The Tony Blair Institute has prepared a White Paper on the draft Labour Code of Ukraine. The document contains an independent analysis of the draft’s key provisions and their potential impact on the labour market, the economy, and the system of labour relations. In the White Paper, the draft Labour Code is defined as a step towards harmonisation with the EU acquis, the creation of a more predictable labour market, and the replacement of fragmented rules with a clearer and more enforceable framework for workers and employers.
According to the assessment, the cumulative effect of implementing the proposed solutions could amount to around 302 thousand formalised or new formal jobs and approximately UAH 43.4 billion in net fiscal gain [PE1] per year.
The Ministry of Economy emphasises that the findings of the White Paper confirmed that the modernisation of labour legislation is not only a matter of updating legal norms, but also an important instrument for economic recovery, the formalisation of employment, improving the quality of jobs, and bringing Ukraine closer to the European social model. According to the document’s conclusions, the draft Labour Code creates a coherent system of rules that is expected to strengthen the confidence of workers, employers, and international partners in the Ukrainian labour market.
A separate block of the White Paper’s conclusions concerns core labour guarantees. The authors of the analysis note that the draft Labour Code provides for a new approach to the minimum wage: it is to be defined both on a monthly and an hourly basis, and its level is to gradually approach 50% of the average wage in the economy.
The economic analysis presented in the White Paper indicates that the initial transition to this approach would mean an increase in the statutory minimum level of pay affecting[PE2] nearly 4 million workers.
The White Paper also records a positive effect from updating the rules on rest and work-life balance. In particular, the minimum annual paid leave is increased from 24 to 28 calendar days, which is consistent with ILO and EU standards. The document stresses that this improves the predictability of the rules, reduces information asymmetry, helps reduce worker exhaustion, and may have a positive impact on labour productivity.
An important conclusion of the White Paper concerns family policy and women’s participation in the labour market. The draft provides for four additional months [PE3] of parental leave for each child, of which two months are the individual right of each parent and cannot be transferred. According to the authors’ estimates, this approach could add around 86 thousand people to net employment and provide approximately UAH 7 billion in annual net benefit for the state. The document also emphasises that clearer guarantees during pregnancy and practical work-organisation tools make labour market participation safer and more accessible for families with children.
Another key conclusion of the White Paper concerns the de-shadowing of employment and the modernisation of enforcement. The document notes that a risk-based and institutionally independent labour inspectorate is capable of stimulating the transition of 110 to 210 thousand jobs into the formal sector and ensuring UAH 9–19 billion in additional revenues each year. The importance of digitalisation is also highlighted separately: recognition of the written electronic form of the employment contract and fully fledged electronic document management could generate around UAH 226 million in direct administrative savings for businesses per year, while also reducing the number of disputes and accelerating employee onboarding.
The White Paper also gives a positive assessment to the set of measures aimed at inclusiveness and the entry of new groups of workers into the labour market. In particular, the apprenticeship employment contract is defined as a mechanism that formalises the combination of study and work and creates a structured pathway to first official employment. Under a conservative scenario, this could result in around 56 thousand additionally formalised workers and approximately UAH 3.4 billion in tax revenues each year. The authors of the analysis also stress that aligned provisions on non-discrimination and support for veterans contribute to broader participation in the labour market and fair competition for jobs.
Special attention in the White Paper is also paid to the predictability of the rules for workers and businesses. The authors stress that the draft Labour Code could replace scattered regulation with new standards, including the written electronic form, clear rules on the minimum wage and leave, as well as labour arbitration, which allows disputes to be resolved in around 20 days instead of a court process lasting many months. According to the document’s estimates, if arbitration is widely used, the total annual savings for workers and employers could reach UAH 5.3 billion, while the additional effect for the efficiency of the justice system could amount to around UAH 970 million.
The document also underlines that the new Labour Code is important for Ukraine’s European integration. The White Paper states that the draft strengthens alignment with key EU and ILO standards on working time, equality, occupational safety, social dialogue, parental leave, and inspection activity. According to the authors’ conclusions, this is capable of increasing trust on the part of European and international partners, as well as creating a more consistent foundation for social dialogue within the country.
The Ministry of Economy states that the conclusions of the White Paper are further confirmation of the need for a systemic renewal of Ukraine’s labour legislation. This is about creating modern, clear, and balanced rules that simultaneously work to protect workers, support the development of fair business, reduce the share of informal employment, and strengthen the resilience of the labour market in the context of the country’s recovery. The White Paper separately emphasises that, under a scenario of proper implementation, the reform could improve labour market participation, the level of formalisation, and the overall predictability of labour relations during reconstruction and Ukraine’s movement towards EU membership.
The full text of the White Paper.pdf