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Human rights in Ukraine – 2008. 14. SOCIO-ECONOMIC RIGHTS

27.06.2009

[1]

1. General trends

An economic crisis always affects the exercising of socio-economic rights since these are the most dependent on the financial possibilities of the State. Usually such times test the ability of the State to take responsibility upon itself and do all that is needed so that people feel protected and confident in the future. This depends on a number of factors determining the socio-economic policy of the State, for example, the level of public confidence in the actions of those in authority, the legal clarity of legislation ensuring safeguards for socio-economic rights, as well as implementation by the State of its obligations with regard to social protection.

Unfortunately, recent years have brought no increase in trust of the State. This is hardly surprising given the divide between the words from those in power or seeking to gain power, and what people actually get. High-ranking public officials talk constantly of high wages, pensions, employment however people have virtually stopped believing that the words will ever become a reality. The lack of public confidence is and will remain a main obstacle to carrying out any systematic reform in the area for social protection, whether introducing a single social contribution, or carrying out pension reform. In order that these measures bring benefit and are effective, it is first of all necessary that the public have confidence in these actions by the State.

Another example is the setting by the government of a subsistence minimum, the basic indicator for the entire system of social security. How can the public trust the government when the latter sets the size of the subsistence minimum, on which the minimum wage and pensions depend, at a rate so removed from reality that it would not even provide the minimum requirements for survival? In setting this indicator the government has for several years been infringing legislation, while as a substitute for a real minimum, the government has thought up «surrogate» indicators such as a guaranteed level of subsistence minimum which envisages the payments of various types of social assistance at a level even lower than the subsistence minimum.

There is also a problem with how clear and unequivocal is the legislation ensuring safeguards for socio-economic rights. It is impossible, for example, to speak of any degree of legal clarity where in order to receive certain social payments, a person is forced to turn to the court, go through all the stages of a court examination and even longer still waiting for the court ruling to be enforced, instead of receiving the legally-stipulated assistance through simple and understandable procedure. One seems flagrant examples of the situation with payments where assistance is for looking after families with children, as well as supplements to the pensions envisaged for war children. The court system is inundated with such cases and the public cannot fully understand what they are entitled to, and what they’re not.

The government has driven itself into a corner. There is no distinction in legislation between norms which ensure certain socio-economic rights and those that provide certain privileges linked with particular services or position. This is due to the complexity and lack of coordination of government regulation in cases where the State either provides or revokes certain privileges, and at the same time creates the risk of restriction or reduction of the current range of socio-economic rights, this being prohibited by the Constitution.

As a result we have seen several judgments of the Constitutional Court declaring unconstitutional particular provisions of laws with this adding to lack of clarity in legislation on ensuring socio-economic rights. This has been exacerbated by the fact that the government has effectively ignored the Constitutional Court judgments, this placing in doubt its ability to ensure their enforcement, as well as the enforcement of laws in the area of social security.

2. The right to an adequate standard of living

Although issues of social protection have traditionally been at the centre of attention of each of the branches of power in Ukraine, the actual changes in the quality of life demonstrate the extremely weak positive impact of economic growth on the situation in the social sphere. Despite the population’s real income almost doubling over 2003-2008, there were no qualitative moves forward in the position of Ukrainians as evidenced by the following disproportions:

·  Low standard of living (according to the standard of living index for 2008 Ukraine shared 62nd position in the rating with Namibia, having fallen three places compared with 2006); .

·  Insufficient financing of human development, in the first instance, insufficient funds spent on healthcare and education;

·  Increase in the scale and rate of depopulation with deterioration in qualitative characteristics with significant migration losses among the part of the population at reproductive age and with a high professional level;

·  The demographic structure of the population characterized by an increase in the ratio of people aged 60 and above (more than 20^ of the population) and a fall in the ratio of those not yet at working age;

·  Fall in the number of births per thousand head of population from 12.6 to 10.2 between 1990 and 2007, and an increase in mortality from 12.1 to 16.4 %, with the high death rate not ensuring natural growth of the population;

·  High mortality rate among men of working age (according to estimates, 40% of 16-year-old males are unlikely to live to 60) as a result of which the difference between life expectancy for women and men is 11 years (in some regions up to 13 years).[2].

In order to ensure the right to an adequate standard of living, it is therefore vital that measures be taken to significantly improve the standard of living of the population with this being especially urgent at a time of increased social tension due to the economic crisis..

