresses the hidden economy in the region.
Hidden economy consists of economic transactions that don’t pursue tax declarations, and therefore, is not regarded as an official (and legal) economic sector. It not only negatively impacts employee rights, but also disrupts the quality of the business environment by, for example, creating room for unfair competition and corruption.
The recent SELDI policy brief brings the hidden economy in Western Balkans into focus and discusses the situation and policy options in the region. According to the report, hidden employment has increased in five of the Western Balkan countries and Serbia appears to be the only exception where it has actually decreased since 2016. The report also indicates how the ongoing Covid-19 crisis has shed a light on the problems of undeclared workers, as well as the businesses of the informal sector. It is emphasized that governments should implement measures to enable transition from informal to formal economic sectors and a variety of policy options is presented [Read Full Report].
A reliable business environment is indeed crucial for innovation and startup-development, as well as transformation towards more sustainable business activities. SME-support-organizations should, therefore, work together against problems bred by the hidden economic sector. Supporting SMEs and startups in their sustainable growth and transformation is at the core of our project, GT4SME. Check our website to see how you can benefit from project results and deliverables.