Charles Woolfson

Labour Standards and Migration in the New Europe: Post-Communist Legacies

Keywords: labour migration, labour standards, Latvia, New Member States

■ The post-communist New Member States of Eastern Europe have experienced significant forms of labour exploitation, with deterioration in labour standards and the working environment. This is leading to increasing labour force 'exit' on a scale not hitherto anticipated. Migrant workers from the Baltic states, paid lower wages and with poorer working conditions, have been at the centre of a number of high-profile labour disputes in the EU-15. This article uses Latvia as a case study in order to discuss the implications of increasing labour migration for the New Member States and for labour standards in the wider EU.

Introduction

On 1 May 2004 eight former communist countries completed the long road to full European Union (EU) membership. Having left the embrace of the

Latvia: Labour Standards in a Neoliberal New Market Economy

Latvia is a small ex-Soviet republic of some 2.3 million persons. It is also the poorest of the 2004 NMSs, as measured by a variety of economic and social indicators [START_REF] Dennis | Monetary Poverty in the EU Acceding and Candidate Countries[END_REF]. As in its Baltic neighbours Estonia and Lithuania, the paradigm of neoliberal reconstruction has been actively implemented in the last decade and a half. A World Bank ranking of 155 nations on key business regulation reforms noted that Eastern Europe in general has achieved the highest rate of reform of any region in the world. Overall, Latvia is ranked at 26th in the world in terms of 'ease-of-doingbusiness', with all three Baltic States commended for their 'remarkable achievement' in achieving a top 30 ranking since the relatively recent introduction of market reforms (World Bank, 2005). Market reform has been a success, at least for the domestic elites who have benefited not simply from the economic gains of privatization, but also from the more recent record rates of GDP growth, albeit from a position of significant absolute decline in the early post-independence period. In the three Baltic states, average GDP growth has been between 6.5 and 8 percent per annum in most recent years, and in the case of Latvia, an extraordinary 13.7 percent in the first quarter of 2006, the highest rate in the EU- 25 (Bank of Latvia, 2006). For domestic elites there have also been collusive benefits with western business interests which have been given new investment opportunities, allowing them to take advantage of cheaper labour in Eastern Europe [START_REF] Bohle | Capital, Labor, and the Prospects for the European Social Model in the East[END_REF].

Such successes have however been achieved at a price. Significant numbers of the labour force have fallen, or more accurately have been pushed below any threshold of regulatory or collective forms of protection. These workers are submerged in the variously described 'shadow', 'grey' or 'black' economy where casual, contingent, fixed-term or temporary forms of employment of both a legal and semi-legal nature predominate. This economy of 'precariousness' is a major factor in nearly all post-communist Eastern Europe countries, where it is linked to the increasing gap between the 'haves' and 'have-nots' [START_REF] Rosser | Income Inequality and the Informal Economy in Transition Economies[END_REF]. Here 'market forces' are no mere economic abstraction but a daily lived experience of economic and social insecurity [START_REF] Rajevska | Social Policy in Latvia: Welfare State under Double Pressure[END_REF].

Viewed in historical perspective labour conditions in the Baltic states are deteriorating. An ILO labour inspectors' report on the region (von Richthofen, 2002: 15) notes:

workers' protection has become more and more difficult due to the privatization process and due to learning the rules of market economies. In consequence, this has led to a drastic degradation of the working environment and a renewed exploitation of the labour force in the Baltics. (emphasis added) 'Deteriorated' employment conditions or 'downgraded labour', and an accompanying tendency towards labour 'informalization' are interlinked impacts of the arrival of market forces in the 'transitional' economies of Eastern Europe [START_REF] Castells | World Underneath: The Origins, Dynamics and Effects of the Informal Economy[END_REF][START_REF] Heintz | Informalization, Economic Growth and the Challenge of Creating Viable Labor Standards in Developing Countries[END_REF][START_REF] Castells | World Underneath: The Origins, Dynamics and Effects of the Informal Economy[END_REF]. In strongly neoliberal economies such as Latvia, there has been the rapid erosion of stable employment relations within newly intensified work regimes, in which the discipline of mass unemployment has been an important factor in undermining the organizational capacities and confidence of labour. The result has been to create labour 'flexibility' and workforce compliance, with a consequential downgrading of employment standards in the context of business-friendly regulatory regimes.

Downgrading takes many forms, for example the imposition of bogus 'full-time' contracts, along with secondary or hidden supplementary contracts stipulating the surrender of employment rights, employer resort to various forms of probationary, fixed-term or part-time contracts and the failure to provide written contracts of employment. The use of 'selfemployed' status to avoid employer obligations regarding social insurance contributions is common in the Baltic states. The avoidance of social insurance and tax liabilities through payment of minimum wages to employees supplemented by so-called 'envelope wages' is also ubiquitous. Envelope wages can be used as a 'soft' form of 'employee differentiation' aimed at eliminating staff no longer required, without incurring any costs to the employer in redundancy pay [START_REF] Hazans | Latvia: Working Too Hard?[END_REF]. The Latvian State Labour Inspectorate estimates that 28 percent of workers receive 'envelope wages' in the form of supplements to the official minimum wage [START_REF] Leta | VID: Latvijā milzīgi ir nedeklar ētie ienākumi un aktuāla ir aploks ˇn ¸u algu probl ēma[END_REF]. 'Undeclared work' is prevalent in many sectors of the economy, including public sector healthcare institutions, construction, agriculture and forestry, hotels and restaurants, commercial services and retail. Other estimates of the Latvian workforce receiving under-the-table wage payments range between 15 and 45 percent of total employment, with approximately fourfifths in the private sector and one-fifth in the state and local government sector (EIROnline, 2004a).

An indication of the scale of 'undeclared wages is provided in an OECD report which noted an increasing discrepancy (on average about 10 percent) between the wages employers record to social insurance authorities for tax purposes, and those they report to statistical agencies; because many private-sector employers conceal wage levels from the statistical agencies, so that 'official wage statistics are therefore unreliable for the private sector'. Official statistics record that 32 percent of the private employees earn about one third of the average wage. As the OECD suggests (2003: 61): this result is not very plausible, considering … that the public-sector wage distribution did indeed show the expected bell-shaped normal distribution around the average. Labour force surveys (LFS) indicate about the same wage distribution in private sectors (although LFS-based wage data are less reliable in other respects).

By comparing public-and private-sector wages according to both LFS and employer surveys, the OECD estimated that around 20 percent of all private-sector employees in Latvia earned more than their employers report (2003). The extent of concealment is also indicated by the fact that declared pay in the private sector is 21.4 percent lower on average than in the public sector, while in sectors where undeclared work is traditionally found, such as the construction industry, the disparity is even greater (32.5 percent) (EIROnline, 2004a). In construction, the proportion of employees receiving envelope wages is estimated to reach 40 percent [START_REF] Sedlenieks | Lielgabals korupcijas vārnu medībām[END_REF], while 'local economists … believe that the shadow economy in Latvia is 40 percent of GDP or more' (European Employment Observatory Review, 2005: 115). It is this mass of 'down-graded' legal and semi-legal employment which provides one of the key 'drivers' of deteriorated labour standards. Even so-called 'legitimate' businesses will often keep a second set of accounting books, or conduct 'off-book' or 'direct' payment transactions with their employees, sub-contractors and customers to avoid taxation, thus oscillating between criminal and non-criminal behaviour on a regular basis, and increasingly blurring regulatory avoidance with outright criminality (Feige and Ott, 1999).

Deterioration is also manifest in exposure to dangerous and unhealthy working conditions, which employees are unable to refuse without fear of dismissal. Under Latvian legislation, the laws regulating industrial relations relate specifically to employees with employment contracts. Thus if an employee is injured at work, social guarantees may apply only if the employee has a contract. Construction is one of the industries in which employment contracts are most often not concluded with the employees and in which working hour limits are not observed. The result is fatigue, and accidents in the construction sector are disproportionately represented in terms of workplace fatalities [START_REF] Eironline | Latvia -Accidents at Work Linked to Minimal Industrial Relations in the Construction Industry[END_REF]. Moreover, so-called 'self-employed' in construction are excluded from labour protection, while the injuries for this group are not even registered in the official data, thus reinforcing the already significant underreporting of workplace accidents. A recent upsurge in speculative building activity following EU accession, particularly in the capital city Riga, has led to a sharp increase in industrial fatalities, already more than half as much again in excess of EU15 averages for the last few years. In recent years Latvia has ranked either the worst or second-worst performer in terms of workplace fatalities in Europe, at approximately six per 100,000 employees, approximately 50 percent above EU averages, while serious injury rates are spiralling, exacerbated by weak enforcement and low financial penalties for safety law violations [START_REF] Woolfson | The "Conventionalization" of Safety Crimes in the Post-Communist New Member States of the European Union[END_REF].

