The socio-economic situation in Ukraine and measures to combat the consequences of the COVID-19 pandemic

21/10/21 Olena Tarasiuk, Ministry of Labour and Social Policy, Ukraine

The income situation

During 2020 there was a steady increase in people’s incomes. The nominal incomes of the population increased by 6.1% compared to the preceding year and in the first quarter of 2021 there was an additional rise by 16.1%.

This increase in income was in particular due to increasing social standards and statutory guarantees. For instance, the defined subsistence minimum increased by 8.0% in 2020 and by another 9.3% in 2021. It is now at about 2,300 UAH which is about €75. In line with the growth of the subsistence minimum, all statutory social entitlements determined by it were increased.

Also the minimum wage increased, namely by 19.8% in 2020, but by January 2021 it has been even 27% higher than a year before.

During this period the average monthly salary increased by 10.4 % and amounted to almost 11,591 UAH (about €376) while the average pension increased by 13.8%. On 1 July, it amounted to 3,779 UAH (about €123).

In order to create preconditions for the further development of the subsistence minimum and to change the approaches of its calculation, a draft law was developed and submitted to the Parliament (Verkhovna Rada) of Ukraine. The draft law stipulates in particular that only the minimum pension and social benefits as the main source of income for a person should depend on the threshold of the subsistence minimum.

The Human Development Strategy

In order to address the most important challenges of social development, such as the unfavorable medical and demographic situation, the low level of welfare and the low efficiency of the health and social protection system, the Human Development Strategy was adopted.

This Strategy is a comprehensive document that sets out long-term and strategic goals as well as main tasks to be implemented in the areas of demographic development, health, education and science, culture and sports as well as in the improvement of living standards, the establishment of family values and in ensuring equal rights for women and men.

The Poverty Reduction Strategy

In order to reduce and prevent poverty, the Poverty Reduction Strategy was implemented, which had a positive impact on the poverty situation. Between 2016 and 2019 the poverty rate (share of incomes below the actual subsistence minimum) decreased in absolute terms from 51.1% to 23.1 %.

However, due to the deteriorating socio-economic situation caused by the spread of the COVID-19 pandemic and related measures (lock-down, quarantine etc.) the poverty rate has slightly increased again in 2020 to 23.2 %.

Mitigating the negative impact of the pandemic

In order to mitigate the negative consequences of the pandemic, the Ministry of Social Policy has introduced a number of measures and the Government has adopted several regulations aimed at supporting business, the working population and vulnerable groups, including:

• A simplified mechanism for providing housing subsidies was introduced and the reassignment of housing subsidies without new application was provided for existing beneficiaries.
• Subsidies to persons who lost their jobs due to quarantine were established.
• To support families with children in quarantine conditions in 2020, an additional assistance was introduced for each child under ten years as well as to one-person companies.
• The extension of payment of previously assigned state social benefits was provided for the new period without the need for personal application.
• One-time cash benefits in the amount of 1,000 UAH (about €32) to certain categories of the population for more than ten million pensioners and recipients of social benefits were provided.
• Since August 1, 2020, targeted assistance to the pension payment was established to 10,000 family members of persons who died as a result of injury, mutilation, contusion or other damage to health received during direct participation in anti-terrorist operations.
• Social protection of insured citizens of Ukraine was strengthened, in particular: the list of insured events was expanded for temporary disability benefits.
• To insured persons in health care facilities, as well as on self-isolation under medical supervision due to COVID-19, 50% of the average income is paid regardless of the contribution period (estimated recipients: 6 million). In addition, a sickness benefit is paid to health care workers as 100% of the average income regardless of the contribution period.
• One-time financial assistance in the amount of 8,000 UAH (about €260) was established to insured persons whose activities were temporarily suspended due to measures against the pandemic.
• Additional guarantees (insurance payments) to health care workers in case of disability or death were introduced.
• Salaries for employees of public social services providing home care were boosted by up to 100 % of salary.

Moreover, the endeavours to strengthen social protection for the most vulnerable are ongoing. In particular, in 2021 incentive mechanisms for unemployed workers from low-income families to return to the labour market was introduced. They are provided with assistance in starting their own business, including purchasing equipment and materials (the programme will start in January 2022). To support low-income families with many children, the Government has decided to provide one-time cash benefits in the amount of 2,000 UAH (about €65) per child to prepare for the school year. This payment should be provided to 145,000 children raised in large low-income families.

Strategy for Digital Transformation

A new Strategy for Digital Transformation of the Social Sphere was adopted by the Government of Ukraine in October 2021. The main objective is to create a unified information environment in the area of social welfare and social work, in particular a unified register of providers, clients of social services and beneficiaries of cash benefits, as well as to introduce a system of monitoring and evaluation.

Electronic services are being introduced using the “Unified Information System of the Social Sphere” to bring social services closer to citizens, which will ensure, in particular, the provision of all services at one approximate point.

Other activities

The National Action Plan for the Implementation of the Convention on the Rights of Persons with Disabilities until 2025 has been approved.

The Concept of creation and development of the system of early intervention, which is aimed at integrating the spheres of health care, preschool education, social protection into the system of early intervention, was approved.

In order to create favorable conditions for employment of persons with disabilities the Government adopted the draft Law of Ukraine in March 2021. It provides the balance of interests of both persons with disabilities and employers with the aim to increase the level of employment of persons with disabilities. The draft law is currently in the legislative process at Parliament.

With these decisions and interventions the Government of Ukraine is taking appropriate steps and providing measures in the area of social welfare to implement Ukraine’s European integration commitments and to improve the welfare of citizens.