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