The societal cost of managers hiring employees without registering them with the tax office runs into the billions.
Unregistered work has been a fact of life in Iceland, as it has been for most countries around the world, but the current financial situation has seen a sharp increase in the practice. Business owners hoping to reduce labour costs – and people seeking work wherever they can get it – have both contributed to this rise.
Despite the short-term gains, the hiring of unregistered workers costs Iceland about 14 billion ISK a year, according to a study compiled by the tax authority, the Confederation of Icelandic Labour Unions, and the Confederation of Icelandic Employers.
These costs are incurred on the nation treasury, municipal budgets, lost union dues, and even on the employees themselves, who more often than not are denied the benefits guaranteed by law to registered workers.
Although unregistered work occurs all over Iceland, it appears to be most common in the Westfjörds – about 18% of those employed who took part in the study were not registered – and at its lowest levels in the east, where only 8% of workers were unregistered.