In a few months will increase pensions and the minimum wage: why Ukrainians do not become richer

In Ukraine after a few months it is expected the next indexation of social standards. The first of may, the minimum pension will grow from 1247 to 1312 of the USD, and subsistence minimum for able-bodied – until 1544 1624 hryvnia. Indexing, according to the country’s budget, two per cent ahead of rising prices – inflation rate of 8.1%, and the standards will grow by 10.1%. Experts are sure that the growth standards in the best case will allow you to save the income of the poorest Ukrainians in the last year. “Today,” found out, the wealthier Ukrainians this year and who will not help the indexation of incomes.

Working Ukrainians: minimal leveled the income of the poorest

At the end of last year, the Cabinet surprised the Ukrainians “unexpected” decision to raise the minimum wage from 1,600 to 3,200 hryvnia from January 2017. The Cabinet said that the plans to raise the minimum wage announced in may last year, and the salary increased, counting the basket.

Photo: archive

The decision to raise the minimal salary are not discussed with employers the most difficult thing I had to small businesses in small towns. So, not all entrepreneurs can “afford” to pay its employees not less than 3200 hryvnia. Those who pay less will face fines of tens of thousands of hryvnia.

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As noted by senior research fellow, Institute of demography and social studies Lydia Tkachenko, the new minimum salary compensated for the cumulative rate of inflation over the past few years. So, from 2014 to 2016, according to the NBU, the prices increased by 80.6 percent, and social standards during the same period rose by only 28.7%. In fact, all the Ukrainians, whose income depends on the state, including pensioners and state employees, have become poorer by 1.5 times.

This year the minimum salary was doubled up with accumulated over several years, the level of prices. The Ukrainians, who had previously earned more than 3200, the innovation of the government not felt. “We have changed the definition of the minimum wage, removed her binding to other types of salaries. Now the growth of the minimal salary does not guarantee wage growth. Overall wages have not increased,” says Lydia Tkachenko.

The analyst of “Alpari” Maxim Parkhomenko notes: to grow must not only minimum, but the average salary in Ukraine. According to the expert, to Ukrainians returned to pre-crisis level of income, the average salary in the country at current prices should be 12 thousand hryvnia.

“Indexing in any case can not fully neutralize the effects of inflation that have been in past years. In our case, using the indexation fail to return to pre-crisis level of wages. Only the rise and wage growth will help to bring income of Ukrainians in the pre-crisis level. Namely, the growth of the average salary from 6000 to 12000 UAH”, – said the analyst.

“Indexing in any case can not fully neutralize the effects of inflation, which was in the past years”, – said the analyst.

Experts explain: in 2017, the year the income level has reached a crisis level for Ukrainians with the minimum wage, at the same time Ukrainians with average wages over the last few years considerably poorer.

Pensioners remain below the poverty line

Most of the economic decline suffered by pensioners. In may of this year the minimum pension will increase from 1247 to 1312 hryvnia, and in December – up to 1373 UAH. “Retirees really began to live worse, inflation is incredibly threw their income. But the economy does not show off. We see a high level of shade, high levels of migration, shows an extremely high ratio of pensioners to working alone,” says Executive Director of the International Fund blazer Oleg Ustenko.

This year the Ukrainians on the deserved rest “get rich” of 2% , provided that the rate of inflation, as provided for in the budget will be 8.1%. Lydia Tkachenko says: revenues will indeed grow, but not for all pensioners. “We have a law written that will never be normal indexing. If the pensioner settlement of the insurance pension is below the subsistence level, he is therefore not entitled. And we have the vast majority of pensioners, about eight million people receive subsidies to the minimum wage, because pensions have not modernize, they will never have normal indexation”, – says scientist.

“We have a law written that will never be normal indexing. If the pensioner settlement of the insurance pension is below the subsistence level, he is not entitled to indexation”, – says scientist.

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Note, the average pension in Ukraine reached UAH 1800, with about 300 thousand pensioners live on a minimum salary of 1,247 USD. At the same time thousands of Ukrainians in retirement receive more than 20 thousand hryvnias. Experts say that the richest pensioners – retired judges. How wrote on his page on the social network ex-Finance Minister, MP Viktor Pynzenyk, the pension of judges of the constitutional Court will be at the level of 226 thousand hryvnia, and the Chairman of 235 thousand hryvnias.

To the incomes of pensioners continued to fall, it is necessary to reduce the inflation rate, confident senior researcher of the Institute of demography and social research.

“Ideally, that inflation was not so high. Why in the Soviet time there was such problem? Because prices did not grow. Or, for example, in developed countries, inflation for the year may be 0.5%, yet inflation could be 50 or 15%, of course, is that such features are not very developed economy. It turns out that the economic capabilities of the state budget no. If the crisis, it is clear that in the budget there is no money for that. Need to become on the path of sustainable development, to avoid such price increases. It is the longest and most proper way,” says Lydia Tkachenko.

Photo: archive

At the same time, Oleg Ustenko says: at the moment Ukraine has no possibility of a dramatic increase pensions. The only way out eventually, when the economy will grow at a more rapid rate, significantly increase the income of Ukrainians in retirement. “The question is not one year”, – said the expert.

As new social standards will affect subsidies

As explained in the Ministry of social policy, to the end of the heating season, i.e., April 30, to count subsidies to Ukrainians will not. But after that, the discount will still count. When calculating subsidies in the social service determine mandatory payment for the family. Regardless of how many used resources (within social norms), will have to pay a fixed amount monthly. Income per family member share of the underlying factor of 2 and a living wage, the amount received multiplied by 15%.

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For example, the total income of a family of four in 2016-m to year – 3200 UAH (two parents with minimum wage and two children). 800 hryvnia each. According to the above formula, you can calculate the amount of mandatory payment: 800 / 1544 / 2 * 15% = 3,8% of the total income, that is for communal family will give 121,6 hryvnia. This year, after growth of the minimal salary, the same family with two minimum wages on four pay for communal 492,8 of the hryvnia, that is 371,2 hryvnia more.

As reported “Today” source in the Cabinet, due to the increase in the minimum wage will be able to save 5 billion budgetary hryvnias which had earlier planned to spend on subsidies. In addition, the officially unemployed Ukrainians in the calculation of grants take into account the income in the amount of two living wages. Before the first of may is 3088 hryvnia, and after may – 3248 hryvnia.