Foreign workers in ethnic restaurants are often flagrantly underpaid

Some are earning only three euros an hour, but authorities have no effective means of redress

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By Jarmo Huhtanen
     
      Finnish authorities suspect that the grey economy is flourishing in ethnic restaurants. However, it is difficult to find evidence of unreported cash payments and unduly low wages for staff.
      In 2008, special inspectors monitoring the working conditions of foreign labour visited more than 50 restaurants employing foreign workers in the province of Uusimaa.
      ”One-third of them followed generally accepted salary principles”, reports labour inspector Anssi Riihijärvi.
      In the majority of the restaurants under scrutiny, wages were below the minimum stipulated by existing labour contracts.
     
The labour inspectors are monitoring the terms of employment concerning foreign workers, while also checking to see if the relevant work permits are in order.
      The efficiency of monitoring is seriously weakened by the fact that the inspectors generally give advance notice of their arrival.
      ”If we have been informed that a given restaurant possibly has illegal employees, we do not give any advance warning, but just turn up”, says Riihijärvi.
      The wage spread even among those who are underpaid is wide.
      ”Three euros is the lowest hourly rate I have encountered”, notes Riihijärvi.
     
Unfortunately, the inspectors do not have enough resources to carry out any organised surveillance and monitoring.
      Moreover, it is relatively easy to produce false employment documents, which makes the work even harder.
      ”It is difficult to insist that for instance a work rota is wrong”, Riihijärvi concludes.
     
The grey economy is not only a problem of ethnic restaurants, but it applies to the entire restaurant branch.
      In 2009, the authorities’ cooperation development project VIRKE published a report indicating that the restaurant and catering industry is one of the core business areas in the grey economy.
      VIRKE is an intensified cooperative undertaking between the Ministry of Finance, the tax authorities, the Police, the Customs, and the recovery administration, the aim of which is to clamp down on the grey economy and white-collar crime.
     
The report made a bold estimate that in 2007 the hidden employment in the sector was as much as 21,800 man-years.
      This is just a calculated estimate, based on models. What the real truth is nobody knows.
      According to the report, the majority of problems occur in the sales of fast food and medium-strength beer. Based on business surveys, one in five pints of beer is sold under thecounter or off the books .
     
There are roughly 1,200 accommodation and restaurant enterprises run by immigrants in Finland. They employ a total of 4,000 people.
      According to the VIRKE report, some firms with an immigrant background have been found guilty of ”aggravated abuse” of foreign labour in cases where foreign workers are more or less completely dependent on their employers.
      ”Here we are talking about really substantial negligence”, says Janne Marttinen, the project manager of VIRKE. ”Really shocking cases”, he adds.
      According to the business surveys, restaurant entrepreneurs believe that authorities do not have the courage to interfere with malpractice spotted in ethnic restaurants.
     
Veli-Matti Aittoniemi, the deputy managing director of the Finnish Tourism and Restaurant Industries Federation (MaRa), points out that the number of those ethnic restaurants in which everything has been found to be in order has also increased.
      When it comes to illegal operation, the pattern is simple.
      ”Restaurants can either manipulate their cash registers or just fail to give any receipts to customers. They may be in the habit of making off-book sales of merchandise, in other words selling items without recording the purchases on the cash register”, Aittoniemi notes.
      ”These unrecorded cash receipts can be used to pay unreported wages. The employee accepts it, as no taxes are deducted from such earnings”, Aittoniemi claims.
     
In the course of last week, Helsingin Sanomat interviewed some restaurant professionals, who said that one should suspect that something dishonest is going on if a portion of food costs only EUR 5.00 and a pint of medium-strength beer only EUR 2.00, or if the cash register is persistently out of order.
      Cheap prices are a sign of the grey economy, many customers also believe.
      They might even suspect that such restaurants are likely to break the law.
     
Some customers say that they might be willing to pay a higher price for food if they could be sure that the restaurant operates according to the law, but the fact of the matter is that a hungry diner is more likely to be thinking about pizza toppings than whether the staff are being exploited or the taxes paid.
     
     
Helsingin Sanomat / First published in print 16.1.2010


Previously in HS International Edition:
  Intensive inspections reveal widespread fraud in Finnish restaurants (20.3.2006)
  Inspectors find that Finnish employers often violate basic rights of foreign employees (21.8.2006)

See also:
  Underpayment of foreign staff commonplace in restaurants (21.3.2006)
  Starvation wages in a Helsinki kitchen (21.3.2006)

JARMO HUHTANEN / Helsingin Sanomat
jarmo.huhtanen@hs.fi