10:56 14.08.2020

Zelensky: Rada's adoption of bill to raise minimum wage to UAH 5,000 in Sept provides for increase in wages to UAH 6,500 in 2021

4 min read
Zelensky: Rada's adoption of bill to raise minimum wage to UAH 5,000 in Sept provides for increase in wages to UAH 6,500 in 2021

President of Ukraine Volodymyr Zelensky has said that the increase the minimum wage to UAH 5,000 from September 1, which is outlined in the president's bill, is the first phase. During 2021, the next phases of increase are to be implemented.

"I am sure that the deputies will vote for the bill submitted by the President of Ukraine to increase the minimum wage to UAH 5,000. Then there will be the second phase of this program – an increase to UAH 6,000 from 2021. And during 2021 there will be the third phase. We will increase to UAH 6,500," the presidential press service quoted Zelensky as saying on Friday morning.

According to the President, after the increase in the minimum wage, the incomes of public sector employees will grow: teachers, doctors, social workers, as their salaries are calculated using the unified wage scale pegged to the minimum wage.

"These are certain steps towards a truly civilized standard of living in Ukraine. Quarantine continues, but after a serious pause, when neither entrepreneurs nor sole proprietors, many state-owned enterprises have been working for more than two months, it is now very important to give

The President appealed to Chairman of the Verkhovna Rada Dmytro Razumkov with a request to hold an extraordinary session of the Parliament on August 25, after the Independence Day of Ukraine, and called on members of parliament to support the president's bill on increasing the minimum wage.

The coronavirus COVID-19 pandemic and restrictive measures to prevent the spread of COVID-19 have hit the real incomes of citizens and, as a result, led to lower saving.

Chairman of the Council of the National Bank of Ukraine Bohdan Danylyshyn said that in the first half of 2020 the savings of the population shrank by almost 6%.

"Raising the minimum wage will somehow increase incomes and, accordingly, enhance the possibility of savings. Therefore, the increase in the minimum wage, even in the announced amount, is necessary and advisable at the present time," the head of the NBU Council said.

"The President's initiative is well-timed. It is supported by the government and, I hope, will be supported by the Verkhovna Rada of Ukraine," he added.

Chairman of the Federation of Trade Unions of Ukraine Hryhoriy Osovy said that the unions have repeatedly raised the issue of increasing the minimum wage before the government and employers. According to him, the current inflation is actually eating away tiny incomes, and the minimum wage should be raised to at least UAH 6,500.

The chairman of the Federation of Trade Unions also said that, according to their calculations, the payroll in the structure of production costs in Ukraine is very insignificant being 5-8%, while in European countries it is 25-30%, so businesses have the resources to increase wages.

On August 6, Zelensky submitted to the Verkhovna Rada a bill on amendments to the law of Ukraine "On the State Budget of Ukraine for 2020," which provides for an increase in the minimum wage and an increase in the minimum wage to UAH 5,000 from UAH 4,723 from September 1 of this year.

The European Business Association (EBA) strongly opposed presidential draft law No. 3963 with amendments to the 2020 national budget on increasing the minimum wage to UAH 5,000 from UAH 4,723,000 from September 1.

"The EBA insists on the inadmissibility of draft law No.3963 unless the maximum value of the [single social contribution] SSC accrual base is reduced to prevent an increased burden on honest taxpayers," the EBA said in a statement on Friday.

The association said that such decision will increase the fiscal pressure on wages and causes a chain reaction of negative consequences.

"There is no doubt that the public authorities will most likely increase pressure on the honest taxpayers in an attempt to compensate for the inevitable tax losses caused by the growth of the shadow sector," the EBA said.

The association also said that despite proposes from businesses to discuss this initiative, the draft law was registered without any consultations with the business community.