"RT: According to some reports, the shadow
economy in Europe today is worth more than 2.1 trillion euros –
how much of a concern is this?
Felix Moreno: Of course, they are all estimates and it’s
all approximate, but it’s around that size. In Spain it’s
around 20% of its economy. In Greece it’s harder to estimate but
some say that it’s between 19% and 20%. It is a concern for
governments since they are having so much trouble to raise money
at the moment and they are attempting to tax their citizens to
oblivion. But it’s not so much concern for citizens somehow
managing to survive, thanks to a shadow economy. "
Call it the shadow economy, underground economy, or System D. People provide a service to others without consideration of the government - no paying taxes, no getting building permits, etc. When people can't find regular work, or the system is corrupt, this is where people go. So when you hear Spain has 40% unemployment, well, that might not be quite correct. They might be hard-working, just outside the statistics of the government.
If there is gainful employment, and the taxing system is fair, the shadow economy should be small. When the shadow economy is so large, you know there is a problem.