Restaurants were allowed to drop the VAT they charge on food from 21% to 12% in return for action on black work. Most, though not all, made it plain they intended to keep the windfall dividend rather than pass any savings on to the diner (in fact, prices have gone up 2% since the VAT was cut on 1 January).

The dividend was supposed to make it easier for restaurants, bars and other food-service establishments, where black work is endemic, to employ staff legally. The €300 million the measure would cost the treasury would, the government reasoned, be more than earned back from the taxes and social security payments that would result.

But, as the table (below) shows, more infringements were uncovered this year than last - albeit from an increased number of checks carried out by inspectors. The number of black workers also increased. Figures for both 2009 and 2010 refer to the first nine months of the year. In 2009, faults were found in 73.5% of the premises checked; this year that rose to 75%.

Danny Van Assche, director of the industry federation Ho.Re.Ca Vlaanderen, put a different gloss on the figures. "Employment in recent months has stayed more or less level, thanks to the VAT cut," he said. "If we look at the figures for the number of employees in the first half of this year, we see it has remained the same. Declared gross wages even went up significantly by 3%.

That shows that we're on track to creating new jobs and regularising existing jobs, just as we agreed at the time of the VAT cut. Without that, a lot more businesses would have gone broke." The crisis has led to both individuals and businesses cutting back on restaurant visits, while costs have risen for raw materials and products like beer, Van Assche points out. "The VAT cut ironed out the effects of the crisis for the sector. To achieve an even greater effect, VAT needs to be cut to the level of neighbouring countries," he said. To the 6% the industry initially asked for, in other words, with the lower rate extended also to drink, which is not the case at present.

Van Assche also says that the small increase in infractions could be attributed to more targeted checks carried out by inspectors, a point conceded by Gerrit Van De Mosselaer of the social inspection service. "It's normal that the number of infractions remains about the same because we carry out targeted checks. We only call on businesses where we have a suspicion something is not right." Businesses are identified as suspect if, for example, they are declaring a large turnover but only paying a small amount of social security, suggesting that workers are being paid under the table.

Undeclared workers in the restaurant industry
                                         2009  2010
number of spot-checks    1,180 2,082
number of infringements  1,329 1,564
number of staff involved   2,790 3,085

Source: FOD Social Affairs