The government of Ukraine made a decision to freeze the minimum wage for the period 2025-2027, which caused a wave of indignation and fear among citizens and experts.
The society noted that it is one of the most controversial initiatives proposed by the government of Ukraine in the conditions of martial law and economic instability. This decision was taken in the context of growing pressure on the state budget, caused by the need to finance defense and support basic social programs.
The Cabinet of Ministers of Ukraine adopted the budget declaration for 2025-2027, which provides for the freezing of the current minimum wage, living wage and minimum salary in the budgetary sphere for the next three years. In addition, in Ukraine, it is planned to replace the living wage with a new special social payment, which, according to the Minister of Labor and Social Policy, Oksana Zholnovich, should have a positive impact on the social system and the economy. At the same time, the amount of new social assistance will be determined individually for each family, taking into account its composition and needs. The new basic social benefit will be provided as care for people who have lost their capacity to work, as well as help for those who do not have the necessary financial security due to poverty.
Does the government really understand the consequences of such decisions, or is this just another attempt to cut costs in the face of a constant budget deficit? At the same time, against the background of these measures, new initiatives are emerging to raise taxes and introduce new excise duties, which will hit the wallets of already burdened citizens. Can this be considered a comprehensive approach to stabilizing the economy, or are these short-sighted solutions that will only exacerbate the crisis?
Specialists’ reaction to the government’s decision
Today, the minimum wage in Ukraine is UAH 8,000, the living wage for persons who have lost their ability to work is UAH 2,361, and for those able to work — UAH 3,028. The minimum official salary in the budget sector is UAH 3,195. The budget declaration approved by the government, which was made public by Yaroslav Zheleznyak, the first deputy chairman of the Verkhovna Rada Committee on Tax and Customs Policy, provides for the refusal to increase these social standards.
The Federation of Trade Unions of Ukraine, extremely outraged by such a decision, published a statement in which it wrote that freezing the minimum wage could lead to the violation of the constitutional rights of citizens and the worsening of the social situation of workers, the unemployed and pensioners.
“The state once again fails to fulfill its obligations to ensure basic social standards, which is unacceptable in the context of the EU accession negotiation process, where the principle of the rule of law is key. Such decisions will affect everyone: employees, the unemployed, pensioners and other socially vulnerable categories of the population.” – emphasized the Federation of Trade Unions.
Economist Oleg Pendzyn drew attention to the fact that the budget declaration for 2025-2027 foresees significant expenses not for salaries, but for security and defense, which may indicate the continuation of the war.
“The lion’s share of budget funds will be directed to the maintenance of the military, which indicates that the war will continue,” he noted.
At the same time, the Chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, Danylo Hetmantsev, said that the issue of freezing minimum social standards will be further discussed in the parliament, admitting that such a measure is excessively strict.
“The freezing of minimum social standards for 2025-2027 is too harsh a measure in the context of fiscal consolidation, especially given the projected increase in inflation. This may negatively affect the return of Ukrainian migrants from abroad.” Hetmantsev emphasized.
What consequences await Ukrainians
Freezing the minimum wage for three years ahead is a move that hides more threats than meets the eye. Rising inflation, rising commodity prices, and the dollar, which is expected to continue to strengthen, all make freezing the minimum wage an extremely dangerous move. When the purchasing power of citizens falls and incomes remain at the same level, this creates ideal conditions for deepening social inequality and increasing poverty. Budget workers, pensioners, low-income families, low-skilled workers — all these population groups are at risk of worsening living conditions, which can have unpredictable consequences for the country’s social stability.
- Macroeconomic prerequisites
First of all, the freezing of the minimum wage takes place against the background of long-term growth of inflation and a decrease in the purchasing power of the national currency. According to government forecasts, the inflation rate will increase by 9.5% in 2025, by 10.4% in 2026 and by 5.9% in 2027. At the same time, the dollar exchange rate is forecast to reach UAH 45 in 2025, UAH 46.5 in 2026, and UAH 46.4 in 2027. In such an economic situation, the minimum wage, which traditionally performs the function of protecting the least well-off sections of the population, risks losing its effectiveness.
From a macroeconomic point of view, the decision to freeze the minimum wage can be perceived as an attempt to reduce inflationary pressure and stabilize budget expenditures. However, this is only a superficial view of the situation. A deeper analysis suggests that such a move could lead to lower domestic consumption, which in turn would cause a slowdown in economic growth. A decrease in the purchasing power of citizens will increase the pressure on small and medium-sized businesses that depend on the domestic market, reduce production volumes and lead to job losses.