 

2.1. Safeguarding the right to an adequate standard of living

In order to implement international commitments on ensuring the right to an adequate standard of living, it is vital that the government establishes an adequate indicator reflecting the minimum level which the State guarantees its population.

According to the Constitution this indicator is the subsistence minimum.

Pensions, other forms of social payments and assistance which are the main source of existence must ensure a standard of living which does not fall below this subsistence minimum.

This indicator thus provides the basis for making a general assessment of the standard of living, determining the criteria of poverty, establishing the size of the minimum wage and minimum retirement pension, the size of social assistance, help for families with children, unemployment benefit, as well as student grants and other social payments. As we can see, the running of all social policy is linked with the use of the subsistence minimum.

It is therefore of interest how this indicator is determined. According to the law, it is the «cost of the range of food items sufficient for ensuring the normal functioning of the human organism and preservation of health, as well as the minimum range of other goods and services needed to satisfy the individual’s basic social and cultural requirements»[3].

Determination of the subsistence minimum should thus be based on methodology for its calculation and a certain minimum range of food items and other goods, as well as services.

And here it becomes interesting. Not everybody knows that at the present time the subsistence minimum is calculated using methodology and a range of food items, other goods and services approved by the Cabinet of Ministers back in the year 2000. This is despite the fact that according to the Law «On the subsistence minimum», the range of minimum food items, other goods and services for the main social and demographic groups of the population should be reviewed at least once every five years.

Each year the Cabinet of Ministers sets itself the task of approving a new range of food items, other goods and services for the consumer basket, and each year manages to fail with this task. Draft proposals for such a range have circulated from one ministry to another, however all these attempts have achieved nothing. The range of food items, other goods and services forming the present consumer basket can thus be considered illegitimate.

It is no less important that specialists consider the norms established in the subsistence minimum to be significantly lower than physiological requirements, and that the range of non-food items does not cover many of the requirements of people nowadays at all.

It is questionable whether the range and amount of goods in the consumer basket meet medical standards, and serious doubts as to the adequacy of this basket are raised.

The size of the subsistence minimum does not take into consideration a number of crucial expenses: on building, buying or renting housing, spending on education, on health, of sending children to preschool facilities, fee-paying medical services etc. Nor are changes in the makeup of the consumer basket due to changes in the sphere of the housing and municipal services management taken into consideration.

Moreover the indicator for able-bodied person does not include income tax for individuals (15%), which is of course a fairly significant part of any person’s wages. It is also worth noting that in calculating the overall indicator for the country, regional differences with regard to prices of food and other items are not taken into account.

Experts believe that if the consumer basket was filled as it should be, the expenditure from the state budget would need to be at least tripled.

This all means one thing: the size of the subsistence minimum at the present time is like a chimera, a screen with which the government is endeavouring to conceal its inability to fulfil its promises in the social sphere. The question arises of how much all fine words about ensuring each citizen with a minimum standard of living are worth if this very minimum standard is the pits and the «ruler» used to set it has long ceased to have any relation with real life.[4]

The next step after it becomes clear that the subsistence minimum is far removed from reality is to determine how it really is used, and whether it is used at all in the social policy of the State. Logically speaking, and on the basis of the Constitution and laws, the subsistence minimum should be used as the criterion for low income, as a basic indicator for determining the minimum wage, minimum pension, various types of assistance for children, etc.

So what is the situation in actual fact?

In fact the subsistence minimum is applied only to establish the size of State social assistance for low-income families and families with children, people who are not entitled to a pension, the disabled. And yet here too a certain «fiddle» is applied, instead of the subsistence minimum. For payment of the assistance envisaged by the Law «On State social assistance to low-income families» a so-called level of safeguarding of the subsistence minimum is applied.

If one endeavours to describe this «element of social policy of the State», then put simply, it is an indicator which reflects the ability of the budget to pay the subsistence minimum to those who are entitled to it. This is approved each year in the Budget and usually its size is 70% lower than the size of the approved subsistence minimum. We thus have an extremely odd situation where the State is only 30% capable of fulfilling what is guaranteed by the Constitution and laws of the country! What then is the point of all this populism which undermines people’s trust?

Yet another example of the use of a «surrogate» subsistence minimum is the application of a level of safeguarding of the subsistence minimum when calculating benefit for looking after a child until it reaches the age of three.

