The proportion of grey economy in Latvia was 22% of GDP in 2017, which is 1.3 percentage points higher than it was in 2016, according to results of Grey Economy in Baltic States 2008-2017 study.
Envelope wages form 45.5%, undeclared income – 37.2%, and undeclared employees form 17.4% of grey economy in Latvia.
Grey economy had increased in all three Baltic States last year. Grey economy in Lithuania was 18.2% of GDP, which is 1.7 percentage points higher. Estonia’s grey economy index was 18.2% of GDP (up by 2.8 percentage points).
Arnis Sauka, co-creator of the Grey Economy Index in Baltic States and director of Sustainable Business Centre of Stockholm School of Economics in Riga, admits that envelope wages present the biggest problem. It is observed in Latvia and other Baltic States.
In 2016, grey economy proportion in Latvia, according to information from the Sustainable Business Centre, was 20.7% of GDP.