Problemi Ekonomiki (Sep 2020)
Informal Employment as a Threat to Social Security in the Labor Market in Ukraine within an Economic Transformation
Abstract
The specific features of informal employment, which is one of the main threats to social security in the labor market, in the context of transformational changes in the economic environment have been identified, and current trends in informal employment have been analyzed. The priority directions of the state policy aimed at eliminating the threats of the informal labor market have been substantiated. The main reasons for the spread of informal employment in Ukraine have been considered, taking into account the peculiarities of the current economic development, as well as the consequences of informal social and labor relations for both the employee and the state. The research has highlighted the current trends in informal employment in Ukraine’s labor market. This has been done by characterizing informal employment by job, place of residence, gender, age, education, industry and region. The results of the statistical grouping show an inverse relationship between informal employment, on the one hand, and gross regional product per capita, as well as disposable income per capita, on the other hand. Thus, with the increase in the scale of informal employment by region, both the gross regional product and disposable income are dropping. At the same time, it is necessary to take into account the relationship between informal employment and the amount of disposable income per capita, which consists in the fact that low income pushes people to look for additional earnings and ways to overcome poverty, informal sources of wages and informal social and labor relations being among the latter. Given the significant negative impact of informal employment on the economic development in Ukraine’s regions and on the standard of living of the population, the following priority measures neutralizing the threat of informal social and labor relations have been named: creation of new official jobs in key economic areas, including industry, agro-industrial complex, construction, transport, etc.; development and introduction of innovative employment and self-employment forms with the official reporting of employment income; development of small and medium business through the application of practices used in advanced countries, e.g. providing tax benefits for the first two years of the enterprise activity; development of youth entrepreneurship by providing young people with preferential taxation and by simplifying the mechanisms of registering and licensing their activities; stricter control over the businesses’ compliance with labor and tax legislation and increasing the severity of penalties applied in case of violations.
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