Wage increases in Ukraine: a bluff or a reality?

These questions were posed to economist Eduard Karajia by journalists from Novini.LIVE.

Funds for Salaries

The bill submitted to the Verkhovna Rada offers hope for an improved quality of life for citizens, as salary increases are always a positive change. According to the document, the minimum wage may be raised three times:

from April 1, payments will increase to 9,100 UAH

from July 1 — to 10,100 UAH

from October 1 — to 11,184 UAH

However, the expert expresses doubts about its feasibility and the possibility of implementation.

"I have very serious doubts. This is a very unhelpful step for Ukraine, not because it’s bad for people to receive higher salaries, but because it’s all a bit deceptive," — says economist Eduard Karajia.

It is worth noting that in 2024, financial assistance to Ukraine was largely provided through donor contributions from other countries and international funds. Therefore, before making a decision to increase payments, it is essential to carefully calculate the budget and determine whether the necessary financial resources are available.

"Because the figure of 300 billion hryvnias is very underestimated. There were calculations in 2021, and at that time the question was about increasing the minimum subsistence level to 4,200 hryvnias, not to the levels currently planned. Back then, the amount was also 300 billion," — emphasizes Eduard Karajia.

Increasing the Minimum Wage

The expert also states that the issue of increasing salaries, the minimum subsistence level, and other social payments should be addressed comprehensively by changing the very mechanism of their calculation. For some categories of citizens, this could significantly improve their income levels, while for others, it may not change much at all.

"If this happens, then the salary of a judge who currently receives between 30 to 75 minimum subsistence levels, which is about 90,000, will rise to a minimum of 270,000 and a maximum of 750,000. Meanwhile, a family that truly needs this assistance will receive only about 2,000 hryvnias more," — says the economist.

Reform of the Payment Mechanism

It is important not just to raise the minimum wage or the subsistence level, but to direct these funds specifically to those with the lowest incomes. Otherwise, this could lead to significant budget expenditures that may be unfairly distributed under the current system.

"We need to review everything tied to this indicator and eliminate excesses, because there are many payments that have nothing to do with the minimum wage, the economy of the state, and so on. Then we can return to this issue to ensure that assistance reaches the population segments that truly need it," — concluded the expert.

Increasing the minimum wage is an important step that could enhance the welfare of the population. However, without adequate financial backing and reforming the payment calculation mechanism, this process may have ambiguous consequences.

Previously, we reported that there are plans for increased mobile communication costs and how much people will now have to pay. Additionally, we discussed the increase in utility payments for residents of Odessa starting March 1.