In Ukraine in 2016 for the first time in several years the rate of growth of social standards has outstripped inflation. So, the minimum wage, a living wage and the minimum pension increased by almost 16%, and prices – by 12%. Thus, according to the State statistics service, the average salary in the country increased from 4362 to nearly 5,400 USD. The website “Segodnia” figured out how the welfare of Ukrainians has changed over the past year.
How have wages for the year
In January 2016 the minimum wage in Ukraine was at the level of 1378 hryvnia, while the average salary in the country at that time reached 4362 hryvnia. The least earned the inhabitants of Ternopil region (average of 3008 hryvnia), and the richest Ukrainians traditionally live in the capital – here at the beginning of the year the average salary reached 7126 hryvnia. In 18 regions of Ukraine the average earnings did not reach four thousand.
As noted HR expert Alexander Belous, statistic does not include that portion of wages paid out in envelopes, as well as income of those Ukrainians who work without official registration.
In 2016, the government sharply reduced the taxation of wages. If before each paycheck on average had to pay 37% of ERUs (tax retirement Fund), then from January 2016 the rate has reduced by 22%. This has led some employers, while not increasing the Fund, to raise wages. However, as noted in the Pension Fund, a large effect is not given.
From the first of may in Ukraine held the indexation of social standards. So, the minimum salary increased from 1378 to 1450 UAH, and pension – from 1074 to 1130 UAH. At the same time the average salary in the country rose to 4984 hryvnia. For Kiev, the average earnings increased to 8080 hryvnia. And less traditionally earned people of Ternopil region – UAH 3630.
To the income returned, at least one indicator of 2014 year, explain economists, at current prices, the minimum wage should be 70% higher. So, from 2014, the year prices rose by at least 80%, and social standards is just 31%.
“Cumulative inflation was high enough. It made for a few years 70%. In order for real incomes increased, social standards had increased by 70%. As for the more averaged is the level of inflation as of three years: 2014, 2015 and 2016. The cumulative inflation rate will exceed 90%. To Ukrainians at least have not lost their income, they have to be paid 1.9 times more”, – says Executive Director of the Fund of the Blazer Oleg Ustenko.
“Cumulative inflation was high enough. It made for a few years 70%. In order for real incomes increased, social standards had increased by 70%. As for the more averaged is the level of inflation as of three years: 2014, 2015 and 2016. The cumulative inflation rate will exceed 90%. To Ukrainians at least have not lost their income, they have to be paid 1.9 times more”, – says Executive Director of the Fund of the Blazer Oleg Ustenko.
At the same time real wages need to increase at least 24%, estimates analyst Vadim Iosub. “In other words, the increase in current nominal wages of this magnitude with zero inflation returned to the level of life of Ukrainians to the level of 2013. But it is possible to argue theoretically, because firstly, this wage growth the Ukrainian economy has no resources, and secondly, such growth of nominal wages would lead to a surge of inflation and target real wages still would not have achieved”, – said the expert.
The latest in 2016, the year the indexation took place in December. The minimum wage rose to 1600 hryvnia, while the average by this time crossed the mark of 5,400 USD. The following year, the government decided to reduce the gap between average and minimum wages and to increase the latter to 3200 hryvnia in January 2017.
As prices rose
One of the key factors that stimulated the growth of inflation index this year has risen in price utilities. Manufacturers have to put in their products expenditure on electricity, gas, water. In January, according to the State statistics service, prices grew by 0.9%, in February decreased by 0.4%. Also steadily reduced inflation in the summer became cheaper products. But in April prices rose sharply, by 3.5%. This is due, as explained in the state statistics, gas price hike.
“A significant factor that influenced the overall rate of inflation in April was a seasonal change in the rates for natural gas at 48.8 per cent. This has led to higher prices (tariffs) for housing, water, electricity, gas and other fuels overall by 20.1%”, – stated in the message.
By the end of 2016, the inflation rate reached 12%.
As a result of growth of prices has changed the structure of the consumer basket of Ukrainians. If earlier 50-55% of family income spent on food, after inflation, says Oleg Ustenko, up to 85% of the income of Ukrainians minimum wages will go to the food and the rest on bills.
The expert explains that those who earn the minimum wage and pensions, pay for utilities only 15% of their income, the rest is covered by subsidies.
“Those who have minimum income, the consumer basket is divided into two large groups: utilities and food. They receive subsidies, have the opportunity to receive a subsidy. I would assume that the consumer basket of the poor Ukrainians, who receives a subsidy is: 85% of their income a family spends on food, the rest is “communal”, – said the Executive Director of the Blazer.
“Those who have minimum income, the consumer basket is divided into two large groups: utilities and food. They receive subsidies, have the opportunity to receive a subsidy. I would assume that the consumer basket of the poor Ukrainians, who receives a subsidy is: 85% of their income a family spends on food, the rest is “communal”, – said the Executive Director of the Blazer.
Oleg Ustenko also noted, the poorer the Ukrainians, the harder it “hits” on their budget inflation. So, the inflation rate is considered for all groups of goods approved by the Cabinet of Ministers of the consumer basket (more than a hundred names). Those whose diet is limited to the most necessary products (some of which with 2014 the year rose by 300%), can spend on products in 2 times more than three years ago.
