Publication

Social and economic rights

Prepared by M. Scherbatiuk, the Ukrainian Helsinki Human Rights Union, featuring Olha Shevchuk-Klyuzheva.

 

  1. The right for adequate standard of living

In 2015, the problem has intensified in Ukraine in respect to the right for the adequate standard of living.

According to the State Statistics Service, the actual disposable income in the first quarter of 2015 was 76.5% if compared to the corresponding period of last year.[1] In the second quarter, actual disposable income amounted to 66% from that of the same period of last year.

As of August 2015, real wages equaled to 80.8% as compared to August 2014[2]. At the time when the structure of household income remained almost unchanged if compared to the first quarter of 2014, during the first quarter of 2015 the share of savings significantly decreased – from 6% to 0.6%.[3] Also arrears of wages increased in September 2015.[4]

At the same time there is significantly reduced the amount of social aid to citizens and on the one hand it is justified by the existing political situation in the country, and on the other hand, it violates the constitutional rights of the population.

Since January 1, 2015 the law has come into force abolishing a number of exemptions and benefits to certain categories of persons and/or changing the procedure of their assignment. In particular, it refers to the abolition of the right for free use of city transport for a number of categories, and it is determined that major part of the benefits will be given only if the amount of average total family income per person for the previous 6 months does not exceed the income that gives the right for tax social benefit in the manner prescribed by the Cabinet of Ministers of Ukraine. The above regulation is applied to benefits for housing services for specific groups of citizens.

The sharp devaluation of the hryvnia and reaching a critical low performance in the auction in January – March 2015 subsequently led to an increase in import prices by three times, and as for the Ukrainian products – by 30%, despite the fact that for a long time the income of the citizens remains unchanged if compared to the same period in 2014.

The UN experts state that 80% Ukrainian citizens are below the poverty line, as set living wage specifies expenses in the amount of UAH 33 per day, equivalent to USD 1.5. According to the UN standards, poverty line refers to those people who spend USD 5 per day that is less than UAH 105.[5]

Rising of fuel prices led to higher tariffs for transportation of passengers in public transport. Since April 2015 there was a regular increase in electricity tariffs, which almost by half increased the costs of the citizens for this item. Rising of tariffs for housing and utility was also observed in September.

In response, the Government has slightly modified system of subsidies for housing and utility services to vulnerable groups of the population, allowing in some ways simplify the obtaining of aid and despite the procedural flaws, a lot of people took advantage of the opportunity to receive the subsidy. According to the Minister of Social Policy: “… Nowadays subsidy has been granted for 3 million 600 thousand families. For comparison: Last year at this time the number was only 450 thousand”.

Only in September 2015 the government conducted indexation of salaries and pensions. Minimum social standards were increased by 13%, in particular the cost of living. It was determined the subsistence minimum per person per month at a rate of UAH 1330, for capable of working persons it is UAH 1,378, for persons incapable for working -UAH 1,074. However, this increase was not sufficient – given the devaluation of the hryvnia the minimum wage dropped to USD 55 per month.

It is important to note that the framework specified by the Cabinet of Ministers of Ukraine for the Ukrainian subsistence minimum in 2000 are significantly lower than physiological ones, and the list of food items generally does not cover many needs. As for the list of food there is observed the non-compliance of food consumption to the medical standards. As for non-food products, for instance, the clothes and food in general are not provided for a child under one year. Though, government has not been approving the respective alterations for more than 15 years.

This issue was the subject of the court consideration and as a result, at the end of September 2015, the District Administrative Court of c. Kyiv declared illegal the actions of the Cabinet of the Ministers as for establishing the subsistence level in 2015 without ensuring and taking into account the results of scientific and social examination of the existing range of food items, the set of non-food products and range of services to establish a living wage.[6] Also the court judgment defined: “To oblige the Cabinet of Ministers of Ukraine to take measures envisaged by legislation and implement the existing competence in order to:

1) complete the scientific and public examination of food, non-food products and services to establish a living wage in Ukraine;

2) review the contents of set of food, non-food products and services for major social and demographic groups.

– to oblige the Cabinet of Ministers of Ukraine to set the living wage in Ukraine in 2015 in the manner and under the provisions of the Law of Ukraine “On Living Wage”.

