FINANCIAL CHALLENGES OF THE SOCIAL INSURANCE SYSTEM: UKRAINIAN EXPERIENCE IN THE CONTEXT OF EUROPEAN PRACTICE

The article explores the financial challenges faced by Ukraine's social insurance system amid full-scale war, demographic crisis, and economic instability. The focus is on analyzing demographic trends, including population decline, decreasing birth rates, rising mortality, and population aging. These factors significantly reduce the number of social contribution payers while increasing the burden on the system due to the growing number of pensioners and welfare recipients. The study delves into the long-term implications of these demographic shifts, projecting their impact on the system's solvency and sustainability. The study provides a comparative analysis of financial indicators such as fund revenues, expenditures, budget deficits, and the share of state financing. It was found that the deficit of social insurance funds reached a substantial amount, and the share of state funding rose significantly. Particular attention is given to the shadow economy, especially the growth of undeclared "envelope" wages and revenue losses exceeding tens of billions of hryvnias. This section quantitatively assesses the scale of these financial leakages, demonstrating their corrosive effect on the system's revenue base. The article also examines the efficiency of managing social insurance funds, highlighting positive outcomes of digitalization, international support, and cost optimization, as well as issues related to corruption, ineffective oversight, and payment delays. A set of measures is proposed to stabilize the system, including tax incentives, enhanced control, and increased international assistance. These proposed measures are critically evaluated for their potential effectiveness and feasibility within the current Ukrainian socio-economic and political landscape. In the context of European experience, the article analyzes three key models of social security: the Bismarck model (insurance-based, funded by employer and employee contributions), the Beveridge model (universal, tax-funded), and the mixed model combining elements of both. A comparison is made of their financing principles, population coverage, and adaptability to crisis conditions. The study concludes that Ukraine should gradually transition toward a mixed model, tailored to its national context and financial sustainability needs. This comparative analysis identifies specific best practices from European countries that could be adapted to strengthen Ukraine's social insurance framework. The findings can be used to inform strategic decisions in social protection reform and align Ukraine's model with European standards.