At the forefront of the fight against the grey economy

Subduing the grey economy is our joint task that requires close cooperation in the development of services and automation. The purpose is to reduce the burden on public administration and to facilitate continuous monitoring in procurement and competitive tendering. Hansel promotes healthy competition by utilising the expertise of the Tax Administration’s Grey Economy Information Unit, for instance.

“The grey economy” refers to business for which no statutory payments, such as taxes, withholding tax or social security contributions are made. It is most common in labour-intensive industries, such as the construction, cleaning, or accommodation and restaurant sectors. Besides failing to make a payment, an enterprise may have neglected its obligation on registration or insurance, or to declare some business activities.

Section 171 Right to obtain information

The new Act on Public Contracts includes a section according to which procurement units have the right to obtain information on discretionary grounds for exclusion, especially in relation to the payment of taxes and social security contributions by businesses. Tax Administration’s Grey Economy Information Unit provides this information to procurement units, at the corporate level.

However, the Act is not quite complete. For example, situations may emerge where Hansel does not have the right to examine the backgrounds of individuals exercising decision-making power at enterprises, although deciding on discretionary grounds for exclusion would require this.

This is also a question of privacy protection. Whenever information is extracted, it must be possible to prove afterwards who needs such information and why. For this reason, information must be retrieved along secure channels. Hansel is developing for the procurement system a connection to reports produced by the Grey Economy Information Unit in the eNest project; more about this in the section on development projects.

For an important cause

Every year, an estimated €4-6 billion in taxes and other public fees, or approximately 10% of the Finnish budget, remain unpaid. Grey economy operators distort competition in their respective industries, so others have to work more because of such stowaways. That is why these operators must be removed from the marketplace.

Cooperation with the Tax Administration’s Grey Economy Information Unit is a great example of development work where customer needs are listened to attentively and the systems are made to facilitate daily work.

Exemplary framework suppliers

In September 2016, the Tax Administration’s Grey Economy Information Unit did a study of Hansel’s framework suppliers by means of customer classification. The supplier base of 393 organisations is managed in a first-rate manner, and the obligations of the framework suppliers is ensured in an exemplary way, with the exception of individual cases. Thanks to amendments made to the Act on Public Contracts, Hansel is now better able to deal with problems and determine the companies in these individual cases.

Read the report on Hansel’s contract suppliers (in Finnish)