Opinion: Cleaning companiesPOSTED: 07/30/13 11:14 AM
What is the difference between a cleaning company and a manpower organization? The Inspectorate of the Dutch Ministry of Social Affairs and Labor discovered that they have a lot in common. That makes it worthwhile for decision makers, union leaders and companies that do business with these types of businesses to read a bit more about an investigation by intervention teams into the world of Dutch cleaning companies. The controls took place between 2009 and July 2012.
The findings may not surprise a lot of readers. The intervention teams controlled 1,450 cleaning companies and found a host of violations at 391 of them. Employers received 429 fines totaling €5.4 million ($7.1 million) and the tax inspectorate imposed for €27.2 million ($35.9 million) in fiscal corrections. All in all the law-breaking cleaning companies were taken to the cleaners for $43 million.
The intervention teams controlled more than 3,600 people during its actions. They found close to 325 illegals and a small number that was underpaid. Among the companies were 124 independents without employees (so-called zzp-ers), but 106 of them were faking this status. The bulk of these fraudulent zzp-companies were operated by Bulgarians (51 percent) and Romanians (43 percent). Lastly, the inspection yielded 58 cases of people who worked in or operated a cleaning company while they were receiving social benefits.
Still, the project was not a complete success, the end-report notes. Inspectors saw no improvement in the number of companies that sticks to the law, in spite of the fact that the controls were announced beforehand in writing, and in spite of the repressive actions by the intervention teams that resulted in fines totaling millions of dollars.
The project did not meet its target of pushing back illegal employment and tax and premium fraud, but there were successes in the field of social benefits fraud and illegal residency.
The intervention teams consisted of members of several tax inspectorates, the inspectorate of Social affairs and labor, de UWV (the organization that executes employees-insurances), municipalities, social detectives, and regional police units.
This multi-disciplinary approach enabled the teams to score fast results. Companies that owed money to the taxman for instance were hit with liens, forcing them to pony up.
The project also revealed a weakness: the intervention teams were unable to prevent that companies stop their activities, go bankrupt, or start again under a different name. That requires other measures in terms of policy and legislation. This is where cleaning companies and manpower agencies come together, because the program Approach Mala Fide Manpower Agencies is already in the process of developing these instruments.
Some ideas are improved systems for the collection of fines, and more options to refuse registration in the register of the Chamber of Commerce. These measures are developed to tackle mala fide manpower agencies, but they could also be applied to mala fide cleaning companies. From there it is a small step to St. Maarten and to mala fide security companies.
Contracting and sub-contracting are two of the main characteristic of the cleaning industry. This increases the risk of not abiding by the law or regulations, because in the chain of contractors and subcontractors companies do not feel responsible for it.
The report about the intervention teams notes that the larger cleaning companies in general stick to the law. Smaller companies (up to 50 employees), start-ups and zzp-ers cause most of the problems. Smaller companies, often operated by immigrants who change the legal status of their operation regularly, are among the most mala fide operations.
These companies do not have any administration, and if they do, it is inadequate. The owners do not cooperate with investigations but create smoke screens instead.
The fact that many of these small companies are operated by immigrants, mainly from Turkey and Eastern Europe, has brought another factor into play: violence. Especially in the window cleaning sector whole neighborhoods have been taken over by organizations that are not registered at the chamber of commerce. Their take-over methods are at times outright criminal: they force competitors out of the hood with raw violence and threats.
The influence of these mala fide cleaning companies on the regular market is devastating. Because they do not play by the rules they are able to work cheaper. It leads to unfair competition in a sector where prices are under pressure and the competition is fierce.
That brings us to a notion Transparency International’s Alma Rocio Balcazar presented last month at the general membership meeting of the hospitality and trade association SHTA: “For a government to be corrupt there must be a counterpart in the private sector.”
For cleaning companies, security companies and all those other contractors and sub contractors that dodge the rules and the taxman the same is true: to be able to operate, they must do business with companies that are willing to turn a blind eye to impossible low prices.
Even it St. Maarten managed, or was willing to, deploy multi-disciplinary teams to tackle fraud in the private sector, these teams would always run one step behind clever operators with dishonorable intentions. That does not mean the government had to give up before even starting such a venture. There is a lot of money out there in the wrong pockets. Making an effort to collect it gives citizens a sense of justice, in creates a more level-playing field for law-abiding entrepreneurs and it creates jobs.