8 October 2014
Ukraine’s shadow economy is growing drastically, said on Oct. 7 Hryhoriy Osoviy, the head of the Trade Unions Federation of Ukraine. Every third worker is working illegally in Ukraine, accounting for USD 15.5 billion in undeclared wages received by five million laborers, he estimated. As a result, the state lacks funds to make pension and social payments. “The tax burden increasingly is shifted onto legal workers, the number of which declines every year and is already less than 10 million,” Osoviy said, as reported by the Ekonomichna Pravda news site. “That is to say, these 10 million are practically supposed to provide their sustenance and that of the remaining 35 million population. No other European country has such an economic burden.” Ihor Bilous, the head of the State Fiscal Service, estimated shadow wages in Ukraine at about USD 1.55 billion per month, the news site reported.
Zenon Zawada: Nothing better exemplifies the failure of the current government to conduct necessary reforms than these statistics offered. The government should have long ago taken measures to reduce the shadow economy. Reducing the heavy taxes on wages would encourage employers to declare them and in turn, generate significant revenue for the budget. These statistics indicate that the Ukrainian economy is utterly dysfunctional and requires the “tectonic changes” declared by Ukrainian President Petro Poroshenko, who is testing the patience of the public by claiming to be waiting until after the Oct. 26 vote to pursue reforms.