It’s not just that this assistance is established only at the size of the difference between the subsistence minimum established for able-bodied individuals, and the average monthly total income for a family calculated for one individual for the previous six months. Even the subsistence minimum in this context is not taken in full, but only half that amount. And in this case, the State’s «charity» should be seen in the provision that the size of this assistance may not be less than 130 UAH. As we see, again instead of finding the possibility for paying mothers the equivalent of the subsistence minimum as assistance, the government has thought up how not to do so.

One can conclude that government policy is aimed not at seeking the means of ensuring fundamental guarantees, but at seeking ways of making it harder for socially vulnerable layers of society to receive assistance by coming up with various «surrogates» of the subsistence minimum in order to justify inability not only to keep their problems, but also to honour the legally enshrined guarantees of socio-economic rights.[5].

 

2.2. The quality and safety of food items

There remains a problem with ensuring that food products are of acceptable quality and safe to eat. The system of State control over quality and safety of food remains ineffective and most definitely does not promote an increase in the quality of what is produced by Ukrainian businesses. Each service within this system functions autonomously at the expense of paid services to producers, setting separate indicators for safety in food products and combining the functions of State supervision over the observance of these indicators.

The organizational and legislative structure of State regulation of quality and safety in food products has basically not changed in any significant way. Despite the adoption of several laws and items of subordinate legislation on the technical regulation of the quality and safety of food products, protection of consumer rights, protection of their health, no integrated and effective system of State regulation has yet been developed.

It should be stressed that the force of the Law «On the safety and quality of food products» and «On standards», the technical rules and procedure for assessing compliance which were adopted recently, do not apply to indicators for safety of products. That is, they won’t draw up horizontal technical regulations even though some technical regulations for food products have begun to emerge. This means that the results of control over safety indicators, the maximum level of harmful substances, though internal, not standardize methods for choosing experiments and carrying out analysis will not be recognized as reliable.

Furthermore, the methods for carrying out the majority of analyzes are closed for producers who are responsible for the quality of the items produced and don’t have a choice for confirming the accuracy of the analyses carried out.

We see an extremely typical example of the implementation of State standards for different types of sausage. The need to introduce such standards was determined by the fact that the quality of the products is low and on occasion presents a danger to those who consume them. In order to resolve this problem, new government standards were drawn up with these clearly stipulating the content of meat, as well as restrictions on the presence of various food and taste additives and substitute products. From 1 August 2008 they were supposed to be brought into force.

However still in July the State Committee on Consumer Standards cancelled the Order on implementing these standards and their implementation was postponed until January 2009. The argument at official level was that producers were not ready to introduce such standards. And consumers, supposedly, were also unlikely to buy products in which, according to the new requirements, there were no ingredients and supplements which form the original taste of this or that type of sausage.

And there continues to be no surprise at the fact that in December 2008 the implementation of these standards was postponed until 2010. However the reason now given was the task of overcoming the consequences of the economic crisis. With these actions the Government, effectively showing disregard for people’s health, placed the interests of business above the human rights to safety and healthy food products.

Food items containing genetically modified products continue to carry any information about this, and people still don’t know if they’re eating such products. The marking up of genetically modified products was introduced by the Cabinet of Ministers in August 2007, however in November of the same year the Cabinet revoked its own decision. The court reinstated it however nobody has yet set about enforcing this law. Although in November 2008, new rules for marking up food products were introduced these again fail to make marking of genetically modified organisms mandatory. The situation thus remains complicated, and not especially honest producers, in order to economise, are continuing to use various mixtures, for example, with the use of genetically modified organisms, placing many people in danger without their knowledge.

2.3. Ensuring proper quality of water[6]

Ensuring proper quality of the water people use remains a problem. Scientists from the National Academy of Science assert that what Ukrainians drink in the guise of drinking water is in fact technical water (sometimes even worse than that) which clearly does not improve the health of the population.

«One cannot on principle receive quality drinking water at waterworks. The water flowing from the tap is not drinking, but technical water. One therefore sees outbreaks of infectious illness, especially during the summer, in the South of Ukraine, because the present system for preparing and purifying water does not provide a full guarantee and absolute sterilization of the water», warns member of the Academy of Sciences, and Director of the Institute of Colloid Chemistry and the Chemistry of Water, Vladislav Honcharuk.

