AmCham Macedonia Winter 2018 (Issue 56) - Page 11

COVER STORY Winter 2018 / Issue 56 Grey Economy in the Construction Industry The construction industry is the main player in infrastructural development. Thus, construc- tion is indispensable in order to achieve the main development targets such as urbanization, industrialization, export, and sus- tainable economic development. The construction industry has a remarkable impact on the GDP of a country and the creation of sus- tainable employment. It is no coin- cidence that the largest number of approved loans by the World Bank and the European Bank for Reconstruction and Development are for investment in capital infra- structure projects. Having in mind the power of this sector in contributing to the increase of the welfare of a nation, the construction sec- tor needs to be protected from negative impacts that affect its development. In this sense, the construction industry faces a comprehensive challenge to, ,on one hand, remain a leader in the development philosophy of the country, especially in develop- ing countries, while on the other acknowledging that the achieve- ment of this goal does not depend only on their ability to successfully complete the undertaken work, but also on the country’s fight against the grey economy. Generally, the suppression of the grey economy is an essence a legitimization of the country’s legal environment. On the other hand, the failure to solve the problem of the grey economy as an incuba- tor of economic crises will result in the reduction of GDP on a global level and increase poverty among the vulnerable economic groups. Marija Sekeroska, Senior Legal Assistant & Corporate Secretary of the Management Board, Granit AD Skopje In that respect the grey economy, if improperly treated or if tolerated, can lead to the degradation of the construction sector. In this sector, the grey economy is manifested mostly in the tolerance of illegal work- ers, tax avoidance, unfair competition, selective application of the bind- ing legal regulations, use of poor quality materials, and employment of unskilled labor. The fact that the problem persists indicates inadequate control, and points to a lack of qualified control staff, accompanied by corruption, unclear jurisdiction, political protection, and inadequate penal policies. One of the ways to suppress the grey economy is to create favorable conditions for fair competition by regulating and finalizing the legislation to eliminate inconsistencies and contradictions in the laws so they could be applied equally to all. The current situation in the field is revealed through research data from the State Statistical Office, which shows that 9.4% of the total number of legal entities in Macedonia registered as construction companies don’t have any employees. Expressed in numbers, this is a total of 446 companies. The construction sector requires a large workforce to be able to execute construction projects but according to data from the State Statistical Office database, only 10 construction companies have more than 250 employees, which is only 0.2% of construction companies. AmCham Macedonia Magazine 11