Spain’s Black Market Economy Is Worth 20% of Its GDP
One million Spanish people have jobs in the underground economy.
Spain’s illicit economy–all that is unaccounted for because it’s illegal or unreported–is worth an unseemly 20% of the country’s GDP, according to a new report by Spain’s Foundation for Financial Studies (FEF). That’s higher than every other country in the European Union except Italy, with 21%.
Illicit activity, while technically illegal, doesn’t necessarily mean drug-related or violent. Much of Spain’s unreported business is due to labor law and tax circumvention, which varies widely from industry to industry. Some sectors are relatively clean, like Spain’s financial industry, where the rate of illegal activity is believed to hover below 10%; others are ridden with messy, unreported business, like the country’s construction industry–Spain’s most flagrant offender–whose rate clocks in at 35%.
The effects of such a massive, underground economy are substantial–for example, more than a million Spaniards are believed to be employed by the country’s unreported economy, and thus, unemployed by the country’s official economy. Spain’s unemployment has ballooned since the onset of the euro zone crisis, but many of those reportedly unemployed may simply be earning their money informally. As much as $26 billion dollars in taxes are also being withheld from tax authorities–money that the government especially needs now amidst an acute financial squeeze.
Read @ The Atlantic