Reforms of Social Security Contributions in Selected EU Member States and Ukraine: Peculiarities of Implementation and Consequences
Keywords:tax burden on labor, the labour taxes incidence, reforms of the social security contributions, sources of financing social expenditures, neoliberal strategies
Introduction. The need to improve the situation in labor markets and to intensify the entrepreneurial activity prompts to reduce tax burden on labor by revising the rates of social security contributions in most EU countries.
In Ukraine, the main goal of the corresponding reform in 2016 was to reduce informal employment and income.
Problem Statement. Neoliberal strategies for reforming social security contributions and transforming social security systems have been spreading over some EU countries and Ukraine, which may result in deteriorating economic growth and increasing inequality and poverty.
Purpose. The purpose of this research is to substantiate possible social and economic risks of introducing radical proposals on the single social contribution reform and to define the expediency of their realization in Ukraine.
Materials and Methods. The European Commission methodology for calculation of the implicit rate of labor taxes in Ukraine, methods of the comparative analysis of social security contributions reform in Ukraine and the EU countries; theoretical generalization of the reasons for the spread of neoliberal strategies; factual and statistical analysis have been used in the research.
Results. The peculiarities and common features of reforming social security contributions in Ukraine and postsocia list EU countries with the largest scale of their reduction have been defined. It has been proven that the critical perception of the SSC reform in 2016 in Ukraine is largely related to the establishment of a contribution exclusively for employers. The fiscal, economic, and social aspects of the reform processes and possible risks of implementation of proposals on the abolition of SSC in Ukraine have been substantiated.
Conclusions. The most obvious consequences of the abolition of SSC in Ukraine may be a decrease in the welfare of workers and retirees and aggravation of inequality and poverty. It is not implausible that the expected results might be contradictory or uncertain. Although the short-term forecast is likely to increase the rates of economic growth, in the long run, there is a significant threat of degradation of its quality.
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