A study carried out by the Expert-Group Association has revealed that almost one in four employed people (22.9%) in Moldova work informally, causing annual losses of up to 7% of the Gross Domestic Product.

According to Stas Madan, program director at Expert-Grup, this situation is due to employees seeking higher incomes, as well as employers who perceive high compliance costs and low penalties for non-compliance. Illegal work without a legal employment contract harms employees, who are deprived of protection and social insurance, as well as companies and the state, since contributions to the budget are not paid and unfair competition between companies is developed.

The situation could be remedied if the State Labor Inspectorate (ISM) regains the powers to conduct unannounced controls and apply sanctions directly in the case of undeclared and under-declared work, Madan claims. He specifies that the reform of the ISM should also include better risk analysis when planning controls, as well as the reorganization of the Inspectorate with improved governance, including new internal policies of integrity through zero tolerance for abuse and corruption.

The reform of the ISM is part of the commitments undertaken by the Republic of Moldova within the international documents it has signed, including the Association Agreement with the European Union. In the fall of 2022, the Ministry of Labor and Social Protection initiated an extensive reform of the ISM, which includes the right of the institution to carry out unannounced checks. The reform is also supported by the National Confederation of Employers, whose representatives believe that unfair competition can be combated and labor migration stopped in this way.

The reform of the state control system regarding occupational health and safety, initiated in 2016 by the Government led by Pavel Filip, as part of the strategy of efficiency and optimization of the executive subdivisions, did not produce the desired results. Authorities have been passing responsibility for investigating work accidents back and forth since April 2017, when the moratorium on checks at enterprises was launched, which took away the powers of the State Labor Inspectorate. The Labor Inspectorate has been restructured, with many of its responsibilities delegated to 10 public agencies that have not proven effective in terms of health and safety at work. In recent years, the Center for Investigative Journalism has carried out several investigations showing that dozens of fatal work accidents for several years were not investigated, and in the absence of unexpected controls, many economic agents relaxed and neglected compliance with security regulations. During this period, undeclared work has increased.