The management of the Social Security Fund for Industrial Accidents has still not drawn the appropriate conclusions from the proposals and recommendations made by specialists of the Accounting Chamber of Ukraine during their previous audits. As a result, in 2005 the discrepancies and gaps continued in normative-legal resolution of issues around for forming and using the money from the Fund’s budget. This ultimately made it impossible to optimize expenditure, was detrimental towards resolving issues of social protection of those injured at the workplace, and failed to stimulate businesses to improve the safety level in the workplace.  These are the results presented by a Panel of the Accounting Chamber based on the results of this year’s audit of the Fund.

From 2003-2005 the level of industrial injuries in Ukraine remained high. It increased in 5 regions, and in 13 regions there was a rise in the number of cases of work-related illnesses. All of this was the result of inadequate implementation of measures aimed at averting accidents, and a reduction in money directed by the Fund at financing these measures, as well as a lack of interest from businesses in improving work safety.

Proposals have not been implemented on bringing the size of insurance tariffs in industries nearer to the level of professional risk. The disproportion seen in previous years therefore remains between the payment of insurance contributions and payments as accident compensation in individual areas of the economy. There was no practical implementation of the relevant norms of the Law “On mandatory state social insurance against industrial accidents and occupational diseases which have caused disability” with regard to establishing reductions or additions to the size of insurance tariffs for businesses depending on the level of safety and of injuries. None of the programs for improving the safety level, work conditions and the industrial environment financed by the Fund from 2002 – 2005 was implemented in full. The national program for improving the safety level, work conditions and the industrial environment in 2001 – 2005 was only 47.1% implemented, in branch programs – 29.8%. The program for developing means for individual protection of workers – 64.3%. Untimely fulfilment of work, lengthy lack of implementation in the workplace of already completed scientific measures for preventing accidents led to their obsolescence and caused inefficient use of Fund spending amounting to 13 million UH.

Administrative payments to the Fund’s budget were also not adequately provided for. Arrears and the number of insurers not fulfilling their commitments to the Fund increased. If in 2003 204 thousand insurers did not pay their insurance contribution, in 2005 this figure had risen by a third.

A negative impact on achieving Fund income came also from the existence of legally established concessions for particular branches, the increase in arrears on insurance contributions and debt against wages. For these reasons the Fund’s budget did not receive 282.6 million UH due. This in particular applies to providing for those with serious work-related disabilities and who are in the queue to receive cars. Over five years of the Fund’s work, only 2.8 % of those in this queue were able to enjoy their right to a car. In 2005 of the planned 5.8 million UH for this purpose, less than 20% was spent. In comparison with previous years, the number rose, but not thanks to an improvement in the Fund’s work, but largely because 52 vehicles had to be purchased to implement court rulings. Last year the removal of indebtedness before the Pension Fund was also achieved through coercive measures..

Specialists of the Accounting Chamber consider a serious problem which could lead to problems in balancing the Fund’s budget to be payment following court rulings of moral compensation. In 2005 pecuniary compensation for moral damages was paid out to more than 2 thousand individuals, this being 4 times higher than in 2004. The corresponding expenditure increased the figures for 2004 by 4.5 times. And over 9 months of this year, the amounts in moral damages have risen 2.4 times over last year.

The executive directorate of the Fund also sometimes creates difficulties in work. In particular, the lack of automated information systems in main areas of insurance work, including in the register of victims, complicates the planning of expenditure and monitoring of the use of funding on payments to victims.

The Panel of the Accounting Chamber has sent its conclusions and suggestions on improving the work of the Fund and on eliminating the failings and violations identified to the Ministry of Employment and to the Fund’s Board.

Press-Service of the Accounting Chamber