Estonian institute: Number of recipients of envelope wages up to 13%

According to the freshly published results of a study on shadow economy conducted by the Estonian Institute of Economic Research (EKI), in 2017, the number of recipients of envelope wages in Estonia showed an on-year increase from 8% to 13%.

Janek Leis, head of the Information Department at the Estonian Tax and Customs Board (MTA), said that it is positive that the share of those earners who do not support envelope wages has increased. Compared to the previous study, the share of those who do not support it increased from 62% to 70%.

"The study supports the assessment based on the MTA's control activity that the amount of people receiving fully illegal salaries is decreasing, but the number of people receiving partial envelope wages has increased,"Leis said.

Results indicate that pressure for the payment of envelope wages has come first and foremost from employers, which can be interpreted with strong wage pressure. "Even though there are more people who receive partial envelope wages, it is nevertheless positive that the sums received illegally have decreased," the MTA official noted. "Therefore, envelope wages are being paid in smaller sums, and a larger share of income is being earned honestly."

Consumption of illegal alcohol, tobacco products continues

The consumption of illegal alcohol has remained on the same level, but the number of people who occasionally consume illicit cigarettes has increased.

According to the study, 5% of residents knowingly consumed illegal alcoholic beverages. In 2016, in comparison, altogether 3% of alcohol consumers consumed illicit alcohol knowingly.

"The consumption of illicit alcohol continues to be rather unpopular, but we nevertheless see dangers in the resale of alcohol purchased from Latvia," Leis commented. "At the same time, MTA inspectors have detected no significant amounts of Latvian alcohol at food and entertainment establishments so far."

In 2016, 16% of smokers knowingly purchased illicit cigarettes, while the indicator stood at 26% in 2017. According to Leis, the price difference between illegal and legal cigarettes decreased at the time, however, from which it can be concluded that even though the favouring of illicit cigarettes has increased, their availability has worsened. "One of the reasons here is definitely also the successful monitoring activity of the MTA and increased detection capacity thanks to the addition of X-ray equipment,"Leis said.

The shadow economy study is based on the results of an survey of 1,074 adults between the ages of 18-74 at the end of 2017. EKI has conducted studies concerning the consumption of illegal alcohol and cigarettes and the payment of envelope wages since 1998.
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