Not a whole explanation but still useful:
even if they get legal status, they have to register as self-employed and pay a statutory monthly “quota” of €300, regardless of income, which they do not earn enough to pay.
That’s €3,600 a year in tax from Day I of self-employment. No, that’s not the assumption of what your income or profit is, that’s the payment you must make. Thus all of the lower end of the Spanish economy is off the books, not on.
Idiocy, of course it is.