He adds that in the very process of sterilization «we receive a huge range of toxic compounds which it is very difficult to eliminate from the vast volume of water flowing through our pipes.»[7]

 

2.4. The right to adequate housing

There are also huge problems in exercising the right to adequate housing. One can obviously not demand that the State provides free housing to all those who want it, that is simply impossible. However the issue involves:

-  providing free housing to those entitled to this by law (some social categories, as well as certain civil servants, including where possible the privatization of housing if this is owned by the State and not received only for temporary use;

-  creating a state system of assistance to help those on a low income purchase housing through special favourable loans or sale at favourable prices taking into consideration the minimal percentage of profitability or other mechanisms to encourage the purchase of ones own housing;

-  providing hostel accommodation;

-  creating a system of social housing for the poor owned by the State or municipal authorities but let out at concessionary rates.

According to the Director of the City Institute Oleksandr Serhiyenko at the present time the average predicted waiting time for free housing is 73.9 years.

Official statistics show that 70% of families wait in the housing queue for ten or more years. Moreover, Mr Serhiyenko calculates, if with the birth of a child, a family joins the queue, then a baby girl may live to get the new flat (with the average life expectancy for women being 74 years), but unlikely that a baby boy will (since life expectancy for men stands at 62 years). It is thus ever more futile to wait in a queue for housing,

It is worth noting that according to official statistics, every seventh person in the housing queue is a Kyiv resident. This is despite the City Institute’s calculation that young residents of the capital will need to wait for their own flat from the State for 130 years, with this figure for Kyivites who took part in the War being around 83 years. The figure for people in the capital with special status because of the Chernobyl Disaster, the period is 90 years. Residents of old Kyiv buildings can on average expect new housing in 18 years.[8]

It is also important to point out that the programme of social housing is effectively not working. According to the Law «On the fund of socially designated housing», social housing is provided free of charge to Ukrainian citizens in need of social protection on the basis of a lease agreement for a certain period. Pursuant to this law, citizens recognized as in need of social protection or having the right to receive social housing are entitled to receive housing or hostel accommodation. Although the Cabinet of Ministers on 19 March 2008 adopted a Resolution «On establishing temporary minimum norms for ensuring social housing», the matter progressed no further. We must therefore acknowledge that the law on social housing is at the present time not working, and that therefore social housing remains as elusive as ever. And considering the problems we now have in the construction field, the situation is unlikely to improve. .

In 2008 the problem of people being deprived of hostel accommodation became particularly acute. As the result of a collision in legislation, it is possible to transfer an entire hostel, as the object of commercial real estate, into private houses, more often than not as part of the property of a municipal or State enterprise. У yet the people who have lived there for many years cannot privatize their living area, there being no legislative mechanisms. Eviction of socially vulnerable citizens from hostels has taken on a social flavour. One can cite examples with attempts to evict people from hostels belonging to the Lviv car factory[9], attempts to evict staff of the Ministry of Internal Affairs [MIA] from hostels in Kyiv[10] and the National Complex «Expocentre Ukraine».[11].

In the light of the emerging social tension, the President issued a Decree «On measures for ensuring the housing rights of hostel residents» which instructed the Ministry of Justice to take measures to stop any forced evictions from hostels until there has been legislative regulation to ensure a mechanism safeguarding the rights of such residents to privatize the accommodation they held in the hostel.

The Verkhovna Rada also adopted a Law «On safeguarding the housing rights of hostel residents» which sets down procedure for exercising their rights. The law stipulates that the right to privatize housing is granted to low-income citizens who have legally resided for no less than five years in a small-family or workers’ hostel, who do not have their own housing, and were or are working for the enterprise which provided them with accommodation in the hostel, and are not in a position to themselves finance the building or purchase of housing. The law came into force on 1 January 2009. At the same time, for this law to begin working, the government needs to draw up a number of subordinate normative legal acts envisaged by the law, and the bodies of local self-government have to make an inventory of all hostels.

Unfortunately it has become a common feature of both large and small cities to have people living on the streets, in the entrances to apartment blocks, in attics and basements. It is important to create a system for reintegrating the homeless, including a network of centres registering homeless people, institutions of social protection – night shelters, reintegration centres and social hotels. Here we should note that despite certain progress in this sphere, even the Ministry of Employment and Social Policy acknowledges that the number of such places is unequivocally insufficient[12] to have any impact on protecting this category of people.

