Helsinki (26.04.2012- Heikki Jokinen) The tax base was narrowed in 2010 by as much as 675 million euro due to the shortcomings in asserting control over the foreign labour force in Finland. In real terms this meant an actual loss in tax revenues of approximately 100 - 150 million euro.
The figures are from a recent report on the efficacy of regulations concerning foreign labour in Finland. It is written by a senior researcher into the black economy, Mr. Markku Hirvonen, and commissioned by the National Police Board.
The report reveals that at least 31,000 foreign workers - and this is a conservative estimate - arrived in Finland to work for foreign companies. Some 24,000 of these employees were not registered with the Finnish Tax Administration.
A full one third of the 6,500 companies that have the Finnish Business Identity Code 2006 - 2010 remain outside the Tax Administration registers. In the year 2008 the Tax Administration register included 331 construction companies from Estonia. Only a third of these saw fit to file tax reports within a year of registering and only half of those registered actually paid any taxes or employers fees.
Markku Hirvonen takes the Olkiluoto nuclear power plant construction site as an example. He calls the site the highest security control workplace in Finland and yet in 2006 - 2011 there were 304 foreign companies working there without any tax registration in Finland. When comparing the entry permissions to the site against all tax information available it was found that in 2010 the tax information supplied by almost 600 registered and more than 200 non-registered companies, was either incomplete or insufficient.
Another problem is that far too many foreign companies do not always abide by Finnish labour law or adhere to collective agreements. According to the reports of the inspectors from the occupational safety and health administration it could reasonably be said that the minimum conditions of employment in respect of foreign employees working for foreign companies were not fulfilled in 34 to 53 per cent of inspected work places, depending on region.
The pattern seems to be that wages or salaries are paid according to the lowest scale of collective agreement even when the work belongs to a higher salary scale. More often than not overtime is not registered or compensated. Also salaries below collective agreement minimums tend to be the norm.
Control and legislation is split among too many ministries resulting in a poorly coordinated and ineffective working system, Markku Hirvonen says by way of summing up. Finland has in practice two labour and subcontractor markets. "As a result there are thousands of foreign registered, practically tax-free companies, which with their tens of thousands of underpaid and tax avoiding employees enjoy a very real and serious competitive advantage over those companies and their employees who follow the law."
Read also:
- Grey economy issues now receiving much attention (29.11.2010)