President of Ukraine

President: Increase of minimum wage is step towards civilized standard of living in Ukraine

14 August 2020 - 09:56

President of Ukraine Volodymyr Zelenskyy has said that the increase the minimum wage to UAH 5,000 from September 1, which is outlined in the president's bill, is the first phase. During 2021, the next phases of increase are to be implemented.

"I am sure that the deputies will vote for the bill submitted by the President of Ukraine to increase the minimum wage to UAH 5,000. Then there will be the second phase of this program – an increase to UAH 6,000 from 2021. And during 2021 there will be the third phase. We will increase to UAH 6,500," the Head of State said.

According to the President, after the increase in the minimum wage, the incomes of public sector employees will grow: teachers, doctors, social workers, as their salaries are calculated using the unified wage scale pegged to the minimum wage.

"These are certain steps towards a truly civilized standard of living in Ukraine. Quarantine continues, but after a serious pause, when neither entrepreneurs nor sole proprietors, many state-owned enterprises have been working for more than two months, it is now very important to give people some support," Volodymyr Zelenskyy said.

The President appealed to Chairman of the Verkhovna Rada Dmytro Razumkov with a request to hold an extraordinary session of the Parliament on August 25, after the Independence Day of Ukraine, and called on members of parliament to support the president's bill on increasing the minimum wage.

The coronavirus COVID-19 pandemic and restrictive measures to prevent the spread of COVID-19 have hit the real incomes of citizens and, as a result, led to lower saving.

Chairman of the Council of the National Bank of Ukraine Bohdan Danylyshyn said that in the first half of 2020 the savings of the population shrank by almost 6%.

"Raising the minimum wage will somehow increase incomes and, accordingly, enhance the possibility of savings. Therefore, the increase in the minimum wage, even in the announced amount, is necessary and advisable at the present time," the head of the NBU Council said.

"The President's initiative is well-timed. It is supported by the government and, I hope, will be supported by the Verkhovna Rada of Ukraine," he added.

Chairman of the Federation of Trade Unions of Ukraine Hryhoriy Osovy said that the unions have repeatedly raised the issue of increasing the minimum wage before the government and employers. According to him, the current inflation is actually eating away tiny incomes, and the minimum wage should be raised to at least UAH 6,500.

"When the President was running for office, he declared that poverty is to be overcome. Raising the minimum wage allows us to get closer to poverty alleviation and its liquidation," Hryhoriy Osovy said.

The chairman of the Federation of Trade Unions also said that, according to their calculations, the payroll in the structure of production costs in Ukraine is very insignificant being 5-8%, while in European countries it is 25-30%, so businesses have the resources to increase wages.

According to him, by targeting integration with the EU, the President and the government must do everything necessary to ensure that the vector of social policy of Ukraine meets European standards.

Raising the minimum wage will help bring salaries of Ukrainian out of the shadows, when an employer officially fixes a low salary that is allowed by law for an employee and gives the rest as a backdoor salary, evading the payment of a single social security contribution. It will also stimulate the growth of average wages in Ukraine and will help reduce the outflow of human capital abroad.

Hryhoriy Osovy said that the increase to UAH 5,000 is only the first phase. The draft national budget for next year, which the government must submit to parliament by September 15, should include the next phases of minimum wage increase. For its part, businesses must also prepare for the inevitable increase in the minimum wage in the future.