Abstract
The size of the shadow economy and the levels of corruption in Greece have been and still are particularly high with respect to other developed OECD countries. Moreover, the political dimensions of the Greek crisis reflected by the phenomena of clientelism and rent-seeking, which are held responsible for the shortcomings of public administration suggest a correlation between the size of the informal economy and the levels of corruption. Policies targeting the informal may lead to alternate sources of government revenues that would lessen the requirement of fiscal austerity and provide relief from the current economic depression. The negative impact of the informal economy on the tourism sector leads to a halt of the development of the tourism industry as a result of the uncontrolled activities in the informal economy. Many countries, especially developing nations, gradually have become more dependent on tourism as a major source of investment and revenue. Given this dependence and the expected continued growth of the Greek tourism industry, the challenge is to undertake incentive oriented policy measures as to reduce the informal economy and to have underground economic activity transformed into the official one.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
All values are in constant 2017 prices and exchange rates.
- 2.
Although a number of scholars exclude activities like money laundering from the informal economy filed.
- 3.
GDP from Services in Greece increased to 9663.65 million euros in the second quarter of 2017 from 7545.09 million euros in the first quarter of 2017. GDP from Services in Greece averaged 10,937.84 million euros from 1995 until 2017, reaching an all-time high of 17,098.90 million euros in the third quarter of 2008 and a record low of 6942.63 million euros in the first quarter of 1995. Labour costs in Greece increased to 89.50 Index Points in the second quarter of 2017 from 88.80 Index Points in the first quarter of 2017. Labour costs in Greece averaged 80.38 Index Points from 1995 until 2017, reaching an all-time high of 107.40 Index Points in the fourth quarter of 2009 and a record low of 48.50 Index Points in the first quarter of 1995.
- 4.
Greece unemployed persons rose to 965.98 thousand in July 2017 from 960.96 thousand in June 2017. Greece Employed Persons rose to 3843.19 thousand in July 2017 from 3834.81 thousand in June 2017.
- 5.
This is directly related to the burden of social security contributions as regulations lead to an increase in labor costs in the formal sector which in turn leads to an increase in unemployment (as occurs in many OECD countries). All of the above provide an incentive for workers to be used in the shadow economy, especially when labor costs are passed on to the same.
- 6.
Of course, according to Eurostat the percentage change in real labor cost per unit were −2.9% in 2011, −7.4% in 2012 and −1.1% in 2013. This decrease reflects the significant decline in turnover in almost all sectors of the Greek economy and the existence of significant employment rate in informal or unofficial forms of employment. There was also a reduction in the average gross earnings in the whole economy by 4.6% in 2010, 1.7% in 2011, 6.6% in 2012 and 7.7% in 2013 as the efforts made by the government under the agreed memorandum for the country’s exit from the crisis intensify.
- 7.
By other payment instruments at POS we refer to the use of cheques, direct debit, credit transfers and mobile payments, among others. We have grouped them into one category given their relatively small market share compared with cash and cards. The use of virtual currencies was not within the scope of this study.
- 8.
Because of the introduction of capital controls in Greece in 2015, it is difficult to compare the relevant payment statistics data with the survey results. In terms of value of payments made at POS, in all countries the share of cash was much lower than in terms of number of payments.
- 9.
See L. 446/2016 (A 240) on the obligation for accepting card payments. According to a 2016 survey of Public Issue Agency on behalf of the Hellenic Confederation of Commerce and Entrepreneurship (ESEE) 68% of Greeks use frequently plastic money: 61% use debit cards, 21% use credit cards and 6% prepaid cards.
- 10.
Cashback is a transaction in which a card-holder asks a retailer to add an amount to the total purchase paid by debit or credit card in order to receive that amount in cash along with the purchase. In 2016 cashback was offered in Belgium, Germany, Estonia, Ireland, Greece, Lithuania, the Netherlands, Austria, Portugal, Slovakia and Finland. In some of these countries it is offered only on a very limited scale.
- 11.
