The aim of this report is to evaluate the extent and nature of undeclared work in Croatia and the
policy approaches and measures currently employed to tackle this sphere.
Extent and nature of undeclared work
In recent years, there have been substantial efforts to reduce undeclared work in Croatia. Faced with
significant deficits in the public budget, the government has sought effective policy responses that
would result in increased compliance. Nonetheless, it is hard to know whether these strategies are
resulting in a decrease in the prevalence of undeclared work. While some studies of the magnitude of
undeclared work suggest that it is continuing to decline in size, others suggest that the trend is in the
opposite direction.
Examining the nature of the undeclared economy, the 2013 Eurobarometer Survey on undeclared
work highlights how much undeclared work in Croatia is for and by close social relations; 57% of the
respondents who were carrying out these activities stated that the purchasers were their friends,
colleagues or acquaintances. Generally, individuals with a lower level of education are the most
susceptible for carrying out undeclared work in Croatia. Men, moreover, are almost three times more
likely to work undeclared than women. Nearly one third of people engaged in undeclared work are
manual workers, and almost every fourth undeclared worker is unemployed, while about every
seventh undeclared worker is retired. Therefore, these three groups, namely manual workers,
unemployed people and the retired, represent about 70% of all undeclared workers in Croatia. This
will be important when designing policy responses.