© AFP/Europress

The Prime Minister of Ukraine himself made the fight against undeclared work a priority for his cabinet of ministers in 2018. At the end of 2018 there were encouraging signs that informal employment is going down. Prime Minister Volodymyr Hroysman recently stated that authorities saw an increase of 155.000 newly registered employees in October 2018 as compared to the previous month. According to him the positive trend continued in the month of November 2018 which saw another increase of registered employees of the same dimension. All of the newly registered employees receive official wages and pay contributions to the social security system.

Andriy Reva, Minister of Social Policy, added that “in comparison with 2017 the number of persons paying the single social contribution increased by 447,600 persons. Almost half a million people left the shadow economy and started paying contributions to the social security system”.

This is a remarkable result in view of the fact that the number of informally employed persons in Ukraine amounts to almost 4 Mio people accounting for 24% of total employment (ILO estimates from 2016, for more see here).

 Additional information on the dimension of informal employment comes from the first Ukrainian Undeclared Work Survey which was done by the Kyiv International Institute of Sociology with support from ILO in 2017. The representative survey covering 1000 workers from across the country shows that 46% of the respondents know someone who works informally. The main reasons for working in informality are the difficulties of finding a regular job, the seasonal nature of the work, and that undeclared work is the way such activities are usually done. Other respondents justify the informal working arrangements arguing that the Ukrainian government is not seen doing anything for them and that both employers and workers benefit in the short run from avoiding to register the jobs. Finally, the survey also shows that informal workers earn lower wages than formally employed persons in addition to being excluded from social security.

The ILO is supporting Ukraine in changing these perceptions and attitudes through the EU-funded ILO project “Enhancing Labour Administration Capacity to Improve Working Conditions and Tackle Undeclared Work“. The project contributes to improved data collection on the dimensions of undeclared and under declared work, aligning national legislation to International Labour Standards and EU rules, awareness rising campaigns on the harmful consequences of undeclared work, and training labour inspectors how to tackle informality. The recently finalized draft of the National Action Plan to Fight Undeclared Work in Ukraine specifies more in detail what will be done in the future to further reduce informality. For Antonio Santos, chief technical advisor of the EU funded ILO project, the most important milestones for 2019 are the approval of the National Action Plan by the Cabinet of Ministers and conferring appropriate powers to Ukrainian labour inspectors in order to do their job as for example giving them the right to make inspection visits without prior notice or suspending work in dangerous sites.