The Government’s decision to increase the minimum wage was ill-conceived. It will cause bad consequences for the Ukrainian economy, Senior Economist and member of the Supervisory Board of CASE UKRAINE Center for Social and Economic Research Volodymyr Dubrovsky warns. He claimed that in an interview to ‘Radio Svoboda’ (‘Radio Freedom’).
– Minimum wages were increased in many countries. It exists in many states, but economists are aware (and this is proven by empirical studies), that actually it only happens under trade unions pressure and helps to only a few categories of workers who work somewhere very close to this minimum wage.
Those who cannot find a job, will be affected: fewer jobs will be created for them. Those who earn more, will suffer from that too, because employers are forced to pay more to the low-skilled workers and save, respectively, on more qualified.
Private sector workers, which had earned less than a the minimum wage, will face a choice: either to be fired or be transferred to a full-time ‘shadow’ sphere. Well, or a businessman will be forced to close his business and earn some other way.
Read the full interview [in ukrainian]