Impact of the shadow economy on social safety: The experience of Ukraine

Abstract

The links between lawful economy and the shadow economy with social safety are investigated. Based on the existing methods of estimating the shadow economy, it is determined that its official level in Ukraine exceeds the critical one (30% according to the Ministry of Economy) by most estimation methods and was ranging from 18 to 46% in 2018. This significant shadowing of the economy has a negative impact on GDP (correlation coefficient -0.729) and; is directly related to the low competitiveness of the economy as per the world rankings. Having impact on the generation of secondary income through fiscal redistribution mechanisms, the shadow economy has a negative impact on the main components of social safety, including the spread of poverty, maintaining an inefficient cost structure with a high share of food expenditures (which is also a sign of low living standards); and limited housing opportunities. The relationship between the shadow economy on the one hand and economic & social safety on the other (-0.865 and -0.560, respectively) has been determined using the correlation analysis. Economic losses from the reduction of tax revenues to the budget have been estimated to confirm the need to develop mechanisms to unshadow the economy as one of top priorities for public administration in the social sphere in Ukraine.

Hiring and Retaining Skilled Employees in Smes: Problems in Human Resource Practices and Links With Organizational Success

“…The limitation of the methodological nature, which created certain difficulties in processing information, was the problem of the biased presentation of information in the business environment regarding the true results of its activities. In Ukraine, on the basis of which the study was conducted, this problem is widespread (Mishchuk et al, 2020). However, subjectivity, which is always characteristic of the method of sociological surveys, and the possible lack of objective reflection of the true results of the activity could not significantly affect the findings obtained, which we confirmed in the estimates of the sample representativeness.…”

Developments in the income situation of the agricultural sector in selected the EU member states

“…However, in fact, programmes highly targeted at those in need were more efficient than transfers distributing income across the lifecycle of individuals. While family cash benefits for low-income groups were found to have a strong redistributive impact, some transfers, like disability benefits, increase the risk of creating poverty traps for beneficiaries (Bubbico & Freytag, 2018;Guzel et al, 2020), especially due to the impact of employment in informal sector (Mishchuk et al, 2020).…”

Dependence of the state of public finances on their transparency and the level of corruption in a country

“…Regional development indicators were added to the list of factor characteristics at the regional level in the DУМIМIС model. Among the main groups of indicators of the DУМIМIС model, one can single out monetary indicators (the growth of the shadow sector and possible corruption are associated with an increase in money transactions and expenses); labor market indices indicating that a decrease in the level of official employment leads to a possible increase in the corruption component and the growth of the shadow economy (Mishchuk et al 2020;Navickas et al 2020).…”