The penalties imposed on employers for violations of labour law are very low (EIROnline, 2004b). The maximum fine for employing a worker without a contract is €720, but the average is nearer €100. The maximum fine for an administrative violation of labour laws was increased in 2005 to 1420 Euros, but only for repeat offenders. Until recently, only corporate rather than personal fines could be imposed, although proposed changes in the criminal law will now make owners and managers of enterprises liable if they provide fraudulent information to the state authorities with the aim of hiding illegal activities (European Employment Observatory, 2005). In 2004, of nearly 2000 enterprises inspected by the Labour Inspectorate, about one fifth were found to have employees without a contract. It estimates that 24 percent of employees in the wood industry have no contract, 23 percent in construction, 14 percent in retail trading, eight percent each in agriculture and medicine (State Labour Inspectorate, 2004).

Evidence from social surveys and case studies also suggests excessively long working hours, intensification of work effort, low basic salaries, high levels of conflict in the workplace, gendered wage discrimination and poor working conditions [START_REF] Antila | Working Life Barometer in the Baltic Countries 2002[END_REF]EIROnline, 2004a;[START_REF] Hazans | Latvia: Working Too Hard?[END_REF]. The Baltic Working Environment and Labour (BWEL) survey data suggest three-quaters of respondents worked between 40 and 49 hours per week (74.1 percent) and a further one 10, more than 50 hours. One in five claimed a 'considerable increase' in work intensity in the previous 12 months. Half reported overtime working, and of these, one-third for seven or more hours per week. Again, a half claimed that such overtime is only partially, or wholly unpaid (Woolfson et al., forthcoming).

Labour 'flexibility' is an already imposed feature of the Latvian labour market. Again, the OECD notes that the newly introduced employment laws replacing Soviet-era labour codes are 'liberal in the sense that employers are free to dismiss workers if there is not enough work andwith a few exceptions -they have the right to select the workers they want to dismiss according to economic criteria' (OECD, 2003: 58). While expressly prohibited in the new labour code, successive short-term contracts and the dismissal of workers at the end of a probationary period are in fact rapidly developing features of the restructuring of the labour market [START_REF] Vainovskis | Termination of Employment Relations: Legal Situation in Latvia[END_REF]. Where collective agreements exist, they are rather weak when it comes to securing additional severance pay in the event of dismissals. More likely, union members will not be re-employed. 'Liberal wage-setting laws' (OECD, 2003: 59) also ensure that legal minimum wages are among the lowest in the EU27 (only Bulgaria and Romania being lower) and despite a recent increase of one quarter from January 2007, remain at 40 percent of the average gross monthly wage.

In a candid appraisal of the Baltic States the OECD observes:

In sum, the predominant forms of wage-setting in the three countries appear quite flexible … While such flexibility is advantageous for business, there can be a danger of abuse by less-scrupulous employers if the institutional framework is too weak. Some groups of low-skilled workers, notably in small private firms, are probably in a vulnerable position if their employers are tempted to reduce wage costs more than is legally allowed. (2003: 60) Employees, afraid of losing their jobs, will characteristically collude to hide any contract abuses: a testimony to the capacity for exploitation where violations are officially tolerated. Such degradation of labour standards are experienced coercively as a clustering of labour abuses. Despite EU accession, Latvia today possesses a labour market in which 'employees lack information about their … rights in terms of industrial relations' (EIROnline, 2004c). A recent survey of Latvian employees revealed that 15 percent were willing to work overtime hours without pay, 22 percent suggested that the collective agreement was only formality. A further 31 percent of respondents admitted that they would be ready to work without contract, 37 percent said they would work even if social guarantees were not paid, and 38 percent would be ready work without annual holidays [START_REF] Skds | Sabiedriskās domas pētījums par Valsts darba inspekcijas darbību: Latvijas iedzīvotāju un darba devēju aptauja[END_REF]. On the other hand, opinion polls since 1996 consistently show dissatisfaction over human rights violations in labour relations at the top of the list (in 2000, 47 percent) [START_REF] Rajevska | Economic and Social Rights[END_REF].

Trade union density and collective bargaining agreements the Baltic region are also the weakest among the NMSs, with both membership and bargaining coverage in continuing decline. Recent estimates suggest that in Latvia 15-16 percent of the workforce are trade union members, in Estonia 11 percent, and in Lithuania 14 percent (EIROnline, 2005a(EIROnline, , 2005b(EIROnline, , 2006a)). As elsewhere in Eastern Europe, the majority of trade union membership is concentrated in the public sector or in the few remaining unprivatized enterprises, while union representation in the new private companies is negligible and fiercely resisted by most employers, including leading foreign investors from Scandinavia who happily bargain with unions in their own countries (EIROnline, 2005c;[START_REF] Sippola | Social Dialogue in Nordic Manufacturing Companies in the Baltic States[END_REF]. Current trade union members are mostly inherited from Soviet times, and all evidence suggests continuing decline, despite valiant efforts on the part of union organizers in several sectors such as finance and services (Woolfson et al., forthcoming). The pervasive 'low-trust' social environment of post-communism, in which individualistic solutions to life problems are sought, including those of violations of rights in the workplace, remains a barrier to collective defence of labour standards [START_REF] Tisenkopfs | Human Capability and Quality of Life: Researching Quality of Life in Latvia[END_REF]. The most 'individualistic' solution of all is that of 'exit'.

The 'Exit Strategy'

Downgraded labour standards may benefit individual employers, but impose costs on Latvian society as a whole. Accession to the EU has at least partially opened doors for East European labour which were once closed, particularly to those EU member states such as Sweden, the UK and Ireland that did not impose 'transitional arrangements'. Against initial predictions of 'no immediate dramatic rises' (European Commission, 2004: vii;[START_REF] Krieger | Migration Trends in an Enlarged Europe[END_REF], there has been a significant outflow of labour seeking higher wages and better working conditions in the EU-15, although the actual percentage of the total European labour force involved is small. Only 1.5 percent of the EU workforce was born in a different Member State from their current state of residence according to Krieger and Fernandez (2006: 16). Recent estimates suggest however that between 50,000 and 100,000 people have emigrated from Latvia in the first 18 months alone following EU accession, at least 2.4 percent of its working population, a figure which could probably be doubled (World Bank, 2006;EIROnline, 2006c). How much of this migration is 'legal' or 'documented' is not known. This rate of emigration seems set to continue.

Labour shortages are already becoming significant, not only in construction and lower-skilled sectors, but also in teaching and public administration, producing identifiable 'skills shortages and bottlenecks' (Central Statistical Bureau, 2006b;World Bank, 2006). The nursing and medical professions and other high qualification sectors have experienced particularly significant losses of personnel (EMN Synthesis Report, 2006). A study based on the EuroBarometer survey notes that better-educated Latvian men and women in the ages 25-34 are 'four times more likely to migrate to another EU Member State than equally well-educated men and women in the same age group from the Czech Republic, Hungary, Slovakia and Slovenia' (European Foundation, 2006). Similar or even higher figures are reported for neighboring Poland, Estonia and Lithuania, which together with Latvia are classed as 'high mobility potential' NMSs (European Foundation, 2006). This research suggests that there are distinct reasons why individuals wish to emigrate, with 'work-related factors' such as higher household income (59 percent compared to 37 percent average for the EU-25) and better working conditions (57 percent compared to 36 percent average for the EU-25) featuring top of the list of expressed priorities [START_REF] Krieger | Too Much or Too Little Long-Distance Mobility in Europe? EU Policies to Promote and Restrict Mobility[END_REF]. Overall, 7.4 percent of Latvians interviewed were prepared to move to another EU country [START_REF] Krieger | Too Much or Too Little Long-Distance Mobility in Europe? EU Policies to Promote and Restrict Mobility[END_REF]. In the words of the Riga office of the International Organization for Migration, 'workforce emigration has taken from Latvia almost the same number of people as deportations under Soviet occupation' (quoted in EUbusiness, 2006).

The exit of labour is creating a 'secondary' reinforcing migration in the region, as workers from other former Soviet countries are recruited who are willing to work for even lower wages and under poorer conditions than their Baltic counterparts. Renooy et al. (2004: 145) describe what they call a 'chain migration of labour from the East to the West', involving migrants from the less-developed neighbouring states of the former Soviet Union. VP Market, a Baltic supermarket chain, has announced its intention to hire staff from neighbouring Belarus (Economist, 2005). The managing director of an association of Latvian construction contractors, Marcis Nikolajevs, is quoted as saying that companies are being forced to import building workers, not just from other parts of the former Soviet Union, but are considering flying in temporary workers from as far away as Ghana. 'We used to be a proud people', Nikolajevs bemoaned, 'this migration is a national tragedy' [START_REF] Bilefsky | Migration's Flip Side: All Roads Lead Out[END_REF]. Such secondary migration flows may produce further social tensions, not least over sensitive 'ethnic balance' questions in countries like Latvia, where an uneasy relationship with the significant Russian minority of 29 percent already exists, nearly half of whom are without Latvian citizenship ('non-citizens') [START_REF] Mez ˇs | National Lisbon Programme for Latvia[END_REF]. Current government policy towards the developing crisis of human resources, in line with prevailing neo-liberal preferences, appears to be one of 'no policy' in terms of managed migration -except insofar as inflows from other parts of the former Soviet bloc to replace departed labour are 'not to be encouraged', even in sectors such as nursing and medicine which are facing severe shortages (EMN Synthesis Report, 2006).

