Huge sums of money are involved. The criminal economy is estimated to turn over between 100 and 150 billion Swedish kronor every year (€9bn – €13.5bn).
At the same time, the socio-economic costs amount to around 50 billion kronor (€4.5bn) a year “in the form of incorrect payments, undeclared wages and the exploitation of vulnerable people” according to the Delegation against labour market crime.
Read this article in Swedish on our Arbeidsliv i Norden.
Tomas Andersson is the coordinator for labour market crime at the Swedish Economic Crime Authority.
“My task is to coordinate our efforts across our three operational areas on regional and national levels. As part of our intelligence work, we identify existing problems and the individuals who are committing crimes.
“That work is then carried forward by our investigative operations to bring the actors to justice, and in our crime prevention work, we cooperate extensively with other authorities and partners to prevent labour market crime,” he tells the Nordic Labour Journal.
New bathroom for cash no longer the main problem
Tomas Andersson has been with the police for 39 years. Since 2000, he has been fighting labour market crime and says it has become far more deliberate and systematic in the past 25 years.
It is no longer about builders renovating bathrooms without providing receipts, he says. One reason for this is ROT – a tax deduction for repairs, maintenance, reconstruction, extensions, and more – which Sweden introduced in 1993 to stimulate the construction industry.
“Today, we see that labour market crime has become a lucrative business for organised crime.”
The large scale is one challenge. Another is companies involved in labour market crime while hiding behind shiny facades. They dilute their legal operations with undeclared labour, unscrupulous procurement, false invoices and what the Swedish Economic Crime Authority focuses on: tax, accounting and financial crimes.
“Most of these cases are reported to us at the Swedish Economic Crime Authority by the Swedish Tax Agency. These are crimes that are not visible to the naked eye and therefore also a challenge,” says Tomas Andersson.
Detecting companies that cheat is another major challenge for the Economic Crime Authority’s intelligence operations. It is a challenge that motivates Tomas Andersson.
“When you begin to understand the enormous sums of money and the level of planning behind these crimes, you become motivated to go to work to stop the flow of funds that should have gone to welfare but instead end up in the pockets of criminal actors.”
By breaking labour market regulations, criminal actors can make substantial profits with low risk. Labour market crime is considerably more lucrative and less risky than, for example, drug or weapons offences, he says.
Improved procurement procedures are key
Links between labour market crime and organised crime are now evident, with procurement being a main arena for unscrupulous companies.
“There are municipalities and private companies that have good procurement procedures, but the overall knowledge and consistency need to improve.
“However, those who are responsible for procurement agree that it is a struggle to protect themselves. Major construction firms, for instance, want to keep criminals away to avoid being associated with them.
“They are careful to protect their brand and want healthy industries and a sound working environment,” says Tomas Andersson.
Part of the preventive work carried out by the Swedish Economic Crime Authority is to raise awareness of how to prevent labour market crime through procurement procedures.
The Nordic Labour Journal has also spoken to Sara Persson, a crime prevention specialist at the Economic Crime Authority.
“The smarter the criminals become, the more we need to refine our methods. When we identify gaps in legislation and in various administrative systems, we try to close them and improve our methods to become faster at catching up,” she says.
The importance of contracts
Sara Persson has been focusing on economic crime in the welfare sector, and right now she is looking at companies involved in HVB – Homes for care or residence. The police have warned that this sector is being infiltrated by criminal networks.
This type of crime could be reduced if municipalities that procure services designed their contracts differently, allocated more resources to monitor them and followed them up correctly, believes Sara Persson.
“There are three concrete pieces of advice that I have taken from municipalities that have been successful with the way they’ve drafted their contracts.
“One is that conditions set in connection with the procurement, such as requirements regarding the suitability of representatives and staff, should apply throughout the entire contract period.
“The second is that municipalities should include in the contracts the right to verify who is employed during the contract period. The third is that the municipality has the right to terminate the contract if the contracting party does not cooperate or hinders the monitoring of the operation.”
Sara Persson points out that the procurement legislation is vaguely worded, providing both some flexibility and some limitations. There is also no common system for how to share good practice.
“This makes it particularly difficult for smaller municipalities to challenge the legislation and make use of the flexibility that exists for how it can be interpreted.
“In a review process, which often occurs when municipalities try to interpret the flexibility more proactively, they cannot award a contract to anyone and are then left without a supplier.”
Sara Persson also wants to see a common system where municipalities can access legal information, such as decisions from the Work Environment Authority, other government agencies or other municipalities that have taken contractual action against companies that have misbehaved.
“Today’s information sharing happens mainly through the media. This is a major problem. If a municipality wants to find out if an actor has breached a contract somewhere else in the country, someone has to make calls to other municipalities to get that information. Not many municipalities have the resources to do this.”
Given the scale and complexity that labour market crime has now reached, there is a need for multiple measures from many directions. Or as Sara Persson puts it:
“One single thing rarely solves the problem. You need knowledge, cooperation, resources, technical solutions and legal changes to address complex issues.”
Coordination
The Swedish government did make one decision in this regard back in 2018, when the Work Environment Agency was tasked with coordinating the work of nine agencies addressing the growing issue of labour market crime.
“The crimes feed into each other. If you cheat on work environment regulations, you might also be cheating on work permits. That is why each agency needs to contribute its resources and expertise,” Åsa Wallin, Head of Unit at the Work Environment Authority, tells the Nordic Labour Journal.
The agencies coordinated by the Work Environment agency are:
- The Prosecution Authority
- The Swedish Tax Agency
- The Gender Equality Agency
- The Public Employment Service
- The Swedish Migration Agency
- The Police Authority
- The Economic Crime Authority
- The Swedish Social Insurance Agency
Since 2018, the agencies have jointly carried out over 18,000 inspections in sectors that are considered particularly vulnerable: construction, transport, restaurants, beauty services and car care.
The inspections have uncovered undeclared labour, hazardous working conditions, exploitation of people, benefit fraud and other serious economic crime, the agencies pointed out in an opinion piece published in Aftonbladet on 27 August this year.
One way the agencies cooperate is through regular meetings between their communications officers, where everyone can contribute with input and feedback, explains Åsa Wallin.
“We also have regional labour market crime centres in Umeå, Malmö, Stockholm, Uppsala, Norrköping, Örebro and Gothenburg, where the agencies work based on the situation in the local area.”
The agencies also run an information campaign to raise awareness of labour market crime and reduce demand for unscrupulous actors. The campaign is spread through digital platforms like Facebook, Instagram, TikTok and YouTube as well as in printed media like Dagens Nyheter, Svenska Dagbladet and Mitt I.
“If a price seems too good to be true, you as a consumer need to react. Ask if the company has an F-tax certificate [F stands for företag, business in Swedish] and a collective agreement, or ask for a receipt,” says Åsa Wallin.
The information campaign’s impact will be assessed based on the number of clicks, shares and comments it creates in social media.
“Often, those who comment start a dialogue, showing how we as citizens can help each other reduce labour market crime.”
Cross-border cooperation
The Nordic countries will meet in October at an economic crime conference to, as Tomas Andersson puts it, discuss shared sorrows and successes. The main body of information is provided by Europol, he notes.
“Extensive labour market crime is international and exists in large parts of Europe. The information we share should therefore be accessible to other European countries.
“Criminals make a lot of money from exploiting workers and breaking labour regulations. Labour market crime is a threat to fair competition and the financing of welfare, and this is something we have to fight together.”
