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It was estimated that the Underground Economy in the Basque Country represented 8.7% of GDP in 2020

Construction and the Trade, Hospitality and Transport sector were the sectors with the highest percentages of underground value added

The Gross Value Added (GVA) generated by the underground economy was valued at 6,214 million euros in the Basque Country in 2020, equivalent to 8.7% of GDP for that year, according to Eustat estimates. This is the first time that the statistical operation Measurement of the non-observed economy has been prepared and it is based on the economic accounts approach.

Underground activities are those activities that are productive and legal but deliberately concealed (partially or fully) from the public authorities, usually to avoid paying taxes or social security contributions. This data, included in the accounts system prepared by Eustat in their Annual Economic Accounts, has been prepared according to Eurostat's methodology and the System of National Accounts (United Nations, 2008). Underground activities are one of the areas that form part of the Non-Observed Economy (NOE), together with illegal activities, informal production and production by households for their own final use.

By sector, the largest estimated underground economy was in the Construction sector, where it was estimated to account for 23.9% of its activity in 2020. It was followed by the sector comprising Trade (including vehicle repair), Hospitality and Transport, which generated 17.1% of its wealth covertly; in Property Activities, the underground economy contributed 14.7% of the total GVA generated; in Other Services Activities, 14.1% of the sector, and in Professional Activities, 10.1%.

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In the other sectors, underground activities made a far more moderate contribution, as was the case in Information & Communications, with 5.7%, Industry and Energy, with 4.9%, and the Primary sector, with 2.6%. Lastly, in the part of the market containing the Education, Health and Social Services sectors, it was estimated at 2.2%.

In relation to the total value of the underground economy, the Services sector made the greatest contribution with 74.1%. Of particular note within the Services sector was “Trade, Hospitality and Transport”, with 32.9%, and in second place, albeit at some distance, was “Property Activities”, with 19.4%. A more modest performance was seen in “Professional Activities”, with 9.9%, and “Other Services Activities” (which include recreational and cultural services, repair of computers and other articles, as well as activities related to washing and cleaning services, hairdressing and other beauty treatments), with 5.3%. Next were private sector activities related to education, health and social services, with 4.3%.

By contrast, in 2020, the services sectors with the least weight in the estimate for this part of the non-observed economy were “Information & Communications” (1.9%) and “Financial and Insurance Activities” (0.4%).

graf0020843_02_i.png

With regard to the other major sectors, the “Construction” sector stood out, accounting for 13.9% of the total underground economy, as did “Industry and Energy”, with 11.8%. Finally, standing below 1% was the “Primary Sector”, with 0.2%.

Note:

The Methodology of the European System of Accounts (ESA 2010) states that the measurement of GDP should include the “observed economy” (OE), which is the production space directly reported by statistics through economic censuses and/or annual surveys, and the “non-observed economy” (NOE), which is the production space that is not directly captured by traditional economic statistical sources such as those described above, and which in practical terms will require adjustments to be made.

Following the tabular approach defined by Eurostat, the Non-Observed Economy distinguishes seven components (N1 to N7), which can be broadly classified into four categories referring to:

a) Unregistered producers:

N1 – Producers deliberately not registering – Underground activities

N2 – Producers deliberately not registering – Illegal activities

N3 – Producers not required to register – Informal activities and Self-consumption

b) Producers not surveyed:

N4 – Legal persons not surveyed – Deficiencies in data collection

N5 – Registered entrepreneurs not surveyed – Deficiencies in data collection

c) Misreporting:

N6 – Producers deliberately misreporting – Deficiencies in data collection and Underground activities

d) Other deficiencies:

N7 – Other statistical deficiencies

Today, Eustat is publishing data on what is known as the “underground economy”, which covers categories N1 and N6 of Eurostat’s tabular approach and is defined by the European Commission as those activities that are productive in an economic sense, and relatively legal (depending on local standards and regulations), but deliberately concealed from the public authorities.

For further information:

Eustat - Euskal Estatistika Erakundea / Basque Statistics Institute C/ Donostia-San Sebastián, 1 01010 Vitoria-Gasteiz Press Service: servicioprensa@eustat.eus Tel.: 945 01 75 62  

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It was estimated that the Underground Economy in the Basque Country represented 8.7% of GDP in 2020

Operation : 
Measurement of the non-observed economy
Código operación : 
179901
Frequency : 
Biennial
Timeframe : 
2020-2022
Last updated : 
03/30/2023
Next update : 
Type of operation : 
Available formats : 
Pdf
Licence : 
Creative Commons
Permalink : 
https://en.eustat.eus/elementos/not0020843_i.html
Metodologia : 
Methodology file
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