09:33 28.12.2016

Poroshenko signs into law bill on minimum wage of UAH 3,200 a month

2 min read
Poroshenko signs into law bill on minimum wage of UAH 3,200 a month

Ukrainian President Petro Poroshenko has signed into law bill No. 5130 amending a number of Ukrainian laws, which doubles the minimum wage in Ukraine to UAH 3,200 a month starting from January 1, 2017, according to a statement posted on the Verkhovna Rada website on Tuesday.

The law also broadens the government's powers, including those of self-government bodies, to inspect the payment of wages to employees and toughening employers' responsibility for non-compliance.

Experts of the Tax and Budget Reform group of the Reanimation Package of Reforms have asked the president to veto this law, as some of its provisions affect business environment and were passed without adequate public discussion.

"The law contains a dangerous provision, which applies to private entrepreneurs and self-employed people: the requirement to pay a single social contribution at the level of the minimum insurance contribution (which taking into account the new minimum wages will be UAH 704) even in the absence of economic activities and consequently income," the experts said.

They argue that this provision is counter-productive, because its implementation will lead to mass termination of activities by private entrepreneurs and worsening conditions for those who are engaged in business activities but temporarily suspended them due to adverse circumstances.

Secondly, the law gives local governments the right to initiate inspections of any enterprises, including private ones, and organize their conduct, the experts said. In their view, such a rule will increase the pressure on businesses, especially small ones.

They predicted that this regulation will result in increased unemployment.

However, Prime Minister Volodymyr Groysman on Tuesday warned employers about the need to strictly follow the rules of the new law.

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