 

2. The right to social protection

3.1. The system of benefits and privileges

A conceptual problem for ensuring the protection of socio-economic rights remains the failure in legislation to separate those norms which ensure certain socio-economic rights and those which provide certain privileges linked with particular services, position etc. This leads to difficulties with State regulation on providing and revoking certain privileges while at the same time running the risk that the State will limit people’s socio-economic rights, this being unacceptable.

The judgments from the Constitutional Court in 2007 and 2008 which found certain provisions of legislative acts unconstitutional since they restricted people’s socio-economic rights, confirm the existence of major problems in the area of social security. These lie in the first instance in how public officials understand the essence of socio-economic rights.

We have as a result the ignoring by the State of many provisions of the said judgments from the Constitutional Court, with this leading to wide-scale infringements of socio-economic rights. There is still no understanding of the fact that like other rights and freedoms, socio-economic rights are guaranteed and may not be cancelled and that in adopting new laws or making amendments to those existing, that their content and scope may not be narrowed.

On the other hand, there is virtually no mechanism for revoking various privileges which are not essentially socio-economic rights, and it is therefore difficult to speak of any effective activities in this sphere.

The system of benefits is extremely broad and spread out. It is used by 1.1 million people and envisages as many as 136 types of different social payments, supplements and subsidies.

In any state the system is an important component of general government policy and should make life easier for socially vulnerable layers of society. However it should also be effective: on the one hand many of those needing them may not have the opportunity to actually enjoy the benefits providing (due to certain legislative procedures, the symbolic or unneeded nature of various benefits for certain socially vulnerable groups, etc). On the other hand there are many categories of citizens who do not in fact need those social benefits and supplements, when compared with other categories.

Unfortunately, we are far from the creation of such a system as is confirmed by a study of the public’s assessment of the system of benefits and privileges, knowledge about their rights to specific types of benefit, the possibility of replacing the present system of benefits and privileges with targeted pecuniary assistance carried out by the Centre of Civic Advocacy[13].

The survey was carried out in December 2008 and January 2009 in Lviv, with 130 people of different age and social status who directly use benefits taking part. The following results were obtained:

−  the majority of those receiving benefits are dissatisfied with the present system of benefits and privileges (70 % of those surveyed);

−  there is an excessively complicated and diffuse system of benefits which is socially and economically unjustified;

−  there is a problem with people being insufficiently informed – 62% of the respondents said that they only know a part of their benefits;

−  46% of the respondents consider that their benefits only slightly improve their standard of living, while 31% say that they don’t improve it at all;;

−  32 % are positive about a change in the system of benefits to targeted pecuniary assistance; 29% consider that they do not have sufficient information about such a reform to draw any conclusions.

The public does not have any or enough information about the system of benefits, directions for reform, including mechanisms for replacing benefits with payments. It is difficult for them to draw any conclusions at all about the system of benefits and its reform. Their conclusions are based on their own personal experience of exercising the right to benefits, as well as information discussed and circulated by the authorities, politicians and civic society.

Another study of public opinion[14] showed that most citizens (49%) are convinced that benefits are enjoyed mainly by those who assign them. Considerably less (around 25%) chose the option that they are enjoyed mainly by those who earned them through their work, while around 25% answered that they were received by people unable to provide for themselves.

As we see, one of the important directions for reform of the system of benefits and privileges, applied in other countries, and being discussed in Ukraine, is a replaced by targeted pecuniary assistance.

It should be noted that from the point of view of the State certain steps are being taken in this direction. A commission has been created for ordering the system of providing benefits with the aim of drawing up proposals for a gradual move to providing benefits in the form of money. However the steps are too few to make any real inroads.

 

3.2. Ensuring social protection of families with children

One of the main priorities of the State in the area of social security is to create conditions for healthy, materially and socially-favourable families. One way of achieving this is through social protection of the most vulnerable categories of society (families with children, low-income families, those disabled from children and children of people with disabilities).

The Cabinet of Ministers and Ministry of Finance in 2007 and 2008 did not ensure enforcement of the Judgment from the Constitutional Court of 9 July 2007 which found unconstitutional the restrictions through Article 71 of the Law «On the State Budget of Ukraine for 2007» on the legally established size of assistance for looking after a child up to the age of three, and the provision of this in full (to an amount no lower than the subsistence minimum)t[15], and the Judgement from 22 May 2008 with analogous content but regarding the 2008 Budget. .