The negative consequences of this labour exodus for the social fabric of Latvian society have been eloquently recorded in investigative articles and at least one novel on the impact of rural depopulation and the rupturing of family ties, dramatized in 'mushroom orphans' brought up by grandparents of departed migrants [START_REF] Bilefsky | Migration's Flip Side: All Roads Lead Out[END_REF][START_REF] Muktupavela | Labour Market and Social Policies in the Baltic Countries[END_REF][START_REF] Sweeney | Aglona -The village that the Latvians Loved and Left[END_REF]. Laima Muktupavela's novel of an itinerant mushroom picker in Ireland records that life for the emigrant may replicate the gross exploitation suffered back home, especially for those in poorly regulated areas of the economy, like horticulture. This picture is seemingly confirmed by a recent study of abuses of migrant labour in Ireland from the Irish Labour Relations Commission [START_REF] Hyland | Migrant Workers and Access to the Statutory Dispute Resolution Agencies[END_REF].

Yet the adoption of an 'exit strategy' by tens of thousands of workers from the NMSs is both an understandable and an inevitable consequence of the desire to find a better working life, and to escape the adverse nature of the working environment at home. The Latvian State Employment Agency has conceded the importance of low levels of pay and the 'not uncommon practice for companies to employ workers illegally, or officially pay them the minimum salary thus decreasing their level of social protection' in prompting workforce exit. In a rare instance of public candour, a representative of the agency admitted that 'employers in Latvia are not ready to motivate their employees and give them good working conditions. This is the main reason why our citizens are looking for jobs in other European countries' (Akule, 2006: 15).

A sociological investigation team was dispatched to Ireland to survey Latvian citizens now resident and working there, in response to growing concerns over the domestic impact of emigration. Their findings quoting Latvian migrant workers go to the heart of the matter: 'I am not afraid to talk with my supervisor which was the case in Latvia. Here [in Ireland] there is trust, and confidence in the employee. And so the work is better done in such an atmosphere.' Another respondent recounted, 'in Ireland we live a life which is "human worthy" -we can afford not always to be thinking of prices and about unpaid wages' (Indãns et al., 2006, my translation). Whether this official soul-searching can alter what seems to be the current exploitative approach adopted by the new business classes of Latvia remains to be seen. The current Latvian government seems reluctant to acknowledge the scale of the issue or to develop new public policy options. One of the few critical commentaries on the current situation suggests that the 'problem of emigration in Latvia is far more serious than the Latvian government cares to admit' (EIROnline, 2006c):

[it] insists that emigration facilitates the improvement of labour force quality, as emigrants can learn a language, master skills, earn money and return home more economically better-off. The fact that many emigrants engage in unskilled jobs that frequently do not correspond to their level of education, and that they do not wish to return home, has never been addressed by the government.

The ongoing nature of labour force exit is now 'reinforcing already strong inflationary pressures and complicating euro adoption plans', threatening the sustainability of previous economic growth in the longer term (World Bank, 2006: 35). While domestic wage levels are rising under the pressure of growing labour shortages (Central Statistical Bureau, 2006a), worker outflow has resulted in job vacancies outnumbering the number of applicants in economically active areas for the first time [START_REF] Eironline | Latvia -High Number of Job Vacancies Increase[END_REF]. Combined with drastically falling population, these trends suggest that sooner rather than later the drain of 'human resources' will become a key challenge for Latvia if not also for its NMS neighbours.

Labour Conflicts Post-Enlargement

While migration from the NMSs may not be significant in absolute numerical terms, at least viewed in a pan-European context, the qualitative impacts may be more substantial. Yet the view of the European Commission is typically reassuring: 'expected mobility from the three Baltic countries and Poland is significantly higher than that from the rest of the Member States, but this is unlikely to pose major and lasting challenges for the labour markets of the receiving countries ' (2006: 17). This development is even portrayed as 'welcome news' since migrants display a 'relatively high degree of adaptability and flexibility' (European Commission, 2006: 233).

However, contra the Commission's sanguine view such mobility has also introduced labour market frictions. Incoming Eastern European labour is a potential threat to labour standards not just in terms of collectively bargained wages but also in terms of safety and health at work. Ireland, the favoured country of destination, again suggests a contemporary example. The annual report of the Irish Health and Safety Authority notes:

The changing nature of Ireland's workforce and the increasing number of non-English speaking workers also poses a different challenge to the way in which the Authority does its work … to ensure that the entire workforce will clearly understand the various safety and health risks, entitlements and precautions applicable to them. (2006a: 5) There were 73 deaths in Ireland in 2005 as a result of work-related accidents, as against 50 in 2004. In the construction sector, in which many migrant workers are to be found, the increase was from 15 fatalities to 23 (Health and Safety Authority, 2006a). In an attempt to address this problem the Authority has produced a series of web-based leaflets and an 80-page pictogram guide for Polish construction workers in their native language (Health and Safety Authority, 2006b). With further eastward enlargement in 2007 and other accessions on the horizon, mobility impacts on working environment standards are likely to become matters of increasing concern.

More immediately, a number of high profile disputes have thrown into relief the potential for destabilization of previously orderly industrial relations frameworks, including established social partnership arrangements. The conflict in late 2004 and early 2005 between a Latvian construction company, Laval un Partneri, employing low-cost Latvian labour in Sweden, and the Swedish trade unions seeking to preserve collectively bargained rates of pay, was the first significant post-enlargement clash over labour standards and the freedom to offer services on a crossborder basis. This dispute also provided an opportunity for Swedish employers to attempt to prise open previous voluntary arrangements in national collective bargaining in order to undermine organized labour [START_REF] Woolfson | Labour Mobility in Construction: European Implications of the Latvian Laval un Partneri Dispute with Swedish Labour[END_REF]. The Laval dispute (or Vaxholm case) is currently before the European Court of Justice (ECJ). It has proved a watershed both in legal and industrial relations terms, provoking a boycott and continuing blockade of the construction site in Stockholm, and mass demonstrations by Swedish trade unionists. The ECJ will, for the first time, be asked to rule on whether the right to take industrial action as promoted in the EU Charter of Fundamental Rights is compatible with the freedoms of the internal market.

Less prominent, but equally contentious has been the Viking Rosella ferry conflict. This dispute, during late 2005 and early 2006, is part of an attempt by Finnish ship-owners seeking to deploy replacement East European labour for Finnish seafarers. The Viking company announced its intention to re-flag its vessel, the Rosella, in Estonia and to replace the Finnish crew with cheaper Estonian labour. The dispute is also due for consideration by the ECJ, having previously been adjudicated in the English courts [START_REF] Davies | The Right to Strike Versus Freedom of Establishment in EC Law: The Battle Commences[END_REF]. The Finnish seafarers union had enlisted the support of the International Transport Federation based in London, in imposing a global boycott of the company. Like the Laval case, the Viking Rosella dispute highlights the question of the extent to which trade unions in the EU-15 may be able to use industrial action to resist what they perceive to be 'social dumping' arising from employment of lower-cost Eastern European labour, in this latter case, under the freedom of establishment principle of the internal market. The legal outcome of both these disputes will be closely observed both by European employers and the European trade union movement.

A third conflict, the Irish Ferries dispute, also in late 2005 and early 2006, involved the substitution of Irish workers by East European labour on cross-channel ferries between the UK and Ireland. While not subject to adjudication in the ECJ, this episode raised important concerns over labour standards, threatening to destabilize the much proclaimed Irish social partnership agreement.

The bare facts are that the company attempted to pay off 543 unionized workers from its key Britain-Ireland routes and replace them with cheaper Eastern European workers, mainly Latvian and Lithuanian, at much lower wages rates, reportedly half the Irish minimum wage of €7.65 per hour. While the majority of the current workforce was prepared to accept an offer of voluntary redundancy, a small core of the original crew was not. The trade unions, arguing that the company had breached a previous agreement on outsourcing and an undertaking to maintain normal staffing on its Irish Sea routes until 2007, drew a proverbial line in the sand. The company claimed that major cost-savings were necessary to compete against lower-cost airline traffic, rejected an Irish Labour Court ruling that it was in breach of employment agreements, and made clear its determination to press ahead with the changes, including re-flagging its vessels to Cyprus [START_REF] Rté | Irish Ferries Rejects Labour Court Ruling[END_REF].