The first is undeclared work, which accounts for roughly two-thirds of the shadow economy. It includes wages that workers and businesses do not declare to the government to avoid taxes or documentation. Undeclared work is widespread in construction, agriculture, and household services (such as cleaning, babysitting, elderly care, and tutoring). The other one-third comes from underreporting, which is when businesses—primarily those that deal heavily in cash, such as small shops, bars, and taxis—report only part of their income to avoid some of the tax burden.
- 12.
Data from OECD (2015) and the World Bank (2015) (“average personal income tax and social security contribution rates on gross labor income for the average wage earner” while “total business tax rate as a percentage of commercial profits”) reveal that, although the tax burden in Greece has increased since 2010 (when the first bailout occurred), it is still lower than that of the eurozone’s core countries such as France and Germany.
- 13.
Katsios, Stavros (2006) “The shadow economy and corruption in Greece.” South-Eastern Europe Journal of Economics 1.2006: 61–80.
References
Alm, J., & Torgler, B. (2011). Do ethics matter? Tax compliance and morality. Journal of Business Ethics, 101(4), 635–651.
Armbrecht, J., & Carlback, M. (2011). The shadow economy: Its effects on the competition in the Swedish restaurant industry. In R. Andriotis, A. Theocharous, & F. Kotsi (Eds.), Proceedings of the International Conference on Tourism (ICOT 2011): Tourism in the era of uncertainty (pp. 28–47). Greece: International Association for Tourism Policy.
Ballas, A., & Tsoukas, H. (1998). Consequences of distrust: The vicious circle of tax evasion in Greece. Journal of Accounting, Ethics & Public Policy, 1(4), 572–596.
Bank of Greece. (2016). Retrieved from https://www.bankofgreece.gr
Buehn, A., & Schneider, F. (2011). Corruption and the shadow economy: Like oil and vinegar, like water and fire? International Tax and Public Finance, 19(1), 172–194.
Das, J., & DiRienzo, C. (2010). Tourism competitiveness and corruption: A cross-country analysis. Tourism Economics, 16(3), 477–492.
Dell’Anno, R., Gómez-Antonio, M., & Pardo, A. (2006). The shadow economy in three Mediterranean countries: France, Spain and Greece. A MIMIC approach. Empirical Economics, 33(1), 51–84.
Din, B. H., et al. (2016). Are shadow economy and tourism related? International evidence. Procedia Economics and Finance, 35, 173–178.
Dreher, A., Kotsogiannis, C., & McCorriston, S. (2009). How do institutions affect corruption and the shadow economy? International Tax and Public Finance, 16(6), 773–796.
ECB – European Central Bank. (2017). The use of cash, cards and other payment instruments used at points of sale (POS) by euro area consumers in 2016. ECB Occasional Papers No 201. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op201.en.pdf
Echazu, L., & Pinaki, B. (2008). Corruption, centralization, and the shadow economy. Southern Economic Journal, 75(2), 524–537.
Eurostat. (2017). Retrieved from http://ec.europa.eu/eurostat/statistics-explained/index.php/Europe_2020_indicators_-_Greece
Haler, D., & Shore, C. (2005). Introduction-sharp practice: Anthropology and the study of corruption. In D. Haler & C. Shore (Eds.), Corruption – Anthropological perspectives. London: Pluto Press.
IAW. (2017). Institute for Applied Economic Research, University of Tübingen, Germany.
Kaplanoglou, G., & Rapanos, V. (2013). Tax and trust: The fiscal crisis in Greece. South European Society and Politics, 18(3), 283–304.
Katsios, S. (2006). The shadow economy and corruption in Greece. South-Eastern Europe Journal of Economics, 1, 61–80.
Kaufmann, D., & Kraay, A. (2002). Growth without governance. Economia, 3(1), 169–229 Retrieved from http://www.worldbank.org/wbi/governance/pubs/growthgov.htm
Kehoe, W. J. (1998). The environment of ethics in global business. Journal of Business and Behavioral Science, 2, 47–56.
Kesar, O., & Čuić, K. (2017). Shadow economy in Tourism: Some conceptual considerations from Croatia. Zagreb International Review of Economics and Business, 20(2), 65–86.
Lambsdorff, J. G. (2003). KYKLOS, Vol. 56–2003, Fasc. 4, pp. 457–474.
