Euro Crisis Fuels Shadow Economy

When times get tough, people have more reason to hide from the bureaucrats


The informal, or shadow, economy is growing in the European Union (EU) due to the economic crisis. It ranges from eight per cent of Gross Domestic Product (GDP) in Switzerland and Austria to more than 30 per cent in some Central and Eastern European countries, such as Bulgaria, Croatia or Romania. Curtailing this "other" marketplace is a challenge for both state governments and the EU, as the transformation of undeclared work into formal work can be an important step towards the fulfilment of the EU employment targets set out in the Commission strategy "Europe 2020".

Known under a broad variety of different names such as "grey and black", "unrecorded", "illegal" or "underground", the hidden economy has as many facets and meanings as names. This recalls the French expression "system D" of "débrouillards" which depicts particularly effective and resourceful people who start doing business on their own, without registering or being monitored by the bureaucracy – a concept sculpted by the history of the former French colonies in Africa.