The dispute dramatically escalated after Irish Ferries sent security guards aboard the Isle of Inishmore, along with up to 70 East European workers. The security guards boarded the ship at Rosslare in Ireland dressed as passengers, but changed into their uniforms in the toilets as the vessel approached Pembroke Dock in Wales. Crew members seized control of the vessel, as officers and engineers followed anti-piracy routines and barricaded themselves in a control room. Irish Ferries said the new workers were there to familiarize themselves with the vessel and their roles, and that the security personnel were there to ensure the continued access of company staff and port officials (BBC News, 2005). Another vessel, the Ulysses, which was due to go from Holyhead to Dublin, was also held in dock. Within days the dispute had widened, with Dublin port workers voting to support Irish Ferries staff and refusing to handle any Irish Ferries ships. Meanwhile, on 3 December a rally was held at Pembroke Dock in support of the Isle of Inishmore crew, supported by the Wales Trades Union Congress (WTUC). At this point, crew members had already barricaded themselves aboard for nine days. On 7 December the WTUC organized a second rally, in support of the Ulysses crew at Holyhead. Some measure of the national outrage in Ireland generated by the dispute was revealed when the Irish Congress of Trade Unions (ICTU) called a national day of protest on 9 December under the theme 'A Threshold of Decency'. In a turnout that exceeded all expectations, the ICTU claimed that an estimated 80,000 to 100,000 people joined the march in Dublin to protest against 'displacement' of Irish workers, the lowering of labour standards and the exploitation of migrants. Some 50,000 to 75,000 more supporters took to the streets in protests in Cork, Galway, Limerick, Waterford, Athlone, Sligo and Rosslare harbour, in what were the largest mass demonstrations in Ireland since at least the 1970s (ICTU, 2005).

The eventual legally binding settlement of the Irish Ferries dispute was a compromise. These included the agreement for Irish Ferries to proceed with the outsourcing of labour and re-flagging to Cyprus, but the trade unions were able to claim at least a partial victory, in that the rates for the new crew were to be at Irish minimum wage levels. The terms and conditions of the remaining Irish crew were protected for at least a temporary period, and the crew members from Eastern Europe would have the right to seek trade union representation (Sheehan, 2006a). Less than a year after the dispute ended, the majority of the nearly 500 existing permanent unionized staff had been replaced by lower-cost agency crews. The Seamen's Union of Ireland (SUI) lost representation among the new workforce and the number of unionized onshore staff was also reduced by three-quarters, while Irish Ferries secured labour cost savings amounting to approximately 11.5 million euros per year [START_REF] Sheehan | Dispute Resolution at Ferry Company Curtails Union Influence[END_REF]. However, the real significance of these conflicts, and others similar to these which have taken place since EU enlargement, is that they have brought trade unions in the EU-15 face-to-face with the challenge they confront in preserving existing standards of employment in the altered context of the new Europe. In so doing they have also tested the strength of employers' commitment to the preservation of previous ordered frameworks of negotiation and social partnership agreements.

Conclusion

This article has examined the deterioration of labour standards in postcommunist society, focusing on Latvia as a 'worst case' example. In the wider context of European enlargement, migrant labour from NMSs is offering to work at wages and under conditions that potentially erode collectively bargained standards in the EU-15. While Latvia has been the focus of this analysis, neighbouring NMSs have also contributed significantly to postaccession labour migration and seem likely to do so even more in the future.

Paradoxically, the issues raised by the industrial disputes described above came into focus during the 2006 'European Year for Workers' Mobility', the objective of which was to promote the free movement of labour in the EU (Europa, 2006). As the future of the 'transitional arrangements' limiting labour inflows into the EU-15 are reviewed, the issue of regulating migration in a way that does not leave open the door to dangerous xenophobia will grow in importance. So far only the UK, Sweden and Ireland have avoided use of the 'transitional arrangements' (though four other members of the EU-15 removed their restrictions after two years). In Ireland, an opinion poll for the Irish Times conducted in the aftermath of the Irish Ferries dispute, suggested that 78 percent of voters wanted to reintroduce work permits for workers from NMSs, while 41 percent thought there are enough foreign workers in Ireland and no more should be admitted (Irish Times, 23 January 2006). Both Ireland and the UK have imposed restrictions on migration from Bulgaria and Romania following their accession in January 2007.

The Irish Ferries conflict has been only the most high profile of a number of recent disputes in Ireland involving migrant labour. Prominent trade unionists have begun to warn of Ireland being 'at the crossroads between racism and harmony' as a result of the fear and insecurity created by the exploitation of migrant workers (SIPTU, 2006). Major Irish unions such as the largest union, SIPTU, are now actively working with migrant labour by employing native Lithuanians and Latvians as union organizers, and exposing cases of gross abuse of immigrant workers. One of the positive signs on the public demonstrations in support of the Irish Ferries workers was the presence of Lithuanian, Latvian and Polish solidarity banners.

At regional Nordic-Baltic level and at pan-European level, new cooperation is also developing between organized labour in the old and new Member States. Finnish trade unions have opened an office in Tallinn to provide information to Estonian workers about their rights and opportunities. Trade unions in Ireland, UK, Sweden and Finland are now also working more closely together with their Latvian, Lithuanian and other East European counterparts. The European Trade Union Confederation (ETUC) and International Confederation of Trade Unions (ICTU) are also lending support to affiliates in the NMSs. However, positive as these developments are, without a significant intensification in international trade union cooperation and organization, the potential erosion of labour standards in the enlarged Europe is unlikely to diminish, particularly with further eastward enlargement.

What are the prospects of securing of a common floor of labour standards in line with EU Charters and norms? The case of neoliberal Latvia with the outflow of its 'pre-adapted' and 'pre-flexibilized' labour offers little ground for optimism. The troubling possibility exists that there will be no upwards 'ratcheting' of labour standards in the more neoliberal of the new market economies, as [START_REF] Sabel | Ratcheting Labor Standards: Regulation for Continuous Improvement in the Global Workplace[END_REF] advocate within the 'global workplace'. Effective enforcement of protective labour regulation is an area where both domestic and European institutions have proved rather weak, while the independent collective resistance of organized labour and its civil society allies, is compromised both by legacies of the previous regime and by over a decade of tripartite involvement in painful post-communist economic reconstruction. Thus, for their part, trade unions in Latvia have developed little countervailing capacity to confront manifold abuses of employees.

Paradoxically, it is the weakness of organized labour, and its overall inability to provide serious resistance to capital's downwards drive on labour standards, that may lead to temporary improvements for a narrow elite within the workforce, as Latvian employers attempt to retain their increasingly disaffected qualified employees. 'Management by fear' and gross exploitation may be increasingly replaced by other more 'subtle' human resource concerns. One real prospect is the further segmentation of the workforce between those workers, mainly younger, white-collar and skilled, with access to more favourable and secure working conditions, and those who lack such advantages -the overwhelming majority of the workforce -further fracturing social solidarity. For employers this is perhaps good news, but for workers' labour standards in both the new and the old Member States, rather less so.

European Journal of Industrial Relations 13(2)

Woolfson: Labour Standards and Migration in the New Europe

ACKNOWLEDGEMENTS

Jeff Sommers, Ian Fitzgerald and Nathan Lillie provided comments on various drafts. Markku Sippola kindly conducted interviews with officials of the Finnish Seafarers Union. All errors remain those of the author.


Colin C Williams

Tackling Undeclared Work in Europe: Lessons from a Study of Ukraine

Keywords: community participation, entrepreneurship, informal economy, public policy

■ This article reports a 2005-6 survey that displays the variety of undeclared work in Ukraine, involving not only an array of 'off-the-books' employees but also various types of informal self-employment as well as forms of undeclared work more akin to mutual aid. Governments pursuing a conventional deterrent approach towards undeclared work may thus eradicate precisely the entrepreneurship and active citizenship that they otherwise seek to nurture. A more nuanced approach to tackling this sphere is proposed.

Introduction

The issue of undeclared work has recently risen on the public policy agenda, not only in the EU where it is one of the top ten priorities for employment reform (European Commission, 2002, 2003a) but also in East-Central European countries such as Ukraine, where the government has stated that tackling undeclared work is its top priority (Mission of Ukraine to European Communities, 2005;NRCU, 2005). The aim of this article is to evaluate the extent and nature of such work and how it can be tackled.

First, the various shifts in perceptions of undeclared work and public policy approaches will be outlined. Throughout Europe, mirroring an earlier trend in the Third World, there has been a move away from a wholly negative depiction of such work towards a more positive representation of this sphere as a seedbed of entrepreneurship and enterprise that needs to be harnessed (European Commission, 2003a, 2003b). Until now, however, few have empirically investigated the validity of this emergent view of undeclared work.

