24% of Ukrainian employees don’t have an official contract, a recent poll revealed. In addition, further 11% are getting part of their wages as cash, while only the minimum is paid officially, Finance.ua reported.

Why do Ukrainians work without employment contracts?

The situation with “shadow employment” isn’t new in Ukraine. It’s been going on for years. Only 63% of Ukrainian employees receive 100% “white” salary, the poll demonstrated.

It’s better than it used to be, but still a substantial share of Ukrainian jobs remains in the shade.

At the same time, 73% of Ukrainian respondents view shadow employment negatively. But there are still people who view it either positively, as a way to get a subsidy from the government and save on taxes, or neutrally.

Which industries have the highest number of people working unofficially?

The following industries have the highest share of people working unofficially:

• Agriculture and farming
• Retail and wholesale
• Construction
• Transport and courier deliveries

Why do employers hire workers without contracts?

Unofficial employment is also beneficial to employers.

• 92% of them said they can save on taxes. Contributions to the state budget are based on the size of salaries; the lower are the official wages, the less the employer has to contribute.
• 84% of employers don’t want to offer workers paid vacations and sick leave.
• Often employees themselves wish to work without an official contract, to be able to get a subsidy from the government (a discount on payment for electricity, water, etc.): 49% of company owners mentioned this as a reason.
• The variants of employment available legally are obsolete, 48% of employers think.
• The administration of official employment is too complex: 44%.
• Too hard to fire someone: 40%.

Ukrainians who are self-employed also usually do not pay taxes, if they are able to hide their income.

The government of Ukraine works consistently to improve the situation with “grey” and “black” wages and bring all workers out of the shadows. One of such measures is raising of the minimum monthly wage, which at the moment is 4,723 hryvnia (USD 177).

The minimum wage in Russia is higher than in Russia, where it is now 11,280 ruble (USD 151).

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