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Illegal Labour Under Scrutiny in Germany

As the recession begins to bite, tax revenues are dwindling. Unemployment is on the rise and the shadow economy is snowballing in Germany. Consequently, billions of Deutschmarks are being slipped past the tax man.

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A tax break costing billionsImage: Bilderbox

There’s only one sector showing signs of growth in Germany and that is the black economy, Angela Merkel, leader of the opposition Christian Democrats said in Berlin on Wednesday.

"There have to be more incentives to work for the unemployed and those on social security", added Friedrich Merz, also of the Christian Democrat opposition.

Speaking just before the debate on the budget, Merz said that those who work should get more money than those on benefits.

This year alone more than 800 billion Deutschmarks have been slipped past the tax man. "No other sector has risen as sharply as the market for illegal labour", Merz said.

"There are plenty of jobs to be had, but obviously not at the right price". This situation has to change, according to Merz.

Apart from measures to curb untaxed labour, the opposition wants to see more government investment

If the federal government invested more, according to the CDU, then local government could hand out more public contracts, which in turn would have a positive effect on the whole economy.

The 2002 budget will see the least public investment in decades. That is one of the reasons why the construction industry is in the doldrums, according to Merz.