We are already wrote about the living wage as one of the most utopian indicators of the country’s economy.
Reflecting the wrong ideas of those in power about the basic needs of Ukrainians, it in no way corresponds to the realities of consuming the most necessary things. What can be purchased for UAH 2,920 per month? Bread? Drinking water? Cereals? Salt? So the living wage is not just too small, it is actually empty, because it is obviously unrealistic for a person who has to eat, pay for housing, medicine, and communication to survive on this amount. After a long year-long pause starting in 2024, the living wage finally moved, and then it froze again.
Oleg Pendzyn, an expert of the “Economic Discussion Club”, reported on the air of “Ukrainian Radio” that the Cabinet of Ministers decided to “freeze” the living wage and the minimum wage for the next three years.
Such a “norm” is contained in the budget declaration for the next three years. It is about what will be included in the state budget for the next three years.
“Neither the living wage nor the minimum wage will be indexed there. That is, due to the lack of funds, 3,000 for the living wage and 8,000 for the minimum are “frozen” for the next three years, the expert noted.
At the same time, only in 2025, according to the macroeconomic forecast, according to O. Pendzin, inflation is expected at the level of 10%. And this indicator is also written in the budget declaration. I wonder how these conflicting “norms” coexist there?
Last week Ministry of social policy published its data on the actual size of the subsistence minimum per person, as well as on individual social and demographic groups of the population.
The prices of June 2024 and the approach corresponding to Article 5 of the Law of Ukraine “On the Subsistence Minimum” were used in the calculations.
As you can see, for an adult able-bodied population, this minimum is UAH 7,382, and after paying all the necessary fees, it reaches UAH 9,170.
We will remind you that Article 4 of the aforementioned the law The “Procedure for establishing and approving the subsistence minimum” declares that the subsistence minimum is established by the Cabinet of Ministers of Ukraine after conducting a scientific and public examination and is approved annually by the Verkhovna Rada of Ukraine in the Law on the State Budget. Therefore, the law provides for an annual review of this indicator, taking into account changes in economic conditions.
By freezing the living wage and the minimum wage for the next three years, the government violates national legislation in the sphere of social life.
What consequences can this have?
If inflation increases and incomes remain at the same level, the real purchasing power of citizens will decrease. This will cause an increase in the level of poverty and social inequality in society.
Domestic consumption will also decrease, as citizens will be limited in their spending, in general, this may negatively affect the economic growth of the country as a whole
It is clear that the decision to freeze the minimum wage and living wage is driven by the desire to reduce public spending on social benefits and public sector workers.
However, such a decision may cause dissatisfaction among the population and lead to social protests.
In the long term, the lack of an increase in the minimum wage and living wage can negatively affect the quality of life of the population, their health and education, which in the future can lead to a decrease in labor productivity and the economic potential of the country.
“There are things that must be resolved quickly enough, because it is the survival of people, in particular those who have these funds as the only social income and are far below the poverty line,” – this is how O. Pendzyn comments on the government’s decision.
