Greece does not have the means to police its underground economy, which is considered very large compared to the size of the country. Austerity measures that cut the size of government will make enforcement of tax laws even more difficult. That is too bad because there is a lot of money to be had if only Greece could get cash from parts of its economy that are largely hidden from sight.
A new study by accounting firm Global Financial Integrity (GFI) claims:
The Greek economy lost US$261 billion to crime, corruption, and tax evasion from 2003-2011.
That may not seem a large amount by U.S. standards, but Greece’s gross domestic product was only $310 billion (nominal) last year and is shrinking rapidly.
GFI says that something strange has happened recently. There were “massive illicit inflows of US$90 billion in 2010 and US$109 billion in 2011.”
via Greece’s Underground Economy Grows – 24/7 Wall St..
Is there a link between the size of the shadow economy and the Euro crisis ?
Just look at this figure to convince yourself.
“Besides informal employment in the rural and non-rural sector also other measures of informal employment like the share of employees not covered by social security, own account workers or unpaid family workers are shown. The most influential factors on the shadow economy and/or shadow labor force are tax policies and state regulation, which, if they rise, increase both. Furthermore the discussion of the recent micro studies underline that economic opportunities, the overall burden of the state (taxes and regulations), the general situation on the labor market, and unemployment are crucial for an understanding of the dynamics of the shadow economy and especially the shadow labor force” writes Friedrich Schneider in The Shadow Economy and Work in the Shadow: What Do We (Not) Know?
Job Market Monitor 
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