The budget is losing 250 billion hryvnias: about 1.9 million Ukrainians receive their salaries “under the table”
15 March 19:08
About 1.9 million Ukrainians receive their salaries “under the table” every year, and the total income generated by such schemes amounts to approximately 250 billion hryvnias. Despite the digitization of the tax service, a risk-based approach to audits, and the government’s policy on de-shadowing the economy, the “envelope salary” scheme is only growing and has become the most widespread among “gray” schemes.
This was reported by Oleg Getman, coordinator of the expert groups at the Economic Expert Platform and an associate expert at CASE Ukraine, citing a study by ISET, as reported by "Komersant Ukrainian" with reference to Delo.ua.
The main reason is the excessive burden on the payroll fund, which continues to grow. Over the past year, rates have been significantly higher than target indicators: the effective burden reached 53% of the payroll fund, while 20% is considered optimal.
Levels of informal employment
Before the war began, according to the State Statistics Service, about 3 million Ukrainians were working informally, accounting for nearly 20% of the employed population aged 15–70.
After the start of the full-scale invasion, the share of informally employed workers decreased slightly: according to a representative 2024 UNICEF survey, about 14% of workers are employed informally, and another 4% work independently without formal registration, totaling approximately 18%.
In total, 7.6 million employees and nearly 1.5 million self-employed individuals work under formal conditions in Ukraine’s economy, for a combined total of 9.1 million people.
Budget losses
Informally employed workers received over 250 billion UAH in income over the year, which could potentially have generated 125 billion UAH in taxes. Based on “upper-bound” estimates, this income could have reached 400 billion UAH, with potential tax revenues of about 200 billion UAH.
The “minimum wage envelope” scheme proved particularly widespread: about 650,000 workers officially receive the minimum wage, while the rest are paid the remainder unofficially. Budget losses from such schemes are estimated at approximately 25 to 53.5 billion UAH per year, while total lost tax revenue from all unofficial wages ranges from 150 to 253 billion UAH annually.
Sectors with the highest levels of “shadow” wages
These schemes are most prevalent in the retail sector. Here, average salaries in the top 50 chains range from 8,000 to 60,000 UAH per month, indicating significant use of “envelope payments.” While budget losses from the retail sector amounted to 13 billion UAH in 2021, they reached 37.2 billion UAH in 2024.
Shadow employment is growing in response to high taxes and administrative pressure. In the context of war, this has a critical impact on the defense budget.
