Undeclared employment harms the state. Informal economy and undeclared employment in peacetime limit the state's ability to implement modern social policy in areas of education, health care, development of professional skills, employment, social protection and pension provision, contribute to tax evasion, and reduce revenues to state and local budgets.
In the full-scale war conditions, when all forces and funds of the state are directed to approach of victory, undeclared employment and informal economy cause irreparable damage to the state’s defense capabilities.