Yeah, it's still a problem, but the problem is with the powers that be that set the rules for what it means to live officially. The wages are less of a problem here than the theft by government of the fruits of ones labor.

The wages payable are still at the mercy of what the market will bear. If these people could not find a way to live officially, in many cases it's highly unlikely that the wage could rise to cover their cost of living and the taxes to be paid, meaning the job would no longer exist.

At the end of the day, you can't tax a society into prosperity. Every tax dollar spent needs to be justified on an ROI for society.

It's many problems. It's not a simple situation because it's one that has evolved over many generations. Is it working people defrauding the government? Is it the government abrogating it's responsibility to manage the economy and tax people fairly and provide effective services to the community? Is it a haven for criminality of a more sinister and even violent kind that inhabits the grey economy and turns it black? All of the above, but it's hard to reform because the people who live this way and suffer many of the disadvantages that result from it are also deeply complicit in it's operation.

A good 5-10% of the population are illegal immigrants so that isn't a good start.