Ukraine is facing serious economic challenges against the backdrop of a major war that has resulted in the loss of 3.5 million jobs and a 30% contraction of the economy in 2022. The Cabinet of Ministers is currently considering a series of measures aimed at economic recovery, including through the legalization of informal employment and increased tax revenues. This was announced by Prime Minister Denys Shmyhal during a briefing on August 27.
Economic Losses
Since the start of Russia’s full-scale invasion of Ukraine, the country’s economy has suffered significant losses. According to the Prime Minister’s data, around 3.5 million jobs were lost in 2022, which significantly impacted the stability of the national economy. Furthermore, the overall economic losses reached 30%, creating a critical need for additional financial resources to support the army and social programs.
“Fight or Work” Strategy
Against these challenges, the government is developing the “fight or work” strategy, which involves mobilizing all possible labor resources to support the country in wartime conditions. This principle is not new; it was previously articulated by President Volodymyr Zelensky and is supported by all branches of power. The essence of the approach is that every citizen should either join the military service or work in the economy, providing the necessary resources for the army and society.
Legalization of Informal Employment
One of the key elements of the new strategy is the fight against the shadow economy. The Prime Minister mentioned that a significant portion of Ukrainians work “in the shadows,” meaning they receive their salary in envelopes and do not pay taxes. In the current circumstances, this is unacceptable, as the state needs every hryvnia to ensure its defense capability. Legalizing informal employment will help increase tax revenues and provide the necessary financial resources for the country.
Return of Those Who Left
Another important aspect of the strategy is the return of Ukrainians who left the country during the war. Shmyhal emphasized that it is crucial for the economic recovery to bring back skilled workers who can make a significant contribution to the country’s development. These measures will help stabilize the economy and increase tax revenues, which are critical for supporting the military and overcoming economic challenges.
Plans for the Future
Despite all the difficulties, the Ukrainian government is trying to find solutions to stabilize the situation.
The government sees as the basis for further recovery of the country:
- plans to legalize the shadow economy;
- bringing back migrant workers;
- stimulating official employment.
The government aims to collect an additional 500 billion hryvnias to the budget this year, as well as cover the need for 15 billion dollars for the next year.
Successful implementation of these measures can be a significant step towards the recovery of Ukraine’s economy and its ability to withstand external challenges. However, this requires collective efforts from the government, businesses, and every citizen.
