Current analysis

Minimum Wage Growth Planned, But Only On Paper


Volodymyr Dubrovsky, ‘Case Ukraine’ Center for Social and Economic Research senior economist, has commented to the ‘Holos Stolytsi’ radio station on the government’s decision to increase minimum wage.One has planned to increase both the minimum and living wage in the 2017 Ukraine`s budget. The Government stated it will raise those points to 3200 hryvnias. In this regard, private enterprises were urged to prepare for the salaries increases since January 1, 2017.

The government managed to find opportunities to raise the minimum wage twice. At whose cost?

- We cannot say that the government has managed to do that. One has done this a little bit tricky: a minimum wage increases, but a schedule of charges does not. That is, as far as I understand, this step will not have any direct impact on public sector wages, as it has taken place in previous years.

And it is made just to force the private sector to set minimum wages. According to the government`s idea – I suppose, it was minister Andriy Reva who has thought it all up – those who actually pay in ‘envelopes’ will start to pay employers more officially. Accordingly, there will be fewer grounds to submit their claims for subsidies. Income taxes and the single social payments will be transmitted to the budget for this salary. Accordingly, budget revenues are slightly to grow, costs are expected to lower.

I think that this step is very controversial, because in fact the minimum wage (where it really works) is a very bad thing, because it turns out that it is easier not to employ a person and to leave him/her unemployed at society`s expense, and not to pay him the salary. Therefore I am against such a step and against such measures. Of course, one needs to take measures to make sure that people do not abuse the subsidies.

October 26, 2016