Moyo, B., & Ziramba, E. (2013). The impact of crime on inbound tourism to South Africa. African Security Review, 22(1), 4–18.
National Statistical Service of Greece. (2017). Retrieved from https://tradingeconomics.com and https://statistics.gr
OECD. (2012). Retrieved from http://www.oecd.org/tax/forum-on-tax-administration/publications-and-products/49428209.pdf
OECD. (2015). Retrieved from http://stats.oecd.org/
OECD. (2017). Retrieved from https://www.oecd.org/tax/administration/shining-light-on-the-shadow-economy-opportunities-and-threats.htm
Raustiala, K., & Slaughter, A.-M. (2002). International law, international relations and compliance. In W. Carlnaes, T. Risse, & B. Simmons (Eds.), The handbook of international relations (p. 539) (Princeton Law & Public Affairs Paper No. 02-2). London: Sage.
Schneider, F. (2009). Size and development of the shadow economy in Germany, Austria and other OECD countries: Some preliminary findings. Revue Economique, 60, 1079–1116.
Schneider, F. (2013). Size and development of the shadow economy of 31 European and 5 other OECD countries from 2003 to 2013: A further decline. Johannes Kepler University, Linz.
Schneider, F. (2015). Size and development of the shadow economy of 31 European and 5 other OECD countries from 2003 to 2015: Different developments. Journal of Self-Governance and Management Economics, 3(4/2015), 7–29.
Schneider, F., & Buehn, A. (2012). Shadow economies in highly developed OECD countries: What are the driving forces? (IZA Discussion Paper no. 6891).
Schneider, F., Buehn, A., & Montenegro, C. E. (2011). Shadow economies all over the world: New estimates for 162 countries from 1999 to 2007. In F. Schneider (Ed.), Handbook on the shadow economy (pp. 9–77). Cheltenham: Edward Elgar.
Schneider, F., & Enste, D. H. (2000). Shadow economies: Size, causes, and consequences. Journal of Economic Literature, XXXVIII(March 2000), 77–114.
Schneider, F., & Enste, D. H. (2013). The shadow economy: An international survey. Cambridge: Cambridge University Press.
Singh, A., Sonali, J.-C., & Adil, M. (2012). Inclusive growth, institutions, and the underground economy (IMF Working Paper No. WP/12/47). Washington, DC: International Monetary Fund.
Tanzi, V. (1998). Corruption around the world: Causes, consequences, scope and cures (IMF staff papers).
Transparency International. (2018). Retrieved from https://www.transparency.org/country/GRC
UNCTAD Secretariat. (2013). Retrieved from http://unctad.org/en/PublicationsLibrary/tdr2013_en.pdf
UNEP. (2013). United Nations Environment Program. Retrieved from http://web.unep.org/
Vousinas, G. (2017). Shadow economy and tax evasion. The Achilles heel of Greek economy. Determinants, effects and policy proposals. Journal of Money Laundering Control, 20(4), 386–404.
Webb, D., et al. (2013). Self-determination theory and consumer behavioral change: Evidence from a household energy-saving behavior study. Journal of Environmental Psychology, 35, 59–66.
World Bank Annual Report. (2008). p. 23. Retrieved from http://siteresources.worldbank.org/EXTANNREP2K8/Resources/YR00_Year_in_Review_English.pdf
World Bank. (2015). Retrieved from http://data.worldbank.org/indicator/IC.TAX.TOTL.CP.ZS?page=1
WTTC. (2018). The economic impact of travel and tourism.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2019 Springer Nature Switzerland AG
About this chapter
Cite this chapter
Katsios, S. (2019). Tourism in ‘Yellow Times’: The De-formalisation of the Greek Economy and Its Impact on Tourism. In: Papathanassis, A., Katsios, S., Dinu, N.R. (eds) Yellow Tourism. Tourism, Hospitality & Event Management. Springer, Cham. https://doi.org/10.1007/978-3-319-94664-1_13
Download citation
DOI: https://doi.org/10.1007/978-3-319-94664-1_13
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-94663-4
Online ISBN: 978-3-319-94664-1
eBook Packages: Business and ManagementBusiness and Management (R0)