In November 2015, there were several meetings of the expert committee on the scientific and public examination of set of food, non-food products and services – basis for living wage determination. On November 20 these sets have been approved by the expert commission and directed to the Ministry of Economic Development and Trade of Ukraine to prepare a draft resolution of the Cabinet of Ministers of Ukraine on their approval.[7]  But it is unknown whether the relevant resolution will be adopted by the Government, as in previous years, despite the submission of the issue for consideration no relevant decision was taken.

It should be noted that nothing has changed in the methodology for determining the cost of living. Even the First Deputy Minister of Ministry of Social Policy V. Shevchenko emphasizes that “methodology of living wage determination generally requires a radical revision. I consider it necessary in the near future to continue work in this direction together with the parties of social dialogue.”

In 2015, despite all the promises of government, there was continuously applied the shameful practice of using indicator of “guaranteed subsistence minimum” for the determination of certain types of social protection. This figure shows the inability or unwillingness of the state to fulfill even the minimum incorporated in the living wage.

In February 2015 the Cabinet of Ministers prepared a draft of Poverty Reduction Strategy, implementation of which shall be in the period from 2016 to 2025 years.  But within this aspect the more important is the fulfillment of tasks for poverty alleviation while there were a lot of good strategies and policy documents in this area while performance remained at extremely low levels all these years, reducing and leveling of the value of such documents. Thus, the results of the National Program for overcoming and preventing from poverty for the period until 2015, approved by the resolution of the Cabinet of Ministers, because of the aggravation of political and socio-economic problems in Ukraine for the last year nearly negated.

The issue of the right for adequate housing was one of the most problematic in Ukraine in the field of socio-economic rights.[8] But only amount of UAH 187,36 million is provided in the state budget for 2015 for the funding of government programs to provide citizens with affordable housing. The largest amount is provided for the program of reduction of prices of mortgage loans (13/3) – UAH 93,25 million. Amount of UAH 49,26 is provided for preferential crediting of young people in the state budget. The increase in the authorized capital of the State Fund for Youth Housing, under the law on the state budget will involve UAH 38 million, UAH 6,85 million will be allocated for financial support of the institution. In addition, there are not provided funds for the affordable housing (70/30) in the state budget.[9]

However, the number of migrants who need to get basic living conditions is more than 1.4 million and 124 thousand combatants.

As to provision of housing to migrants and combatants, the experts agree that in Ukraine there is no public policy focused on these categories and there are no compensatory mechanisms for lost housing.[10] However, the government allocates certain funds for housing for combatants and a program of partial compensation for housing costs for migrants. In particular, amount of UAH 300 million was allocated for the provision of housing to families of the fallen in ATO in 2015; till the end of the year there was planned to provide housing for 633 families by the end of the year. But it does not solve the problem.

 

  1. The right for social protection

The social protection system in Ukraine in 2015 was at special attention because its effectiveness was decisive for the socio-economic rights of many people who, due to economic factors, were facing the problem of survival.

2015 again showed the presence of significant shortcomings in this area to be addressed. Among which there is the fact that until now there was no division of the legal frameworks into those guaranteeing social and economic rights and those providing certain privileges in connection with a particular position or particular services. This in turn prevents from the effective implementation of changes to the entire social protection system. This is particularly important in the context of changes to the Constitution of Ukraine, because it can determine such division.

In general the social protection system remains too cumbersome system with financially unjustified benefits and social payments system and with inefficient extensive network of public institutions of social protection, which corresponds to a greater degree to the traditions of the Soviet model than the European approach.

There is a problem that the large number of court decisions in Ukraine is not executed and the largest number of them refers to the so-called “social cases”, where people try to get social benefits provided by applicable legislation. According to the Ministry of social policy there is in general the underfunding of social transfers in the state budget up to the several tens of billions of hryvnia. According to official data of the Ministry of Justice of Ukraine, currently there are executed only about 30% of the resolutions of the domestic courts. Consequently, the remaining 70% refer the violation of the rights of citizens for the judicial protection, which have the potential to become the subject of consideration at the European Court of Human Rights.