Ukraine’s economy, which is already in a state of crisis, risks receiving another blow. A decrease in the purchasing power of citizens directly affects the domestic market, leading to a decrease in demand for goods and services. This, in turn, leads to a slowdown in economic growth, which has a negative impact on all areas of the country’s life. And when we talk about economic stability, it is worth remembering that it cannot be achieved at the expense of lowering the standard of living of citizens.
- Social consequences
Freezing the minimum wage for the next several years means that the incomes of the least well-off will remain at the same level, despite the constant increase in the prices of basic goods and services. This is especially dangerous for pensioners, low-income families, as well as for low-skilled workers who do not have the opportunity to increase their incomes due to changes in the professional field.
Social inequality, which is already a serious problem in Ukraine, may become even more acute as a result of freezing the minimum wage. The lack of indexation of salaries against the backdrop of rising living costs will lead to the fact that many citizens will have to look for additional sources of income or reduce spending on basic needs, such as food, education and health care. This, in turn, can cause a deterioration in the health of the population, a decrease in the level of education and social mobility, which will negatively affect the country’s development in the long term.
- Impact on pension and other social benefits
Freezing the minimum wage also has a direct impact on the pension system and other social benefits. The minimum wage is the basic indicator for calculating pensions and social assistance. If this indicator does not increase, the amount of pensions and other payments will remain unchanged. This means that pensioners, who already face difficulties in providing basic needs, will find themselves in an even more difficult situation.
Given the fact that pensions in Ukraine are one of the main items of social spending, a decrease in their real value can lead to an increase in the level of poverty among the elderly. It can also cause an increase in social tension and discontent among the population, which can lead to mass protests and demands for a revision of state social policy.
- Tax consequences
The minimum wage is also an important element of the tax system, as it determines the amount of taxes and fees paid by citizens and businesses. Freezing this indicator can lead to a decrease in state budget revenues, since a decrease in the purchasing power of the population will directly affect the level of consumption, and therefore, the amount of tax revenues.
In a situation where the state is already facing a budget deficit due to significant spending on defense and social programs, a decrease in tax revenues could pose a serious challenge to the country’s financial stability. This, in turn, may lead to the need to revise the tax policy, which will include tax increases or the introduction of new fees, which will further increase the pressure on business and the population.
- Legal aspects
From a legal point of view, the decision to freeze the minimum wage can be challenged as a violation of labor rights and principles of social justice enshrined in the Constitution of Ukraine. The minimum wage is a state social guarantee that should ensure a decent standard of living for every working citizen. Keeping this indicator at the same level in the face of rising inflation can be seen as a violation of these rights, which can lead to massive lawsuits and workplace conflicts.
In particular, in the event that inflation exceeds the level of income growth of citizens, employees may apply to the court with demands for revision of the minimum wage level or compensation for damages caused by violation of their labor rights. This can create additional pressure on the judicial system and contribute to the growth of social tension in the country.
Alternatives are possible
Freezing the minimum wage is only one of the possible options for solving the problem of the state budget deficit, but there are alternative approaches that can be less painful for the social sphere and the economy in general. For example, the government can consider the possibility of reforming the tax system, in particular, the introduction of progressive taxation, which would reduce the burden on socially vulnerable sections of the population and ensure a fairer distribution of the tax burden.
The question also arises: wouldn’t it be more logical to pay attention to the sky-high salaries of officials, deputies and judges? These people, who often do not justify their official duties, moreover, are at the center of scandals, receive hundreds of thousands of hryvnias per month, while most Ukrainians survive on pennies. Why doesn’t the government start by cutting those obscenely high incomes, instead of again punishing those who already have the least?
In addition, corruption, which permeates all levels of government, remains the country’s main problem. Billions of hryvnias, which settle offshore and in the pockets of corrupt officials, could become another important resource that the state is so desperately looking for today. Instead of targeting those who are barely surviving, the government should focus on the real fight against corruption and the return of illegally withdrawn funds to the budget. This would not only fill the state treasury, but would also be a real step towards social justice. But why is this not done? Perhaps because the fight against corruption and reducing the excessive income of officials will affect the interests of those who hold power in their hands? While ordinary citizens are forced to endure yet another reduction in their already meager incomes.
By leaving the minimum wages unchanged, the government once again demonstrates that the interests of ordinary people are only a secondary concern for it. This approach is not only unfair, but also destructive for the country. It undermines trust in the authorities, deepens social inequality and becomes the cause of growing tension in society.