Second, I report a 2005/6 survey of undeclared work in Ukraine which indicates that this sphere indeed plays a major role in the development of enterprise and entrepreneurship. The great majority of the self-employed surveyed in Ukraine start up their business ventures by conducting at least a portion of their transactions on an undeclared basis. However, this positive role of undeclared work should not be exaggerated. On the one hand, over a quarter of undeclared work is conducted by off-the-books employees; on the other, a further half of all undeclared work is conducted for and by relatives, friends and neighbours under work relations more akin to mutual aid than employment. This entails a need for a more nuanced policy approach towards this sphere.

At the outset, it is necessary to define what is here meant by undeclared work or what has been variously called 'informal employment', the 'underground sector', 'shadow work' and the 'hidden economy'. The term refers to the paid production and sale of goods and services that are unregistered by, or hidden from the state for tax and/or benefit purposes but which are legal in all other respects (European Commission, 1998;[START_REF] Grabiner | The Informal Economy[END_REF]ILO, 2002;[START_REF] Thomas | Informal Economic Activity[END_REF][START_REF] Williams | Informal Employment in the Advanced Economies: Implications for Work and Welfare[END_REF]. It excludes both unpaid work and work (such as drug trafficking) in which the good and/or service provided is itself illegal; though non-declaration normally breaches tax or social security legislation. This economic sphere, like most others, possesses blurred edges. For example, some definitions include work performed in exchange for gifts, and services such as prostitution which are illegal in some nations but not others. Throughout this article, only work for monetary payment is included, and solely exchanges of goods and services legal in the country under consideration.

Approaches Towards Tackling Undeclared Work

Until recently, undeclared work in advanced capitalist societies has largely been viewed in negative terms as contributing little if anything to economic and social development [START_REF] Gallin | Propositions on Trade Unions and Informal Employment in Time of Globalization[END_REF][START_REF] Grabiner | The Informal Economy[END_REF]; the conventional public policy approach has thus been to eradicate such work [START_REF] Hasseldine | More Tax Evasion Research Required in New Millennium[END_REF][START_REF] Sandford | Policies Dealing with Tax Evasion[END_REF]. Most European governments have sought to deter such working with increasingly punitive measures, increasing the penalties and coordinating strategy and action to improve detection rates. Such an approach has been supported by supranational agencies (European Commission, 1998;ILO, 2002) and many academic commentators [START_REF] Castells | World Underneath: The Origins, Dynamics and Effects of the Informal Economy[END_REF].

In the UK, for example, the Chancellor of the Exchequer commissioned a report in 1999 which concluded that deterrence was the most appropriate way forward. For Grabiner (2000: 19):

as long as people can profit by not declaring their work, it will be impossible entirely to eradicate the informal economy. Therefore, the most effective way of tackling the problem is significantly to improve the likelihood of detecting and penalizing offenders. What is needed is a strong environment of deterrence.

The outcome was a series of tougher penalties and improved detection methods. These included: increased sanctions for employers and employees, tighter controls, more severe punishments, increased cooperation and data exchange between authorities both on a national and international level, field checks, fraud hotlines and unannounced house visits to benefit claimants [START_REF] Grabiner | The Informal Economy[END_REF][START_REF] Renooy | Undeclared Work in an Enlarged Union: An Analysis of Shadow Work -An In-depth Study of Specific Items[END_REF][START_REF] Sbs | Government Response to the SBC Report on the Informal Economy[END_REF].

In the Third World, however, it has been recognized for several decades that the undeclared sector acts as 'an incubator for business potential and … transitional base for accessibility and graduation to the formal economy', and that many undeclared workers show 'real business acumen, creativity, dynamism and innovation' (ILO, 2002: 54). During the past few years, a similar view of undeclared work has started to emerge in Europe [START_REF] Renooy | Undeclared Work in an Enlarged Union: An Analysis of Shadow Work -An In-depth Study of Specific Items[END_REF]Small Business Council, 2004;[START_REF] Williams | Cash-in-Hand Work: The Underground Sector and the Hidden Economy of Favours[END_REF]Williams, , 2006a)).

For neoliberals, undeclared workers are heroes casting off the shackles of an over-burdensome state, and undeclared work is the 'essence of liberalism' [START_REF] Sauvy | Le Travail Noir et l'Economie de Demain[END_REF]. As De Soto (1989: 255) asserts, 'the real problem is not so much informality as formality'. Neoliberals view the recent growth of undeclared work as evidence of a resurgence of the free market against state regulation and union control; hence they argue for a laissezfaire approach towards such work combined with deregulation of the formal economy. With fewer regulations, the notion is that the distinction between formal and undeclared work will wither away so that the declared and undeclared spheres become inseparable; all activities would be performed in a manner now called 'undeclared', although such activity would be legitimate since it would not be breaking any rules.

In recent years in Europe, this representation of undeclared work as a site of entrepreneurship has also been taken up by a strand of socialdemocratic thought, also viewing undeclared enterprise as an asset, but only if this endeavour can be harnessed and moved into the formal economy [START_REF] Renooy | Undeclared Work in an Enlarged Union: An Analysis of Shadow Work -An In-depth Study of Specific Items[END_REF]Small Business Council, 2004;[START_REF] Williams | Cash-in-Hand Work: The Underground Sector and the Hidden Economy of Favours[END_REF]Williams, , 2006a)). If formalized, this would contribute to the development of an enterprise culture and the achievement of fuller employment. This emergent discourse finds a clear expression in the EU Employment Guideline 9 on undeclared work, first adopted in 2001. As the then Commissioner Anna Diamantopoulou put it:

Member states must increase efforts to quantify undeclared work, to cut it down and to transform it into regular employment. This is vital because of the direct link between combating undeclared work and hitting the Lisbon target of full employment by 2010 within a sound macroeconomic environment. (European Commission, 2002: 1, emphasis added) To transfer such work into the formal economy, deterrents are seen as necessary but insufficient; they need to be combined with 'enabling' initiatives. As the 2003 version of the Guideline insisted, not only is there a need for push initiatives ('sticks') in the form of 'improved law enforcement and the application of sanctions' but also a range of pull initiatives ('carrots'), namely a 'simplification of the business environment' and the provision of 'appropriate incentives in the tax and benefits system' (European Commission, 2003b). In Ukraine similarly, although the emphasis is on deterrents, such as stricter sanctions, there is also a growing focus on a limited range of incentives including the simplification of reporting systems and the registration process as well as the provision of incentives for labour to leave the undeclared sphere [START_REF] Novoseletsky | The Program to Bring Activities Out of the shadow Economy is on the Agenda[END_REF].

Whether such 'enabling' policy initiatives actually differ from the neoliberal advocacy of deregulation is questionable. Though the call is for undeclared work to be brought into the legitimate realm rather than for the formal economy to be deregulated, the initiatives advocated seem to amount to little more than a 'low road' approach that seeks to strip away formal regulations and eliminate taxes. In this article, however, the intention is to explore a 'high road' approach to legitimizing undeclared work, in the context of an appreciation of the complex character of undeclared work. Below, and to move towards outlining such an approach, one of the first studies to unpack the diverse nature of undeclared work is reported.

Undeclared Work in Ukraine

Ukraine, the second largest successor state of the former Soviet Union, displays a wide gulf between the state and society and also severe economic problems as it attempts to make the transition to a market society. As the 2004 New Europe Barometer shows, there is a widespread perception that public officials are corrupt. While two-thirds of the population in new EU member states state that most officials are corrupt, 92 percent in Ukraine believe this is the case -the highest figure in all 13 East-Central European countries studied [START_REF] Rose | Insiders and Outsiders: New Europe Barometer[END_REF]. Few Ukrainians believe in paying tax since they do not trust the state to use it for redistributive or collective purposes. Given that official employment declined by about onethird between [START_REF] Renooy | The Informal Economy: Meaning, Measurement and Social Significance[END_REF]and 1999(Cherneyshev, 2006) ) and that 73 percent of Ukrainians assert that they receive insufficient from their main income to buy what they really need [START_REF] Rose | Insiders and Outsiders: New Europe Barometer[END_REF], it would be surprising if undeclared work were not rife.

Despite many previous surveys of the Ukraine labour market, no previous attempt has been made to collect data on undeclared work. Instead, there have only been indirect measurement methods using proxy indicators. According to these, such work in Ukraine is equivalent to 47-54 percent of GDP using physical input proxies [START_REF] Schneider | Shadow Economies: Size, Causes and Consequences[END_REF] and 55-70 percent using currency demand [START_REF] Dzvinka | How Does the Unofficial Economy Interact with the Official One?[END_REF], while government estimates, based on such proxies, assert that 55 percent of Ukraine's GDP is produced in the undeclared sphere (NCRU, 2005).

