The shadow economy is worth 197.6 billion, 12.6 per cent more than in 2021

In 2023, the average gross hourly wage for regular workers was 17.8 euros, whilst that for irregular workers stood at 9.2 euros. This represents a difference of €8.60 for every hour worked, corresponding to a 48.3 per cent lower wage for those working in the informal sector. Overall, every hour worked in the informal sector is paid, on average, just over half the rate of an hour’s work in the formal sector. This wage differential thus compounds the lack of contractual, social security and insurance protection, and helps to create a situation in which the invisibility of the employment relationship can also result in a lower earning capacity.

The gap extends across all the main sectors of the economy, albeit to varying degrees. The Focus also contains estimates of the losses incurred by workers in the informal sector across the various sectors. In agriculture, the gap is relatively smaller: €11.3 gross per hour for workers in the formal sector compared with €8.1 for those in the informal sector, representing a loss of 28.3 per cent. In construction, the gap rises to 6.3 euros, with hourly pay falling from 16.2 to 9.9 euros and a loss of 38.9 per cent.

It is in industry in the strict sense that the widest gap in absolute terms is observed. Whilst regular employment pays a gross hourly wage of 20.2 euros, irregular employment pays an average of 9.4 euros, representing a difference of 10.8 euros and a loss of 53.5 per cent.

A similar gap can be seen in the services sector, where the hourly wage falls from 17.6 to 9.3 euros, a reduction of 47.2 per cent. Within this macro-sector, the differences are substantial. In retail, transport, hotels and the hospitality sector, the hourly wage falls from €17 for regular workers to €10.8 for irregular workers, representing a loss of 36.5 per cent. In business services, however, the gap reaches 10 euros per hour: 20.7 euros for regular employment compared with 10.7 euros for irregular employment, representing a 48.3 per cent reduction. In other services, the gap is smaller in absolute terms but remains significant: 12.9 euros compared with 8 euros per hour, equivalent to a 38 per cent loss.

Tax evasion exceeding 100 billion: one in every six euros disappears

Between 2019 and 2023, tax and social security contribution evasion stood at between 99 and 103 billion euros per year, with the main component being tax evasion – approximately 90 per cent of which relates to unpaid taxes – and is predominantly attributable to failure to declare VAT (30 billion) and failure to declare personal income tax by the self-employed and businesses (over 36 billion). The average rate of evasion as a proportion of total tax revenue stands at 17.4 per cent: in practice, for every 100 euros of expected revenue, almost 17 never reach the State.

The highest rate is recorded for personal income tax (IRPEF) paid by the self-employed and businesses, where the propensity to evade tax rises to 60.6 per cent. According to the broadest estimate, social security contribution evasion exceeds 10 billion euros, of which 9 billion euros relate to the non-payment of contributions payable by employers.

The final tally for the period between 2021 and 2023 shows a shortfall in tax and social security revenue of 313 billion euros,

Public debt has exceeded 3,000 billion euros, equivalent to 136.7 per cent of GDP. Between 2021 and 2025, the total debt increased by over 500 billion; the regular servicing of the entire debt has resulted in total interest expenditure of just under 400 billion. Between 2021 and 2023 alone, the total shortfall in tax and social security revenue reached 313 billion euros, a figure 88 billion higher than the total amount of NRRP funds allocated to Italia (225 billion comprising grants, loans and the Complementary Plan, spread over six years, 2021–2026).

According to simulations carried out by the Parliamentary Budget Office, a structural improvement in tax compliance could bring the debt-to-GDP ratio within a range of between 115.9 and 118 percentage points by 2041.

Gardini: tackling the informal economy is a priority for social cohesion

“Undeclared work is an economy that goes unseen and untaxed. It is a black hole that swallows up – causing it to vanish into thin air – wealth equivalent to the GDP of Emilia-Romagna: 197.6 billion euros, equal to 9.2 per cent of the country’s GDP. Behind these figures lies another reality – an unacceptable one: 2.7 million people working illegally, exploited and paid almost half as much as their legally employed colleagues,” commented Maurizio Gardini, president of Confcooperative.

‘The shadow economy is a force that exacerbates inequality, affecting first and foremost those who work without protection. Every euro that escapes general taxation – adds Gardini – is one euro less for healthcare, for pensions, and for the services that hold the country together: a heavy burden that weighs on public debt and future generations. Tackling the informal economy is a priority that must be addressed for the sake of Italia’s social and economic cohesion.”