This has prompted numerous approaches to different level courts. in 2008 the courts examined and passed rulings to have the above-mentioned assistance paid as envisaged by the law to over 4 thousand claimants to an overall amount of 11 million UAH. Given the lack of money assigned in the State budget for enforcing the court rulings, the accounts of particular departments of employment and social protection have been frozen, and their managers have faced administrative proceedings for not enforcing the court rulings.[16]

The transfer by the Cabinet of Ministers in March 2008 of authority as central curator of subventions from the Ministry of Employment to the Ministry of Finance, due to the lack of procedure for interaction, has created conditions where the Ministry of Employment cannot fully ensure implementation of State policy in the area of social protection of the population. Furthermore, at the district (city) level the curator of subventions event remains bodies of employment and social protection of the population which are not subordinated and do not answer to the financial bodies.

It should be said that non-enforcement by the State of the Judgments from the Constitutional Court of 9 July 2007 and of 22 May 2008 regarding assistance to families with children renders meaningless all efforts by the State to create a system of social protection for the most vulnerable categories of the public, leads to legal lack of clarity when in order to receive assistance set down in legislation, a person has to go through court stages to defend their rights, and even more time spend waiting for when the court ruling will be implemented. All of this leads to social tension, an atmosphere of distrust in the actions of the authorities in the area of social security. This is understandable since there can be no effective system of social protections where the payment on particular types of assistance are carried out only through court orders.

 

3.3. Guarantees of social security for the elderly

The pension system in 2008 continued to work in conditions of maximum financial tension, while not sufficiently meeting the needs of pensioners who on retirement lose half their earnings.

The demographic situation is very difficult. If in 1966 the percentage of the population at retirement age came to 15.9%, over recent years this figure has increased one and a half times and now stands at 23.8%, and is expected to rise to 35% of the population by 2048.

15.2 million people are paying pension contributions, with the number of pensioners standing at 13.8 million. Thus, already today the average person making contributions is financing 90.8% of the average pension, and in some regions more. This is with the pension component in the GNP of the country already exceeding 15%.[17].

Due to demographic trends the solidarity pension system is already incapable, without State support, of ensuring that pensions sufficiently substitute lost earnings, and an optimum differentiation of pensions.

Although two basic laws are already working – on mandatory State pension insurance, and on private pension provisions, the question of implementation of a universal mandatory accumulation system of pensions has yet to be regulated through legislation and no organizational structure has been created. The draft law on introducing an accumulation system of mandatory State pension insurance (№ 0942) has still not been passed, and other measures needed for its work are also not being carried out.

Even the Minister of Employment and Social Policy, L. Denisa, says that the second level of the pension system can only begin functioning in 2011.[18].

It is important to point out that the introduction of a second accumulation level of the pension system is vital for the creation of an effective system of social protection for the elderly. It can become a factor for diversification of the sources of income, ensure a proper level for replacing salary with pension, and mobilization of long-term investment resources needed for the modernization of the Ukrainian economy, and as a result, an increase in the base of insurance contributions.

It should also be noted that a draft is still only being worked on for a law providing pensions for people engaged in especially hazardous work, or particularly difficult working conditions, with this entitling them to receive retirement pension on favourable conditions, or through years of service, through corporate or professional funds. This is despite the fact that the need for introducing pension provisions via corporate and professional funds was stipulated back in 2003 in the Law «On mandatory State pension insurance».

There continues to be disproportion in pension provisions caused by the retention for some categories of the public of special pension programmes (according to profession) which establish different pension provision conditions.

Besides the basic law on pension payments, there are also another 23 laws which envisage different procedure for calculating pensions. According to the main law the pension can on average be calculated at 50% of what the person earned, while according to others – 60-90%. This applies to civil servants, staff of the Prosecutor’s office, the courts, science and some other categories. There is no single approach in formulating pensions regardless of where the person worked, in the civil service or in production. We therefore have such a huge difference between the pensions of former deputies, judges and prosecutors, and others.

Things are not all good in the system of non-State pension provisions either. Over the four years of its existence, the number of participants in this system remains relatively small (407.8 thousand people), the net value of shares formed by the pension funds is also not high (404 million UAH)[19].