OECD experts in their handbook on measurement methods (OECD, 2002) and the most recent European Commission report on undeclared work [START_REF] Renooy | Undeclared Work in an Enlarged Union: An Analysis of Shadow Work -An In-depth Study of Specific Items[END_REF], as well as a host of academic evaluations [START_REF] Thomas | Informal Economic Activity[END_REF][START_REF] Williams | Cash-in-Hand Work: The Underground Sector and the Hidden Economy of Favours[END_REF]Williams, , 2006a;;[START_REF] Williams | Informal Employment in the Advanced Economies: Implications for Work and Welfare[END_REF] have questioned the validity of such proxy measures and called for the use of direct surveys. Reflecting this, the European Commission is currently conducting a feasibility study for a Europe-wide direct survey of undeclared work (European Commission, 2005).

An initial attempt to collect data on undeclared work in Ukraine was therefore conducted, involving face-to-face structured interviews with 600 households. Given that previous studies in Europe reveal significant disparities in the level of undeclared work between affluent and deprived as well as urban and rural populations [START_REF] Leonard | Informal Economic Activity in Belfast[END_REF][START_REF] Renooy | The Informal Economy: Meaning, Measurement and Social Significance[END_REF][START_REF] Williams | The Undeclared Sector, Self-employment and Public Policy[END_REF], maximum variation sampling was used to select four contrasting localities. Two were in Kiev, the capital: Perchersk, an affluent area, heavily populated by government officials and the new business class, and Vynogardar, a deprived neighbourhood comprising dilapidated Soviet-era housing with high unemployment and widespread poverty. Also chosen were a deprived rural area near Vasilikiv, which relied heavily on a nearby refrigerator manufacturing plant for employment until this closed nearly 10 years ago and since then has suffered high unemployment, and Uz ˇhgorod, a town on the Ukrainian/Slovakia border and the capital of the Carpathian region and where inhabitants complain that inflated prices caused by crossborder trade mean that they cannot afford many goods and services.

A spatially stratified sample of 150 households was selected in each locality. Thus if there were 3000 households in the area, the researcher called at every 20th household. If there was no response or the interviewer was refused an interview, then the neighbouring household was visited. Table 1 provides a profile of the 600 respondents. Although this is a relatively small sample size and is not nationally representative, it nevertheless provides one of the first insights into the extent and nature of undeclared work in contemporary Ukraine.

Given that previous research on undeclared work elsewhere in Europe indicates that respondents find it difficult to recall instances of such work when unstructured interviews are used, and that the resultant data are often not comparable [START_REF] Leonard | Informal Economic Activity in Belfast[END_REF]Williams, 2006a), a structured interview schedule was used. Besides gathering background data on gross household income, the employment status of household members, their employment histories, ages and gender, respondents were asked about the forms of work that they most rely on to maintain their living standard, the sources of labour that the household last used to complete 25 common domestic services, and whether they had undertaken any of these 25 tasks for others (either on a paid or unpaid basis) during the past year. They were then asked open-ended questions about the forms of undeclared work that they had conducted and its relative importance to their household income and finally, using five-point Likert scaling, attitudinal questions concerning their ability to draw upon help from others and their views of the economy, politics, everyday life and their future prospects. This article focuses on the responses to the first and fourth sets of questions, reporting first the extent, and second the nature of undeclared work. The Extent of Undeclared Work

To understand the degree to which the surveyed population rely on undeclared work for their standard of living, respondents were asked to name the form of work most important to them for achieving their standard of living, along with the second most important. One in six (16.4 percent) report that they primarily rely on undeclared work (see Table 2).

A further quarter who specify some other form of work as their principal source of livelihood cite undeclared work as the second most important contributor to their standard of living. Of these, some 28 percent are primarily dependent on subsistence production, 22 percent on mutual aid, 30 percent on formal employment and 14 percent on state benefits. In total, therefore, some 40 percent of all Ukraine households cite undeclared work as either the principal or second most important contributor to their standard of living.

There are, however, socio-economic variations in the extent to which different populations rely on undeclared work (see Table 3). Contrary to the 'marginality thesis' that undeclared work is concentrated amongst such populations such as the unemployed or people in deprived areas [START_REF] Gallin | Propositions on Trade Unions and Informal Employment in Time of Globalization[END_REF][START_REF] Kim | Poverty and Informal Economy Participation: Evidence from Romania[END_REF], this survey finds that this is not the case. Just 12.5 percent of no-earner households cite undeclared work as their primary strategy compared with 23.5 percent of single-earner households and 13.9 percent of multiple-earner households. Indeed, of all households primarily reliant on undeclared work for their livelihood, some 51 percent are multipleearner households (58 percent of all households surveyed), 43 percent single-earner households (29 percent of surveyed households) and just six percent no-earner households (12 percent of surveyed households). Similarly, it is not the poorest households who primarily rely on undeclared work; there is a fairly even distribution across the income spectrum; and if anything, such work is more concentrated in the higher-income brackets. Just 12.1 percent of households relying primarily on undeclared work have a gross household income of less than 90 (UAH600) per month (these represent 12.5 percent of all households), 35 percent earn 90-210 (41 percent of all households), 23 percent 210-330 (22 percent of all households), 13 percent earn 330-450 (10 percent of all households), seven percent 450-570 (seven percent of all households) and 11 percent more than this (seven percent of all households).

In terms of geographical disparities, deprived areas are not necessarily more dependent on undeclared work. Although just 9.3 percent of households in the affluent Kiev suburb rely primarily on undeclared work compared with 18.5 percent in the deprived Kiev neighbourhood, only 11.4 percent in the deprived rural area do so and 24.4 percent in the relatively affluent border town of Uz ˇhgorod. There is thus no simple correlation between deprivation and undeclared work. This study thus reinforces the wealth of previous literature that has refuted the marginality thesis both in western nations [START_REF] Renooy | The Informal Economy: Meaning, Measurement and Social Significance[END_REF][START_REF] Williams | The Undeclared Sector, Self-employment and Public Policy[END_REF] and transition economies [START_REF] Rosser | Income Inequality and the Informal Economy in Transition Economies[END_REF][START_REF] Wallace | Economic Transformation Outside the Law: Corruption, Trust in Public Institutions and the Informal Economy in Transition Countries of Central and Eastern Europe[END_REF].

Turning to the gendered nature of undeclared work, just 37 percent of undeclared work is conducted by women, whose undeclared wage is on average 33 percent less than men's; thus undeclared work reinforces the gender inequalities in the formal labour market. In part, however, this can be explained by the fact that women are more likely to engage in undeclared work for friends, neighbours and kin, which although lower paid is not conducted purely for the purpose of financial gain. The types of task conducted are also heavily gendered, again mirroring both the formal economy and the gender division of domestic labour, with women engaged especially in personal and caring services such as child-care and domestic service, and men undertaking construction and manufacturing-oriented activities. The nature of undeclared work is further investigated below.

Forms of Undeclared Work

The widespread recognition that undeclared work is not always conducted by marginalized groups has challenged the conventional negative depiction of such work as low-paid, exploitative and positioned at the bottom of a hierarchy of types of employment. What has emerged is a segmented undeclared labour market with a hierarchy of its own [START_REF] Clarke | Making Ends Meet in Contemporary Russia: Secondary Employment, Subsidiary Agriculture and Social Networks[END_REF][START_REF] Neef | Aspects of the Informal Economy in a Transforming Country: The Case of Romania[END_REF][START_REF] Williams | Informal Employment in the Advanced Economies: Implications for Work and Welfare[END_REF]. Until now, this segmented labour market has usually been depicted as composed of undeclared employees working for businesses earning low wages and working under exploitative conditions and those working on a self-employed basis earning higher wages and with greater autonomy over their work [START_REF] Castells | World Underneath: The Origins, Dynamics and Effects of the Informal Economy[END_REF][START_REF] Williams | Informal Employment in the Advanced Economies: Implications for Work and Welfare[END_REF]. This Ukraine survey, however, indicates the need for a richer and more textured understanding of the diverse work relations involved in each of these two types of undeclared work.

Undeclared Employees

Some 28 percent of all undeclared work identified in this survey involves people working 'off-the-books' for a business, while some 25 percent of all respondents asserted that they had engaged in such work over the past year. Until now, one particular type of undeclared employee has been heavily emphasized in the literature on undeclared work, namely those marginalized populations excluded from the formal labour market and working under degrading, 'sweatshop-like' conditions, especially in the garment manufacturing sector [START_REF] Bender | Sweated Work, Weak Bodies: Anti-sweatshop Campaigns and Languages of Labor[END_REF][START_REF] Espenshade | Monitoring Sweatshops: Workers, Consumers and the Global Apparel Industry[END_REF]. Although such employees cannot be ignored and instances were identified of people being employed in wholly off-the-books sweatshops, these represent only a minor segment of all undeclared employees in Ukraine.

