Increasing undeclared work in Austria: a shadow over the economy!

Increasing undeclared work in Austria: a shadow over the economy!

In Austria, undeclared work increases due to a persistent recession that is accompanied by high inflation and increasing unemployment. According to the economist Friedrich Schneider, the volume of the shadow economy in 2025 is estimated at around 40.7 billion euros, which corresponds to 8.1 percent of the official economic output. This increase of 6.5 percent compared to the previous year is a clear signal for the economic challenges with which many citizens are faced. The nominal shadow economy also increased by 14.9 percent in 2024, which corresponds to 38.23 billion euros and represents 7.8 percent of gross domestic product (GDP). One of the causes of this increase is the abolition of the cold progression, which could help at short notice, but has negative potential in the long term.

The government's austerity measures could also increase the tendency to work, as many people try to compensate for loss of income. Compared to other EU countries, Austria has the second-rings underscent of undershot, only Luxembourg has a lower proportion. The shadow economy in Bulgaria, Romania and Croatia, on the other hand, reaches a third of the respective GDP, which illustrates the problem in these countries.

distribution of undeclared work

The majority of the shadow economy in Austria comes from the construction industry and the craft businesses, which make up about 39 percent. In addition, 17 percent of the undeclared work is eliminated on other commercial enterprises and household services. The existing structures seem to enable the population to get involved in a sideline, with two thirds of the undeclared work being done by "sidelines". At the same time, the state loses between 2 and 3.5 billion euros annually to taxes and social security contributions.

A positive aspect could be that 85 percent of the "black" money earned will be spent in the official economy again immediately. Nevertheless, the development causes higher costs for health insurance companies that have to pay due to additional accidents and incapacity to work. The prevailing insight is that the income from undeclared work serves as a buffer against the negatives of the recession and compensates for loss of income.

measures to combat undeclared work

In order to actively act against increasing undeclared work, Schneider suggests the reintroduction of the craftsman bonus of 2,000 euros per household and year as well as a reduction in non -wage costs. These measures could help stabilize the numbers and stop the illegal work. The situation is further tightened by a low economic growth of only 0.35 percent and a high inflation of 6.6 percent, which also increases the increase in the shadow economy.

for 2023 was a sales with undeclared work of around 34.5 billion euros, which represents an increase of 1.25 billion euros compared to the previous year. This clearly shows that the development of undeclared work should be a significant part of the economic discussion in Austria.