The discussion continues among Ukrainian economists and politicians about whether the minimum wage should be raised to UAH 237 as of July 1. In particular, the Ministry of Labor and Social Policy instead proposed return to tying pay scales to the adjusted relative minimum wage of UAH 185. The Day also decided to contribute to this discussion and turned to experts for comment. What should the minimum wage in Ukraine be, considering the real cost of living and not budget capabilities?
Serhiy LYTVYNOV, general director, Minolta Ukraine Company:
“Even without making special calculations I can say that the minimum wage should be UAH 500. To illustrate, although average employees in our company make that, they spend it all on food and can set hardly anything aside. And even those who make between UAH 3,000 and 3,500 cannot accumulate savings. I was amazed when our employee with a salary like that used a company fringe benefit, an interest-free loan given only once every few years. However, he didn’t need the money to buy a car or expensive furniture, but only a brand-name jacket for his child.
“Much still remains to be done before the economy can make it possible for employers to start paying decently. Personally, I think that emphasis should be made on developing the consumer market. People who retain the socialist mindset cannot understand it. Meanwhile, even foreign loans could prove a shot in the arm of the domestic market.
“It is essential that money should reach the people. They will return the money to the market by buying products, clothing, and satisfying certain cultural needs. In the understanding of a market-oriented economist this could stimulate demand and thus activate production. To boost economic growth we shouldn’t pump cash into enterprises, which was widely practiced until recently. This only piled up domestic and foreign debts. On the contrary, we should create and develop the market and stimulate demand.”
Tetiana ARTYMCHUK, executive director of the Vesta Industrial Company:
“Our minimum wage should come to $100. This can be achieved primarily by lowering taxes on salaries. Employers could use the money thus saved to increase pay. It is an open secret that the official and actual salaries paid in this country are different things. Easing the tax burden will make it possible to increase substantially both the minimum wage and salaries of more skilled workers. As for wages and salaries paid from the budget, the problem of the budget deficit needs to be solved. It’s not up to me to decide where the taxpayers’ money goes or who manages it and how, or why our teachers and doctors suffer as result.”
Ella LIBANOVA, expert consultant to the president of Ukraine:
“The minimum wage should certainly match the minimum subsistence level (UAH 342). However, such pay would be completely unrealistic today. And to eliminate this paradox, we need to get the economy out of the shadows. If all wages are accounted for and if everybody pays taxes, then these two minimums will draw closer to each other. And the budget is not the only problem. We must ensure the growth of production efficiency both in the state-run and private sectors of the economy.”