The typical undeclared employee in Ukraine is formally employed in a legitimate organization, but receives part of the wage cash-in-hand, as [START_REF] Neef | Aspects of the Informal Economy in a Transforming Country: The Case of Romania[END_REF] also identifies in Romania and [START_REF] Sedlenieks | Cash in an Envelope: Corruption and Tax Avoidance as an Economic Strategy in Contemporary Riga[END_REF] in Latvia. This is a practice that applies not just to lower-paid workers but across the income spectrum. Indeed, some 30 percent of formal employees interviewed were paid by their employer in such a manner. Although sometimes this cash-inhand element was for overtime, most of the time they were receiving a proportion of their core wage in this manner. Very few employees were happy with this arrangement. This was not because they had experienced problems receiving this element of their wage -none said that this was the case -but because receiving part of their wages in this manner affected their social security and pension entitlements as well as their ability to apply for visas to travel abroad and obtain credit, since their official wage was lower than their actual wage. Although such a practice is common in Ukraine, the formal procedures of institutions such as banks do not take it into formally account when making decisions on loans (even if informally they do so). As one respondent seeking a mortgage recounted, the bank informed him that he would need seven guarantors because of his 'low' wages. Getting seven people together was not a problem but as he stated:

all my work colleagues had pieces of paper with them that said they earn only 300 per month, which was not enough for the bank. However, all seven had SUV vehicles parked outside the building. We had to take the bank manager outside to show them to him and say 'this is what we really earn'. In the end they agreed to give me the loan.

Besides those formal employees receiving a portion of their wage off-thebooks, another group of undeclared employees are those working for businesses in which they do not hold a formal job. This takes many forms, as [START_REF] Clarke | Making Ends Meet in Contemporary Russia: Secondary Employment, Subsidiary Agriculture and Social Networks[END_REF] has shown in Russia. On the one hand, there are those working for wholly off-the-books businesses and on the other, and more prevalent, those working for legitimate businesses that pay a portion of their workforce on an undeclared basis. Such work was sometimes full-time but more often part-time, temporary or occasional. Some 70 percent hold a formal job and engage in such work on a temporary, part-time or occasional basis to supplement their formal wages. Many worked for construction companies, restaurants and manufacturing businesses, especially in the clothing industry.

The remaining 30 percent working off-the-books for businesses in which they do not hold a formal job are economically inactive or unemployed. Often they are early retired. Examples of the work they undertake are multifarious but include labouring in the construction industry, taxi-driving, serving on market stalls, restaurant work and staffing assembly lines in manufacturing. These tend to be the lowest-paid of all undeclared workers. One early retired man, for example, regularly worked 24-hour shifts as a security guard in the block of flats in which he lived, on a cash-in-hand basis to top up his state pension. The formally employed security guard who unofficially subcontracted this work paid him one-tenth of his salary.

The lesson from Ukraine, therefore, is that undeclared employees are distributed across the income spectrum and engage work practices as varied as those found in the formal labour market. The policy implications are discussed below.

Undeclared Self-employment

Many engage in undeclared work on a self-employed basis; indeed, these undertake some three-quarters (72 percent) of all the undeclared work identified in this survey. Breaking this down in terms of the work relations involved, some 24 percent (17 percent of all undeclared work) is conducted by the self-employed on a for-profit basis for clients previously unknown to, or only vaguely known by, them, whilst the remaining 76 percent (55 percent of all undeclared work) is undertaken as a paid favour for people previously known by them, and sometimes involves a wider range of rationales than purely financial gain, such as helping others.

Given the earlier argument that a more enabling approach is emerging towards undeclared work, not least because it is now being seen as a seedbed for entrepreneurship and enterprise, it is important here to try to identify its relative importance in this regard. How many self-employed, for example, start-up their business ventures conducting some or all of their transactions on an off-the-books basis? A previous study in Russia finds that 26.5 percent of the new self-employed work on an undeclared basis as a second job at the outset, indicating how the undeclared sphere is an incubator for new self-employed businesses [START_REF] Guariglia | The Dynamics of Moonlighting in Russia[END_REF]. This Ukraine survey provides further evidence of how many enterprises start-up (and continue to operate) in the undeclared sphere. Of all identified as engaged in self-employment (some 298 individuals in total), 65 percent did not have a licence to practise their trade on this basis. Some two-thirds of the self-employed therefore operate as 'ghosts' unregistered by the state, indicating that the tendency to start-up and continue working wholly offthe-books is widespread. These ghosts, however, represent but one segment of the self-employed working on an undeclared basis.

Of those with a licence and therefore registered as self-employed, some 85 percent reported conducting a portion of their trade on an undeclared basis. Some 90 percent of all registered self-employed interviewed, moreover, asserted that they had started-up their enterprises on a cashin-hand basis and that it was only once they became more established that some of their trade had shifted into the legitimate sphere. This has major policy implications. Given the current emphasis on new business start-ups as a route to economic development, it strongly suggests that deterring undeclared work will mean governments stamping out with one hand precisely the entrepreneurship and enterprise that with another hand they are so desperately seeking to nurture. This is not an issue for only a small proportion of business start-ups; nine in 10 entrepreneurs who had started-up a self-employed enterprise had done so on an undeclared basis and some two-thirds of these had still not even registered their enterprises, let alone declared any of their income to the state.

Despite this widespread tendency to operate wholly or partially offthe-books, most would like to legitimize their operations. Reflecting the opinion of the vast majority is a woman in her 40s who has established a successful catering business:

I would like to have my own 'legit' business. I would be very proud … People would look at me differently … but it is very difficult … Our chinnovniki [bureaucrats] want money, money and more money but I cannot afford to do that … You must pay stupid tax rates and very high rates for pensions … It simply doesn't make sense. It is a shame because it has always been my dream to be a khozyaika [enterprise owner], but it isn't to be. If I did have a 'legit' business though, I could then go to the bank and take out a loan and expand … but because I am not formal, they won't give me any money.

The undeclared sphere is therefore not only the principal seedbed for entrepreneurship and enterprise formation in Ukraine, but a vast proportion of all business ventures remain wholly within its interstices. If this large hidden enterprise culture were to be harnessed, it seems that this would allow these entrepreneurs to develop and grow their businesses, something that at present they find very difficult.

This survey reveals, however, that an enabling approach that simply attempts to transfer off-the-books work conducted on an autonomous basis into the formal economy is insufficient. This is because not all such work is conducted under a relationship akin to formal employment. A large proportion is conducted for neighbours, friends and kin under work relations more like mutual aid. Although some 'paid favours' for family, friends and neighbours are conducted solely for financial gain, the vast majority are undertaken both to make money and to help out others. For suppliers, paid favours are conducted to make a little money 'on the side' but at the same time to provide some service to people they know who would otherwise be unable to get the job done. For consumers, meanwhile, people they know are often paid for performing some task in order to redistribute money to them in a way that does not appear to be 'charity' and also to develop or cement social ties. Some 80 percent of customers, if they had not employed the person to conduct this work, would either have not had it done or would have performed it themselves. It therefore seems highly unlikely that much of this undeclared work could be turned into formal employment.

Some 55 percent of all undeclared work identified in this survey was of this variety. Indeed, 18 percent of all undeclared work was for family living outside the household, 23 percent for friends and 14 percent for neighbours. These findings parallel those of a study in England, that much undeclared work is conducted for close social relations for redistributive purposes [START_REF] Williams | Cash-in-Hand Work: The Underground Sector and the Hidden Economy of Favours[END_REF].

Of all instances where people provide favours to kin, friends and neighbours, this survey reveals that some 41 percent involved payment. To eradicate such paid favours would thus eliminate nearly half of all acts of one-to-one reciprocity in Ukraine. Some 36 percent of exchanges with relatives are paid, 56 percent of exchanges between neighbours and 46 percent of those between friends. Although some might suggest that a laissez-faire approach of benign neglect could be adopted towards such endeavour, this study suggests the need for caution. Not only would it be difficult to distinguish between these paid favours that constitute over half of all undeclared work in Ukraine, and profit-motivated undeclared work, but also there are some significant socio-economic disparities. Higher-income households give and receive some 41 percent more paid favours than the average household, whilst the lowest-income households receive and provide just one half of the paid favours of the average household. The implications are important.

Conclusions and Policy Implications

Throughout Europe in general, the industrial relations problem of tackling undeclared work has moved to the top of the public policy agenda. In Ukraine, solving this problem has been named as the top public policy objective (Mission of Ukraine to European Communities, 2005;NRCU, 2005). The aim of this article has been to advance knowledge on the nature of such work so that it can be tackled.

