Public policies and strategies for fighting unregistered employment

The subject of my work titled ?Public Policies and Strategies for Fighting Unregistered Employment? is the unregistered employment, which is a reflection of unregistered economy on professional life, and the public policies and strategies which have been adopted in order to fight unregistered employment.Although there is not a generally accepted definition for unregistered employment because of the fact that it is a rather comprehensive and complicated phenomenon in terms of its function, motives and results, it is possible to define it as all the income-yielding economic activities which can not be detected with the known statistical techniques, which is not included in the GNP accounts and which is totally or partially left outside the knowledge of the related public organizations and institutions. Because of unregistered employment, GNP, employment, general price level and budget figures can not be established; necessary measures can not be taken and applied with effective and appropriate policies; the applications fail and resources are misused. On the other hand, it causes the state too much financial loss; there occurs unfair competition and the ones who are engaged in registered employment lose their trust in government as they observe the common unregistered employment; registered economy contracts as unregistered economy grows, consequently state incomes are reduced.Unregistered employment bears a general definition as evasion of legal liabilities such as tax and social security contributions because the employees are not reported or underreported and as the employees work or are made to work without having social security.Unregistered employment is not only a problem for the developing countries but also a serious problem for the developed ones. The unregistered employment ratio in EU countries is 11 %.Unregistered economy and employment are economic realities of great importance in Turkey as well as other developing countries. The great size of unregistered employment in Turkey is one of the main factors which affect labor market in Turkey. According to January, 2011 statistics, 40,9 % of the employees are not registered under a social security system.Unregistered employment bears negative consequences not only for employees but also for state and employers. While some employers evade their legal liabilities by making their employees work without registering them, other employees are affected financially in a bad way owing to these unfair competition conditions. As for the state, it suffers a severe loss of tax and insurance contributions due to unregistered employment and is compelled to supply the unregistered employees with social contributions. The most important result of unregistered employment for the unregistered employees is that they are obliged to go on living without social security, which is fundamental for all. There are unhealthy and bad work place conditions particularly for foreign illegal workers and children workers in unregistered employment.By fighting and registering unregistered employment, it will be possible to increase the contribution incomes of social security institutions and there will be relative increases in pensions thanks to this increase of contributions; health and other social security services provided by social security institutions will be of better quality; the heavy financial burden on the registered businesses will be reduced; social security contributions which the workers and businesses will gradually fall; competition terms which are in favor of unregistered businesses will become for the advantage of registered businesses which fulfill their legal liabilities and pay their taxes; the number of the child workers will be reduced; the employment conditions of women, the disabled and other groups open to abuse will ameliorate and financial plans can be made based on more realistic data.Within this work, a method close to the system approach is followed. Unregistered employment is analyzed as a system and factors such as unfair income distribution, unemployment, indigence and problems of social security system are handled as a part of this system. The processes that link these parts and the features of these processes are analyzed as well. These sub-systems and the interaction among them are fully analyzed in order to understand, control and solve the problem of unregistered employment.Fitting the objectives of the open system approach, a model which is in mutual interaction with its surroundings, which receives input and which brings about internal changes as a result of the changes that take place around it has been established. A general assessment about the works which deal with unregistered employment in our country has been made. The factors that form the basis of the policies adopted up to now and their rates of importance have been identified.The content of this work comprises types of unregistered economy, its motives and the effects of unregistered employment, which is a reflection of unregistered economy on professional life, on economic and social life, unregistered economy?s scope of activities, public policies and strategies which are adopted or supported in order to fight unregistered employment.This work is composed of five sections. The conceptual framework of unregistered economy and its general view is dealt with in the first section. Unregistered employment, its motives, how it emerged, structure of unregistered unemployment in some countries, the alleged beneficial aspects of unregistered employment and the effects of registering it are analyzed in the second section. The policies applied while fighting unregistered employment, precautions taken and activities carried out in EU countries are examined and the results which have been obtained are analyzed in the third section. The structure and dimensions of unregistered employment in Turkey, working groups whose employment is mostly unregistered, its results are analyzed in the fourth section. The tools which could help to register unregistered employment in Turkey and related legal regulations are discussed in the fifth section and a general evaluation is made regarding the course of action of the works that have been suggested.After putting forward the general points of the work, the conclusion part analyzes how the theories that have been supported could be put into practice and how the expected results could effect not only the main grounds of strategies which are determined and applied within this framework but also the related parts of the public.Some assumptions are made in this work and what types of policies and strategies need to be developed so as to fight unregistered employment based on these assumptions form its focus. These assumptions, policies and strategies can be summarized as follows:a)The heavy financial burden on work power is considered to be one of the most important parts of the system which make up unregistered employment. As registered employment is anticipated to become more common if taxes and insurance contributions are reduced, the financial burden related to employment on the insured and the employer should be reduced and there should be different legal liabilities depending on the sectors and jobs. Consequently, tax and insurance rates which increase the cost of work power and decrease competitive power should be made more flexible in the medium and long term depending on the economic conjuncture.b)Another important motive of the system that makes up unregistered employment is that there is no efficient and deterrent supervision. Unregistered employment is supposed to decrease as supervision in businesses becomes more efficient and with awareness-rising applications. For this reason, the number of the supervisors who supervise just in place has to be increased so that an efficient supervision mechanism is established, the deterrent function of supervision is maintained by acting instantly upon denouncements and complaints and citizens trust in social security institutions more. Also sector-specific supervisions and supervisions of annual programs should be adopted and new supervision strategies should be developed.c)It is found out that there is not an application strategy for fighting unregistered employment which is based on social compromise and unity of action. Success lays on the establishment of a model which receives input from its surroundings and makes changes depending on the changes that occur around it, all in harmony with the open system approach. The strategy for fighting unregistered employment should be based on participation, generality, planned applications in accordance with objectives and principles of field works.d)Solution offers which are foreseen as theoretical, which are separate and which are not based on an application strategy do not seem to be satisfactory for solving this problem as they can not analyze the system which makes up unregistered employment.It is mandatory that public policies and strategies are shaped according to the principles of reducing the burden on employment, an efficient and coordinated public administration, competent and deterrent supervision system, a widespread awareness rising and training campaign, unity of action of all the related parties and social compromise, establishment of special units responsible for applying the policy, simultaneous realization of all these policy tools at a specified application time, so that the objectives are accomplished.