Among the problems of social protection of participants of the ATO there can be mentioned the changes to legislation regarding improvement of the procedure of receipt of the status of combatant, settlement of status and social security for the representatives of the volunteer battalions, alterations to ensure the labour rights of the ATO. One of the main problems was the lack of awareness of the combatants and their families on how they can take advantage of the benefits for which they are entitled. Unfortunately, the Ministry of Social Policy currently is at the stage of finalizing of the program of psychological rehabilitation of the ATO combatants, as well as expanding the network of health centers to which they can receive the vouchers. In addition, there are only works in progress on the creation of the mechanism of electronic entering to the unified database of beneficiaries, so that the combatants can receive benefits without referring specifically to the social protection authority.

As of 2015, Ukraine has about 13 million of pensioners and the average pension is UAH 1,670, while the minimum wage is established by law as UAH 1,218.[11] Every month the amount of pensions paid is UAH 20-21 billion.  In 2015 the Pension Fund of Ukraine approved the annual budget of UAH 234.4 billion with deficit of UAH 19 billion that will be covered directly from the state budget. In general, there is about 1,2 of working person per one pensioner in Ukraine.[12] This demographic trend is alarming for the state, because low wages, “shadowing” of salaries and economy recession complicate the provisions for the persons of retirement age, creating an additional burden for the state budget.

At this point, Ukraine has the solidarity pension system, which has several significant drawbacks. For example people who have the same experience, but in the past paid different pension contributions, at present receive the same pension. Or the citizens who have the same experience and receive the same salary, but retired with a difference of a few years, get amounts that differ significantly.

In 2015 the pension policy of Ukraine faced some quite serious innovations resulting from reforms.

1) On March 2, 2015, the Verkhovna Rada of Ukraine adopted the law on reducing pensions to working pensioners, temporary cancellation of pension payments to employees in special positions and changing of conditions of retiring for the citizens who are entitled to so-called “privileged” pension. Working pensioners will be paid 85% of the pension, if the salary in one and half times exceeds the minimum one. At termination of employment, the pension will be payable in full.

Pensions to the specific categories of employed persons (judges, prosecutors, customs officials, MPs, etc.), are temporarily canceled in full until the end of 2015.

Privileged pensions are paid to citizens who work full time at underground works, work in hazardous and harmful conditions especially after the age of 50 (men) and 45 (women) with experience of 25 and 20 years respectively.

In addition, a preferential length of service for women will rise each year by 6 months to reach 25 years in 2024.

Also, citizens who work in hazardous and difficult conditions are eligible for a preferential pension. In this case, the retirement age is 55 years, with experience of 30 years for men and 25 for women. The list of such professions is regulated by the Cabinet of Ministers of Ukraine.  It should be noted that the aforementioned law does not apply to disabled groups I and II, disabled veterans, combatants, members of ATO and family members of military personnel.

2) On April 30, 2015 the Cabinet of Ministers of Ukraine has registered in the Verkhovna Rada a draft law No. 2767 “On Amendments to Certain Legislative Acts of Ukraine on introduction of the accumulative system of compulsory state pension insurance and common principles of pension accrual”. This draft law aims to radically change the pension system in Ukraine.

According to this draft law every citizen will be personally attached to own retirement future. Compulsory pension insurance is planned for individuals under 35 years old, while persons from 36 to 55 can volunteer to participate. To introduce the accumulative pension system it is necessary to ensure the stable economic growth of the country because innovations will not come into force before 2017. The premium rates will gradually increase to the target level of 7% in 2022.

It also provides complete cancellation of the so-called special pensions for civil servants, judges, prosecutors, etc., which will come into effect from the beginning of 2016 and it causes an active debate about the constitutionality of this approach.[13]

In addition, this project provides some additional options to use private pension funds (PPF), popular in various countries in the world. In Ukraine the PPF as a financial institution can provide new prospects, including not only the guaranteed provision of additional benefits for retirement, but also investing of accumulated funds in the economy of the state.

The actual problem is the blockade of pension payments in the occupied territory. The lack of results after the signing of the Minsk agreements prevents from transfer of tranche of social aids. As of May 1, 2015 1 million 109 thousand pensioners from the Donetsk and Lugansk regions receive pensions in full.[14] However, 333,9 thousand pensioners live at the uncontrolled territory and therefore do not receive any funds. For the accrual of pensions citizens shall apply to social welfare authority with a passport and a certificate on temporary registration.

