How to change the life of Ukrainians: salaries, taxes and inflation until 2020

In Ukraine presented the draft budget resolution for three years. According to the document, every year the minimum wage will increase by 6-16%, while the rate of price growth will gradually slow down to 5%. The website “Today” had read the paper and find out how it can change the life of Ukrainians in the next few years.

As wages will rise in Ukraine

In 2018, according to the budget resolution in Ukraine on 523 of the hryvnia will increase the minimum wage. In the beginning of this year the minimum salary was raised twice – from 1600 to 3200 hryvnia, to revise the minimum wage in 2017 will no longer be. But in the next year employers must pay employees not less 3723 hryvnia, in 2019 the minimum wage will rise to 4173, and in 2020 – up to 4425 UAH. Thus, every year, social standards will raise 6-16%

Earlier the minimum wages were increased by at least the rate of inflation in the country. Crisis 2015 and 2014 this rule has been violated. So, in 2014, prices rose by 24.9%, and social standards “froze”. In 2015 the inflation index reached a record for modern Ukraine of 43.3%, while social standards were indexed only by 14.3%.

As experts explain, the minimum wage though, and is established by the decision of the government, but its size should depend on the economic situation in the country. Ideally, the minimum salary should be 60% of the national average wage. Pwhen the effects of raising the minimum wage a few: grow the income of the poorest Ukrainians, increasing the penalties for employers, some companies must increase the wage bill, increasing Pension contributions.

“When we have the government last year decided to detach the minimum wage from a living wage, it is not invented, than it is to replace. Need a new solution, what are the challenges, as now set a minimum salary. Objectively speaking, it is good when the minimum wage – 60% of the average. Then it would be more incentive to work at any job. But we need to see how different working conditions, what is the nature of the work. It would be correct, if not the government itself will solve, and that before that, had held consultations with the social partners”, – says senior researcher of the Institute of demography and social studies under national Academy of Sciences Lydia Tkachenko.

The Ministry of Finance has also calculated the projected growth in average wages. So, this year the average salary of Ukrainians will reach 7104 hryvnia, next year this figure may increase to 8629 hryvnia, in 2019 – 9540 hryvnia, and in 2020-m – 10 of 537 USD.

As prices rise

High inflation – it is normal for a developing economy, the Executive Director of the International Fund blazer Oleg Ustenko. In the advanced economies, prices are rising within an average of one to two percent per year. So, during the global crisis of 2008 in Ukraine the rate of inflation reached 22.3 per cent, and in the countries of the European Union, only 3.4%. At the end of last year in the EU rose by 1.66%, and in Ukraine – 12.4%.
“It’s not how prices are rising, and as the growing purchasing power of the population. In any inflation if the income of the population grows faster, inflation is not terrible”, – says Director of the analytical Department of Concorde Capital Oleksandr Parashchiy

When inflation is high, money depreciate quickly. Even if earnings growth outpaces price growth, to increase or even to preserve their savings when high inflation is difficult.

According to the budget resolution in the next few years, the growth rate of inflation is significantly reduced. So, at the end of this year prices could rise by 11.2% in the following year by 7%, and in 2019 – by 5.9%, and in 2020 – 5%.

“This figure is quite real. Its implementation is possible under condition of growth of volume of foreign trade, as a consequence, stabilize our trade balance, as a result, we will witness a stabilization of the exchange rate including inflation. Because most of the goods we consumed or processed, imported, causing the change of the exchange rate entails the change of prices”, – says the analyst of “Alpari” Maxim Parkhomenko.

By the way, the Ministry of Finance suggests reducing the budget deficit and reduce public debt levels.

How can change the penalties and taxes

Tax on real estate. Every year Ukrainians who own real estate with a total area of more than the established norm (a norm is determined by the local authority), have to pay a tax for each “extra” square. Local councils have the right to determine the interest tax rate (from 0 to 1.5% of the minimum wage) and the area of the property that are not taxed (60 square meters per apartment, 120 for the house and 180 square meters in total area of house and apartment).

For example, the city Council took the following decisions for each “extra” square meter to collect 1% of the minimum wage. Resident of Kiev, who owns two apartments a total area of 140 square meters, will have to pay the tax for 80 squares (the norm for apartments in the capital – 60 square meters). It should be noted that the percentage of the minimum wage is taken over the last year. So, next year, over 80 squares will have to pay 2560 hryvnia, and if the minimum salary will increase, as provided for in the budget resolution, in 2019 80 “extra squares” will cost 2978 UAH.

Fines. “Most of the penalties are calculated not from the minimum wage. In particular, all the fines defined in the Code of Ukraine on administrative offences and the Criminal code, is defined as a certain amount of non-taxable minimum incomes of citizens (UAH 17),” – says the head of the practice Decisions and disputes JUSCUTUM Anton Kuts.

Will have to pay more than employers who violate Labor laws. If now for each unformed employee put a fine in the amount of 96 thousand UAH (30 times the minimum wage), already in 2020 for the same violation will have to pay 132 thousand. The same fine is put in the case if the employee is furnished at half rates, and in fact works full-time. If the employer does not pay for additional work at night and on weekends, you will have to pay a fine of 10 minimum wages – 32 thousand UAH at the moment and more than 37 thousand next year.

As noted by Anton Kuts, the minimum salary has a value when assigning offences to categories of offences. For example, stealing is a crime, if the value stolen exceeds 10% of the minimal salary. Now it is 320 USD.