Minister: Some 40% of Ukraine's economy in shadow

Ukrainian Social Policy Minister Andriy Reva says 40% of Ukraine's economy remains in the shadow, therefore the developed countries' standards of solving economic problems cannot be effective in Ukraine, while de-shadowing will bring more money to the wage fund than the actual economic growth.

"This was proved by the Government in 2017. The entire wage fund in 2016 amounted to UAH 584 billion [US$22.3 billion], while the Economic Development Ministry forecasted it might grow by UAH 82 billion [$3.1 billion]. However, the Ministry of Social Policy said the figure was understated and predicted the growth of the fund by UAH 212 billion [$8.1 billion]. In fact, the payroll budget in 2017 totaled UAH 796 billion [$30.4 billion]. We received UAH 212 billion in the budget with a 2.5% economic growth. Where did this money come from? The answer is very simple – from the shadow economy and as a result of a 50% raise of minimum wage," Reva explained, as reported by the ministry's press service.

The official noted that practical conclusions need to be drawn from the fact.

Read alsoIMF: Ukraine's inflation in 2017 highest among all CIS members"For example, if UAH 6 billion ($229.4 million) in revenue is under-received in the first quarter [of 2018], and the Finance Ministry says there is no money, it will always be that way if minimum wage is not raised," the minister stressed.

As UNIAN reported earlier, the State Statistics Service of Ukraine has revised upwards its estimate of Ukraine's real GDP growth in 2017 from 2.2% to 2.5%.

The International Monetary Fund has retained a 3.2% economic growth forecast for Ukraine in 2018.

According to the State Labor Service, every third employee, or about 5 million people are working illegally in Ukraine.

Reva says the rate of shadow employment in Ukraine in 2017 decreased by 8%, to 3.7 million people from an earlier 4 million non-accounted workers.