 

Recommendations

1) To reform the system of social benefits: to divide the legal frameworks into those guaranteeing social and economic rights and those providing certain privileges in connection with a particular position or particular services;

2) to discontinue the practice of non-fulfillment of legal frameworks guaranteeing the implementation of social and economic rights;

3) to provide in full the funding of statutory guarantees of socio-economic rights, to stop the practice of “manual control” in determining the amount of social aid;

4) to improve the calculation of the living wage, especially to adopt a new set of food and non-food items and services, to adopt a new method for calculating this indicator;

5) to stop using the indicator “minimum living wage” that unreasonably reduces the minimum social guarantees, declared within applicable legislation;

6) to comply with the Law of Ukraine “On general principles and requirements for safety and quality of food” on the procedures regulating food quality

7) to establish and implement procedures to ensure the safety and quality of drinking water;

8) to implement measures to ensure the availability of housing, to prevent from groundless evictions from housing (especially of vulnerable groups), infringement of housing affordability for vulnerable groups;

9) to provide adequate funding and clear and effective mechanisms for implementing programs for social housing and the development of a network of reintegration, social accommodation for the homeless;

10) to improve work to ensure social protection for the vulnerable population due to the increase in tariffs for housing and communal services, including operation of a transparent and effective system of utility incentives and subsidies;

11) to gradually reduce the share of direct state funding of social needs and increase the amount of funding from the population, based on the increase in all types of income, primarily wages, pensions and other social transfers;

12) to ensure a tight connection between social benefits provided and the sources and mechanisms for compensation of their cost to the providers;

13) to continue reform of the pension system through the introduction of legislation on the accumulation level of this system and to create the conditions for it;

14) to resolve the issue of pensions for persons leaving for permanent residence abroad to countries which have not signed international agreements in terms of pensions.

15) to avoid discrete increases in the minimum pension; to introduce indexation rules for pension increases linked to the consumer price index calculated for groups of people with different incomes;

16) to provide guarantees of implementation of domestic judicial decisions relating to social assistance benefits where the claimant is a State.

[1] Available income of the population per I quarter of 2015 – State Statistics Service of Ukraine, http://www.ukrstat.gov.ua/operativ/operativ2015/gdn/ndn/ndn_u/ndn0115_u.html

[2] SOCIO-ECONOMIC SITUATION IN UKRAINE (according to the State Statistics Service of Ukraine – http://www.dcz.gov.ua/statdatacatalog/document?id=350795

[3] Socio-economic development of Ukraine in January-May 2015 – State Statistics Service of Ukraine

[4] Arrears of wages in 2015 rotsi1 – the State Statistics Service

[5] http://ubr.ua/ukraine-and-world/society/80-ukraincev-jivut-v-ukraine-za-chertoi-bednosti-oon-343952

[6] There is published a court decision to raise the living wage http://zib.com.ua/ua/print/118745-oprilyudneno_rishennya_sudu_schodo_pidvischennya_prozhitkovo.html

[7] There was completed the scientific and public examination of food, non-food products and services to establish a living wage http://www.mlsp.gov.ua/labour/control/uk/publish/article;jsessionid=599EE777B587CF1B1A3A0B65FBFF00D2.app1?art_id=183619&cat_id=107177

[8] 2.4. The right to adequate housing http://helsinki.org.ua/index.php?id=1432463481

[9] The state budget-2015 allocates to affordable housing only UAH 187,4 million http://economics.unian.ua/realestate/1030832-na-dostupne-jitlo-v-derjbyudjeti-2015-peredbacheno-vsogo-1874-mln-griven.html

[10] The strategy of accommodation and housing of internally displaced persons and combatants of ATO in Ukraine: legislative framework and practical aspectshttp://ief.org.ua/?p=4891

[11] http://economics.unian.ua/soc/1042211-minimalni-zarplati-ta-pensiji-ukrajintsiv-zrostut-na-13-iz-1-grudnya-2015-roku.html

[12] http://ukr.segodnya.ua/economics/enews/pensionnaya-reforma-kak-spravlyayutsya-drugie-strany-i-chto-delat-v-ukraine-594993.html

[13] The opinion of the scientific expert management of the Verkhovna Rada of Ukrainehttp://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=55000

[14] http://www.pravda.com.ua/news/2015/05/21/7068558/

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