In Ukraine, the issue of increasing the minimum living wage remains unresolved, and no changes are expected in the near future. Minister of Social Policy Denys Uliutin, during his speech in the Verkhovna Rada, explained the factors that are hindering the reform and what needs to be done for its implementation.
This is reported by Finway
Main Obstacles to Increasing the Minimum Living Wage
Currently, the minimum living wage in Ukraine serves as the basis for calculating approximately 170 different types of payments, most of which are salaries that have no direct connection to this social indicator. Additionally, the current methodology for determining it is outdated and does not reflect modern economic conditions.
Denys Uliutin explained that implementing the reform requires several sequential steps. Among them are the adoption of four draft laws that have already been submitted to the Verkhovna Rada, as well as detaching the minimum living wage from all payments to which it is currently tied.
“We have repeatedly emphasized, along with the relevant committee, that it is necessary to detach the minimum living wage from all payments to which it is currently tied. This includes about 170 payments, most of which are salaries that have nothing to do directly with the minimum living wage,” the minister noted.
A New Approach to Calculating the Minimum Living Wage
After the relevant laws are approved, Ukraine plans to transition to a European model for determining the minimum living wage. This system takes into account two main factors: the food component, based on the nutritional composition of food, i.e., the volume and composition of nutrients necessary for a person, and the non-food component, which is calculated separately for each individual.
Uliutin emphasized that the government and the relevant committee are ready to implement changes, but the primary task remains the adoption of four key draft laws. Only after this can the minimum living wage be detached from the payment system and the reform conducted.
The minister stressed that as long as the minimum living wage is tied to a large number of payments, its increase will automatically lead to a significant rise in state expenditures. Therefore, it is essential to first carry out the “detachment,” and only then move on to reviewing the indicator itself.