Although the specific national political-economic and social context of Ukraine means that this country has a larger undeclared sector than those in the EU-15, or indeed the CEE-8 [START_REF] Schneider | Shadow Economies: Size, Causes and Consequences[END_REF], and also that some types of undeclared work will be relatively more prevalent (such as formal employees receiving a proportion of their wages cash-in-hand because of a widespread perception of state corruption that results in low tax compliance), there is no reason to suppose that the multiple forms of undeclared work identified here in Ukraine do not exist in other European nations. Indeed, although not so far mapped in such detail elsewhere, this diversity is becoming increasingly apparent whenever the nature of undeclared work is unpacked in other European nations [START_REF] Clarke | Making Ends Meet in Contemporary Russia: Secondary Employment, Subsidiary Agriculture and Social Networks[END_REF][START_REF] Renooy | Undeclared Work in an Enlarged Union: An Analysis of Shadow Work -An In-depth Study of Specific Items[END_REF][START_REF] Williams | Cash-in-Hand Work: The Underground Sector and the Hidden Economy of Favours[END_REF][START_REF] Williams | The Hidden Enterprise Culture: Entrepreneurship in the Underground Economy[END_REF]. What are the public policy implications of this diverse nature of undeclared work?

Until now, a negative and narrow depiction of such work has informed the dominant public policy approach in many nations, encouraging efforts to deter participation by increasing punishments and detection rates so as to change the cost-benefit calculation of participants. In recent years, however, the recognition that the undeclared sphere may inspire entrepreneurship and enterprise has led to calls for an approach to harness rather than deter this hidden enterprise culture. This survey, although based on a relatively small sample, has provided strong support for such an approach, showing that some two-thirds of people setting up business ventures operate wholly off-the-books, not even registering as self-employed, and that the vast majority interviewed who had set up a business had started it up by conducting at least a portion of their transactions on an undeclared basis. Although such proportions are likely to be lower elsewhere in Europe because of higher levels of tax morality, this finding nonetheless reinforces the view that there is a need to shift from deterring undeclared work to facilitating its formalization both in Ukraine in particular and Europe more generally.

Nevertheless, too often such an enabling approach has taken the form of a 'low road' policy to deregulate the formal economy through regulatory simplification and tax reductions (European Commission, 2003a;Mission of Ukraine to European Communities, 2005;NCRU, 2005;[START_REF] Novoseletsky | The Program to Bring Activities Out of the shadow Economy is on the Agenda[END_REF]. Adopting an enabling approach towards enterprise and entrepreneurship in the undeclared sphere does not have to take this form. A 'high road' approach could be adopted, seeking to bring the hidden enterprise culture into the formal economy by combining push initiatives ('sticks') in the form of deterrents and more effective detection with pull initiatives ('carrots') to encourage these self-employed workers to legitimize their operations. These range from supply-side incentives (encouraging suppliers to formalize their undeclared work) including society-wide amnesties, individual-level amnesties and advisory and support services to help micro-enterprises formalize; demand-side initiatives to encourage customers to use formal rather than undeclared labour, such as voucher schemes; and initiatives to improve tax morality and elicit participation in the declared economy by replacing direct (compliance) with indirect (commitment) control methods, in order to develop a 'high commitment society' [START_REF] Williams | The Hidden Enterprise Culture: Entrepreneurship in the Underground Economy[END_REF]. Such a high road approach could also be applied to tackling undeclared employees, a form of undeclared work that until now -because of its 'sweatshop' depiction -has been subjected solely to a deterrence approach. If undeclared employees are to be tackled, however, then one starting point is to deal with the widespread perception of corruption amongst public officials. By increasing transparency in public life and moving from indirect to direct control methods, coupled with amnesties, support and advice, this widespread problem in Ukraine of employees working on an undeclared basis might start to be resolved as tax morality improves. Although the issue of state corruption is less prevalent elsewhere in Europe, it is perhaps still the case that increasing transparency about public spending and moving from indirect to direct control methods, coupled with amnesties and business support, remain necessary initiatives if tax morality is to be improved.

Even if there were a switch to such a high-road approach, this would still be insufficient for dealing with undeclared work. Since over half of all undeclared work comprises paid favours more akin to mutual aid than employment, and this is a principal means of providing one-to-one aid, this cannot be transferred into the formal economy. What, therefore, is to be done about this segment of the undeclared sphere? One option is to turn a 'blind eye' to such endeavour by adopting a laissez-faire approach. Although this might seem superficially appropriate, there are major problems with this option. First, public officials throughout Europe involved in tax collection will find it difficult to distinguish between undeclared work conducted primarily for economic gain (which they are seeking to encourage to 'go formal' using a combination of deterrents and incentives) and paid favours (which they would be asked tacitly to condone). A second important issue regarding the tacit condoning of paid favours relates to the resultant continuation of the uneven distribution of such work. At present, that is, higher-income households receive and undertake such work far more than lower-income households, as shown above.

Another option, therefore, is to seek to facilitate its legitimization but into the realm of legitimate mutual aid (rather than formal employment), using policy initiatives that also facilitate the inclusion of those currently unable to draw upon such social support networks. This could be achieved by developing mutual-exchange systems that reflect the seemingly emergent cultural tendency for payment to be made when people conduct favours for each other, such as local exchange and trading schemes (LETS), and exempting 'favours' in these systems from being counted as income for tax and social security purposes. Indeed, one recent evaluation found that some 35 percent of exchanges on LETS would have been previously undertaken on an undeclared basis if the LETS did not exist [START_REF] Williams | Bridges into Work? An Evaluation of Local Exchange and Trading Schemes (LETS)[END_REF].

The net result would be a move beyond a deterrence approach and towards one which combines deterrents with a 'high road' enabling approach that recognizes the multifarious nature of undeclared work and provides push and pull initiatives both to help the hidden enterprise culture and undeclared employees to move into the formal economy and to transfer paid favours into a realm of legitimate mutual aid. Whether or not this more enabling approach is deemed the appropriate way forward, it is now certain that a deterrence approach cannot succeed. Governments, if they persist with such an approach, will with each new initiative to deter undeclared work destroy not only the self-employment and entrepreneurial endeavour but also the active citizenship that they are seeking through other policies to nurture. The richer and more textured understanding of the diverse forms of undeclared work developed in this article demonstrates the importance of developing more complex policy solutions for the different forms of undeclared work, as well as the need to join-up policy in the realms of undeclared work, entrepreneurship and active citizenship.

TABLE 1 . Socio-economic Profile of Respondents to Ukraine Survey on Undeclared Work, 2005/06

 1

	224

Williams: Tackling Undeclared Work in Europe 225 TABLE 2. Primary and Secondary Most Important Source of Livelihood: % of All Households

				Secondary strategy
		Self-	Mutual	Un-	Employ-Benefits All
	Primary	provisioning	aid	declared	ment
	Strategy			work
	Self-	0.9	1.7	2.2	2.4	0.5	7.7
	provisioning
	Mutual aid	0.2	0.9	1.0	1.4	1.0	4.5
	Undeclared	3.4	4.1	1.5	6.0	1.4	16.4
	work
	Employment	10.3	17.5	18.4	9.5	5.7	61.4
	Pension/	2.9	4.1	1.4	0.5	1.0	9.9
	Benefits
	Source: 2005/06 Ukraine survey.

European Journal of Industrial Relations 13(2) 226 TABLE 3. Primary Sphere Relied on by Ukraine Households, 2005/6: By Type of Household

				Primary strategy
	%	Self-	Mutual Undeclared	Formal	Pension/
		provisioning	aid	work	employment benefits
	Employment status
	of household
	Multiple earner	4.7	1.5	13.9	78.6	1.1
	Single earner	8.4	4.8	23.5	56.0	7.2
	No earner:	37.5	18.8	12.5	18.8	12.5
	working age
	No earner:	5.4	3.6	5.4	10.7	75.0
	retired
	Gross Household
	Income/month
	Ͻ600	9.6	4.1	15.1	41.1	30.1
	600-1399	6.7	3.3	13.4	61.9	14.6
	1400-2199	6.6	4.1	17.3	71.1	0.8
	2200-2999	3.4	1.7	18.6	73.3	1.7
	3000-3799	10.2	2.6	15.4	69.2	2.6
	3800 ϩ	4.5	0	22.7	72.7	0
	By locality
	Kiev: affluent	4.7	2.0	9.3	72.4	11.4
	area
	Kiev: deprived	13.8	6.1	18.5	55.4	6.1
	area
	Rural area	7.4	3.3	11.4	63.8	14.1
	Border town	2.0	1.4	24.4	62.6	9.5
	Source: 2005/6 Ukraine survey.

European Journal of Industrial Relations 13(2)

ACKNOWLEDGEMENTS

The empirical data reported in this article arise from a project entitled 'Surviving Post-Socialism: Evaluating the Role of the Informal Sector in Ukraine', funded by the UK Economic and Social Research Council (RES000220985). I am indebted to Peter Rodgers for research assistance and to John Round for helping me to understand the background issues in transition economies, as well as to Richard Hyman and the anonymous reviewers of an earlier version of this article for their insightful and constructive comments.