An interesting take on this in Spain recently was that unpaid overtime was effectively "robbing from state taxes", because those extra hours should have been paid and so contribute to the government coffers. This resulted in a law (mostly defanged, self reports and no real punishment) that companies must track the time employees spend at work.
The government may not have standing to sue on the worker's behalf.
The agency that prosecutes tax fraud may be larger and better funded than the agency that protects workers.
One tax evasion charge may combine the cases of thousands of affected workers into one case, where the individual cases are too small and time consuming to pursue.
The penalties for tax evasion may be more severe than the penalties for wage theft.
That's sad that a government wouldn't see its citizens being robbed as a problem that affects them, as governments are directly responsible for the regulatory environment in which we all do business.
If people allow themselves to be robbed, and millions do everyday, there is nothing the government can do about it, just as if they are robbed by a mugger. If people aren't reporting it, then nothing will change.
Sounds a bit like an old ‘legal fiction’ in England - person A claimed that they were unable to pay their taxes because person B owed them money so sued them in the Court of Exchequer (which was not supposed to hear disputes between two subjects but could hear disputes between people who owed the Crown money and the Crown). As the court was a bit more efficient at the time than some of the alternatives and everyone wanted a speedy resolution to the dispute, no one challenged the (non-existent) debt to the Crown.
1) Wages are taxed, not work. If there is no money paid there is no tax evasion.
2) Unpaid overtime is not really unpaid unless your employment agreement explicitly states that you are not supposed to work more than 40 hours. If you get paid $100k to work 50 hours, then you are getting paid $100k to work 50 hours, not $100k to work the first 40 and $0 to work the next 10. Your comp is payment all the hours you work, not just the first 40.
At least in the US, not sure about the EU, but unless your profession is explicitly exempt salaried employees are still owed overtime. Unless a job explicitly states the number of hours an employee is to work it's assumed it's 40 hours.
Of course there are exceptions, such as programmers.
