State Tax Service: More than 95% of Ukrainian employers infringe labour laws

According to the Deputy Head of the State Tax Service, Oleksandr Klimenko, a check of Ukrainian employers found that more than 95% of them infringe labour legislation, and one in five pays wages below the subsistence minimum.  He said that the statistics were shocking and that at virtually all enterprises checked, infringements had been found. As well as the fact that 20% pay less than the subsistence minimum, an even greater percentage pay “in envelopes”, i.e. bypassing the tax department.  “From this, accordingly, we have underfunding of social programmes from local budges. The first priority of our service is to break this vicious circle”.

Mr Klimenko cited other figures, for example, saying that the tax inspectors had found 76 thousand employees working without a contract, while 34 thousand people were found to be engaged in business activities without State registration.  He called on his subordinates to fight illegal employment.

“We are dealing with a systemic social phenomenon. This problem is therefore impossible to resolve through “repressive” means along – checks, fines, other sanctions. Our main task is to change people’s attitude to this. Figuratively speaking, to set the fashion for official employment with a decent salary”.

He added that after conversations with tax officials, 40 thousand enterprises had increased payment of labour, with this resulting in the State receiving 79 million UAH from income tax.  He said that through the tax bodies’s efforts wage arrears had fallen by over 1 billion UAH since the beginning of the year. 

The tax bodies had demanded an extra 44 billion UAH from business.

http://biz.liga.net/news/E1107230.html

Worth mentioning that human rights groups have expressed concern over the use of the tax authorities to put pressure on individuals and businesses for political or other reasons.