In 2016 the average monthly earnings of Ukrainians were only 5183 hryvnia, which is only 198 US Dollars or 175 Euro.
How wages in Ukraine will change by 2020
The minimum wage was increased by 100% in January 2017: From 1600 to 3200 UAH ($61.4–122.8). It was a big step, since certain social payments are based on this parameter. With higher wages, the size of unemployment benefits also increased.
The government projects that by the end of the year the average monthly paycheck will reach 7104 hryvnia ($272). But because we are talking averages, it means there were be still plenty of people working 8-hour shifts 5 days a week, and taking home less than $200.
Besides, women in Ukraine earn on average 25% less than men. Females are among the lowest paid employees in the country.
Some of Ukrainian women on Elenasmodels.com reported that they earn only around USD $100 monthly working as teachers or medical personnel in a hospital.
At the same time, as we reported earlier, there are no plans for future rises in 2017.
The government expects that social standards are going to rise by 6-10% every year, according to Segodnya.ua.
- In 2018 the minimum wage will reach 3723 UAH ($143).
- By 2019 it will rise up to 4173 UAH ($160).
- By 2020 it should grow to 4425 UAH ($170).
Inflation vs. indexation of social standards
According to Finance.ua, before 2014 the level of the lowest remuneration tended to increase at least to the level of inflation in the country. In fact, the level of earnings, transferred to US Dollars, kept increasing.
But in 2014 prices rose almost by 25% and there were no corresponding growth in remuneration.
- What happened in 2014? Read the short course of modern Ukrainian history here.
During the period that is now known as the “economic crisis of 2014-2015”, inflation in Ukraine had been galloping ahead, while the average paycheck remained nearly the same.
- For instance, in 2015 the inflation index grew drastically by approximately 43%, but social payments were indexed only by 14%.
- Because the exchange rate between hryvnia and US Dollar kept discounting the Ukrainian currency, people’s standards of living dropped substantially.
Experts insist that the minimum salary should not only be defined by the government but depend on the real economic situation in the country. They argue that the perfect size of the minimum salary should equal 60% from the average wage in the country.
Nevertheless, the fact that the minimum salary is being increased has economic consequences.
- Income of poorest Ukrainians rises.
- Fines for employers, which are linked to this figure, increase.
- Contributions to Pension Fund grow.
However, when discussing the rise of the minimum salary, the officials leave out such figures as prognosis of the exchange rate to US Dollar or Euro. But it is this rate that determines how much goods cost for regular Ukrainians.