Shadow Employment Grows in Ukraine: Only 54% of Employers Pay Official Salaries

Ukraine's Labor Market Is Increasingly Operating in the Shadows

According to Главком: Speaking at the HR Wisdom Summit 2026, Maria Abdullina-head of the OLX Rabota platform and co-chair of the HR Committee at the European Business Association-highlighted a troubling trend: the shadow economy is expanding within Ukraine's labor market. She noted that just 54% of employers maintain fully official employment and pay "white" (legal) salaries, while 21% of companies acknowledge making compromises in how they formalize labor relationships.

'I noticed that this figure has risen. In other words, the labor market is indeed becoming more shadowy.' Maria Abdullina

According to surveys, 78% of employers are facing a staffing crisis, and more than two-thirds of companies expect the personnel situation to worsen. Businesses identify mobilization as the primary driver of this labor shortage. One in four employers reported that wages have increased by at least 10% over the past year.

Entrepreneurial Activity Is on the Rise

Alongside these concerning trends, official statistics reveal a positive shift in entrepreneurship. During the first two quarters of 2026, Ukraine saw 39,214 more individual entrepreneurs (FOPs) registered than closed:

• In 2026, 141,472 entrepreneurs launched their ventures,
• While 102,258 FOPs ceased operations.

Notably, the number of FOP closures dropped by 36% compared to the same period in 2025.

Thus, despite the challenges facing the labor market, entrepreneurial activity in Ukraine is gaining momentum.

The situation in Ukraine's labor market reflects a complex balance between the rise of shadow employment and a surge in entrepreneurship. On one hand, increased shadow activity points to problems with legalizing jobs, which could undermine workers' social protections. On the other hand, the uptick in entrepreneurship may signal a recovery in economic activity and the creation of new positions. These developments require close monitoring by both government authorities and businesses to ensure labor market stability.

Amidst the rising shadow employment, the dynamics of job availability are shifting. Recent reports indicate that the number of job openings in Ukraine is nearly double that of unemployed individuals. This disparity highlights the urgent need for businesses to adapt to the evolving labor market, which is increasingly characterized by both challenges and opportunities.