One must acknowledge that there has not yet been any success in bringing to fruition the possibilities of a system of non-State pension provisions as a way of ensuring pensions for the population

Among the main causes for the slow development of non-State pension provisions, we would note the following:

-  a poor level of explanatory work regarding the content and role of an accumulation pension system in society and the inadequacy of financing for the above-mentioned work;

-  insufficient interest by employers in financing non-State pension programmes for employees;

-  a low level of pay and wages arrears;

-  a limited choice of financial instruments suitable for investing pension funds in them due to the development of the capital market not keeping up with the needs of institutional investors. The possibility of compulsory sale of the shares of enterprises with strategic importance for the economy and its security, of enterprises with monopoly and enterprises with a state share in them, solely on the stock exchange, lack of interest of issuers in running listing procedure on the stock exchange;

-  high administrative costs of the system due to the small amount of accumulated assets (in the first quarter of 2008, expenses paid for out of pension assets came to 19 million UAH, or 4.67% of the total amount of the assets).

A considerable problem is also the failure by the State to fulfil its obligations with regard to social provisions for war children. People who according to legislation have the right to receive this status, and the connected benefits with regard to pensions, have begun approaching the courts in large numbers.

For example, more than 73 thousand war children have lodged claims demanding supplements to their pensions just with the Poltava District Administrative Court alone.[20] Nor is the situation better in other regions.[21].

All of this is yet another example of the lack of clarity of legislation in the sphere of social protection of the population where people cannot receive the social provisions envisaged by the law and are forced to defend their rights through the court. As well as all else, this has led to a serious overload on the court system, with the courts simply inundated with such cases.

 

3.4. Introduction of a single social contribution

On 15 January 2009 the Verkhovna Rada passed the Law «On a system for gathering and recording a single social contribution for mandatory State social insurance» which proposes to determine the main principles for the functioning of such a system, the conditions and procedure of calculating and paying the single social contribution and the authority of the bodies administering the collection and recording.

At the same time, despite the need and relevance of introducing an effective system of mandatory State social insurance, it should be noted that the law contained a number of very significant failures.

While leaving all existing funds of social security, the law introduces yet another State body – an Administration of Social Security which would be just one more additional structure which would have to be financed from the income from mandatory State social insurance, this in no way raising the efficiency of the system of social protection of the population.

It was also proposed through amendments to Article 21 of the Law «On mandatory State social insurance in the event of unemployment» to remove from people’s insurance period the time that they received unemployment benefit, were partially unemployed, the period of leave to care for a child under the age of three, as well as leave to look after a child up to the age of six on the basis of a medical opinion. Bearing in mind that such amendments narrow the rights of people insured, they are in breach of Article 22 of the Constitution which states that the content and scope of existing rights and freedoms may not be reduced when making amendments to current laws.[22]

Due to the existence in the law of significant failures, on & February 2009 President Yushchenko returned the said law to the Verkhovna Rada.

It should be noted that if the system of social protection on the basis of a single social contribution is really to work, an optimum and transparent model of management of the system for gathering and recording the contributions is needed, with the timeframe for moving over to such a system being agreed. The list of those paying the single social contribution must be clarified, and the basis stipulated for calculating the contribution, while provisions which narrow the content and scope of existing rights and freedoms, the provisions on broadening the supervisory council of the authorized State bank, on the creation of a Methodological Commission on issues of reporting, should be excluded.

 

3. Recommendations

1) Reform the system for social benefits, divide legal norms into those guaranteeing socio-economic rights and those granting certain privileges in connection with a particular position or special merits;

2) Stop the practice of suspending the form or not implementing legal norms guaranteeing socio-economic rights;

3) Allow for the full funding of guarantees of socio-economic rights enshrined in law;

4) Improve the calculation of the subsistence minimum, approving a new subsistence basket of food items and goods and services; adopt new methods for calculating this indicator;

5) Improve regulation of the quality of food items, as well as the quality and safety of drinking water;

6) Introduce measures aimed at making housing affordable;

7) Ensure proper financing and understandable and effective mechanisms for implementing a programme providing social housing, as well as the development of a network of reintegration centres and social hotels for people who are homeless;

8) Gradually reduce the percentage of direct State funding of social needs and increase the amount financed by the population on the basis of increases in all income, first and foremost, wages, pensions and other forms of social transfers;

9) Provide all types of social assistance on a targeted basis taking into consideration the total income of the family;

10) introduce a single form of targeted social assistance for unforeseen circumstances – the death of a relative, serious illness, natural disaster, social conflict, etc;

11) ensure a strict link between social benefits provided and the sources and mechanisms for compensation of their value to those providing them;

12) Introduce standardized approaches for determining the size of payments from the State Budget to compensate those providing benefit services;

