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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Towards the International Day for the Eradication of Poverty

Sociologists say the situation with two-child families considerably worsened in Ukraine last year, with 42 percent of them living beyond the poverty line
23 October, 2012 - 00:00

There was a saying in the Soviet era: “Poverty is no crime but it is a curse and worse.” Very few remember it today, but this does not mean that something has radically changed here, even though President Viktor Yanukovych of Ukraine made a special statement last Wednesday on the occasion of the International Day for the Eradication of Poverty. He said, among other things, that “the level of extreme poverty is now the lowest since 2001 and that of absolute poverty fell from 16.8 percent in 2010 to 14.6 percent in 2011.” The president also pointed out that the implementation of social initiatives allowed the government to raise pensions for 12.9 million Ukrainian pensioners by an average 120 hryvnias in May 2012, resume the repayment of compensations to former USSR saving bank depositors, and begin to increase retired military servicemen’s pensions. “The first positive shifts must inspire us to make a still more strenuous effort to combat poverty,” Yanukovych says to the electorate. “Cooperation between the government and businesspeople and a wide range of civic organizations still remains the number-one task today. I am convinced that we will manage by joint efforts to provide every individual with decent living standards.”

We will get back later to this quotation from the president’s address and, meanwhile, let us look at what sociologists say about Ukrainian poverty. The level of poverty was going down in Ukraine until 2006, when the crisis cut short this positive trend, and Ukraine is now back at the 2006 level. “Those who spend more than 60 percent of the family budget on food are considered to be poor,” says Kateryna Rybalchenko, a UN Development Program senior manager. “In the past year, the share of these people in Ukraine has gone up to 41.5 percent.”

“The past year has seen a noticeable drop – from 23.5 to 19.6 percent – in poverty among the employed people. But if this figure does not fall further on, it may become critical,” says Liudmyla Cherenko, a department chief at the Institute of Demography and Social Research. “Employment is supposed to insure one against poverty and minimize risks. If we are saying that 20 percent are poor, this means that wage standards are low and must be changed. If it is a case of two young people with one child, the two wages should be divided into three, and they will run the risk of falling below the poverty line.” Cherenko thinks that poverty among the employed and poverty among children are interrelated. Last year saw a decline in the poverty level for those who work, which she claims had a positive effect on children. “The poverty line in this group went down from 32.7 to 32 percent last year,” the expert notes, “but the situation with two-child families is worsening – the poverty level went up from 40.7 to 42.0 percent.”

“Until we change the principles of distribution, the situation with, for example, relative poverty will never change,” Cherenko continues. “We have raised social standards, minimal wages and pensions and seem to have pulled people out of poverty. But it is far more difficult in the case of relative poverty.” Asked by The Day about the principles to be applied here, she said she prefers “the model of Old Europe” but added: “It is claimed that the latter has collapsed due to the crisis. I believe that the lesser the income gap and inequality between people is, the greater the progress in societal development will be.” Cherenko says the abyss between the poor and the rich is growing at an unprecedented pace in the world. For example, Africa is more and more distancing itself from civilized countries. According to the academic, civilization is reaching a deadlock because nobody knows the economic model that will help break it.

Africa, poverty, and an economic model for Ukraine were also the subjects of a debate among the economists who gathered on October 18 at the Bleyzer Foundation to attend the fifth season of expert roundtables. Vasyl Yurchyshyn, Razumkov Center economic programs manager, focused on the future difficulties for Ukraine’s export-oriented economy. He quoted the well-known economist Nouriel Rubini as saying that the world’s economic situation is going to deteriorate because “the economic field in the European Union is unstable and it is not clear what may help it stabilize in the near future, and the economic dynamics of the largest emerging giant, China, has essentially worsened.” So the expert is sure that there are no prospects in sight that would allow Ukraine “to get at least some plus today. Nor is it clear what can help this country obtain some normal plus next year, too.”

Ihor Lavrynenko, the Reformist Club’s analytical department director, forecasts that next year the government of Ukraine will be investing in the most dynamic sectors, which will provoke an essential growth of import and will be further boosting the foreign debt. “Against the backdrop of low confidence in this country’s economy on the part of all the strata of the population, this will more and more affect the hryvnia’s rate and, taking into account problems with the IMF, this may lead to an all-out devaluation of the national currency,” Lavrynenko presumes. He says the government continues to discuss what is to be done next year. One group suggests putting emphasis on restoring social justice by way of increasing social payments and carrying out big investment projects, which will stimulate the economy. Another one insists on continuing institutional reforms, improving the investment climate, easing the administrative pressure on business, and fighting corruption.

“It will be known on November 6 who has won,” the expert says. “And, in my view, the crucial day will be November 6 rather than October 28, The Day of elections.” The Day tried to clear up this illogical rating of the two dates. Lavrynenko refused to answer this question on the voice recorder. But one of the roundtable speakers explained this in an informal chat: “The old parliament may appoint a new premier on November 6 with or without due account of the election results.” But which of the two groups will win, will Mykola Azarov be dismissed? The Day has not yet received an answer to these questions, but when I was rereading this material, I came across the following phrase in the abovementioned address of the president of Ukraine: “Still important is today cooperation between the government, businesspeople, and a wide range of civic organizations.” Is this a hint?

By Vitalii KNIAZHANSKY, The Day
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