13) Introduce in stages a system for providing benefits in cash form;

14) Continue reform of the pension system by introducing an accumulation level of this system and create the conditions for this;

15) Avoid discrete increases in the minimum pension and introduce a rule for indexation according to which increases in the pension would be linked to the index for consumer prices calculated for groups in society with different incomes;

16) Improve regulation and supervision over private pension funds taking international experience and consultations into consideration;

17) Create mechanisms for implementing the judgment of the Constitutional Court regarding the non-compliance with the Constitution of the Law «On the State Budget for 2008»

18) Introduce a system of single social insurance and develop mechanisms for introducing it, and for preventing «corrupt schemes» in its functioning.



[1] By Maxim Shcherbatyuk, UHHRU.

[2] Ukraine in 2008: processes, results, prospects. White Book of State Policy / General Editor Y.H. Ruban – National Institute for Strategic Research, 2008 http://niss.gov.ua/book/book2008/index.htm

[3] Law of Ukraine “On the subsistence minimum” http://zakon.rada.gov.ua/cgi-bin/laws/main.cgi?nreg=966-14

[4] “Worth knowing. The secrets of the subsistence minimum” // UHHRU website, 8 December 2008 http://helsinki.org.ua/index.php?id=1228738638

[5] Worth knowing. The secrets of the subsistence minimum” // UHHRU website, 8 December 2008 http://helsinki.org.ua/index.php?id=1228738638

[6] See also the unit on Environmental rights.

[7] “A fundamentally new system of water supply presented at session of the National Defence and Security Council” // Internet publication “Korespndent.net” http://korrespondent.net/tech/759330

[8] O. Serhiyenko: “Queue as long as life, or 1/3 of human happiness” // “Dzerkalo tyzhnya” № 43 (722), 15-21 November 2008 http://dt.ua/3000/3050/64676/

[9] “50 residents of Lviv hostels picket the Ratusz and want to “transfer” to municipal property” // Lviv Civic Portal, 12 June 2008 http://gromada.lviv.ua/news/2008/06/12/3390.html

[10] “240 police officers may be evicted from the capital’s departmental hostels” // UVS TV Channel, 11 March 2008 http://ubcua.tv/index.php?option=com_content&task=view&id=439

[11] “The authorities are ignoring the unlawful eviction of hostel residents” // Internet publication “Glavred”, 16 December 2008

http://ua.glavred.info/archive/2008/12/16/121554-19.html

[12] Ministry of Employment: the Problems of homelessness are many-faceted and touch on virtually all spheres of public life” // http://mlsp.gov.ua/control/uk/publish/article?art_id=91509

[13] Study of people’s attitude to the present system of benefits and privileges, carried out as part of the project “Reform of the system of benefits and privileges in Ukraine – moving towards European standards”, by the Centre of Civic Advocacy http://lawngo.net/index.php?itemid=%20759

[14] Viktor Pushkar: “Social and Psychological Study of Everyday Ideas about Human Rights” / Kharkiv Human Rights Protection Group, Kharkiv, Prava ludyny, 2009, p. 40

[15] “Proper help through the courts?” // Accounting Chamber of Ukraine, 9 December 2009, http://ac-rada.gov.ua/achamber/control/uk/publish/article/main?art_id=1328392&cat_id=411

[16] Ibid

[17] Draft Concept Strategy for further pension reform in Ukraine, from 29 July 2008, Ministry of Employment and Social Policy http://mlsp.kmu.gov.ua/control/uk/publish/article;

[18] “A mandatory accumulation system of pensions in Ukraine could become working by 2011, Ludmila Denisova predicts” // National Assembly for the Disabled” 1 March 2009. http://naiu.org.ua/index.php?option=com_content&task=view&id=3009&Itemid=97

[19] Draft Concept Strategy for further pension reform in Ukraine, from 29 July 2008, Ministry of Employment and Social Policy, http://mlsp.kmu.gov.ua/control/uk/publish/article;

[20] “More than 73 thousand children of the war are demanding their money through the Poltava Court” // UNIAN information agency, 08.02.2009, http://unian.net/ukr/news/news-299528.html

[21] “War children storm the courts” // the Newspaper “Uzhhorod”, 23 December 2008 http://uzhgorod.net.ua/news/33155; “War children from the entire Rivne region have occupied the administrative court” // Internet publication “OGO.ua”, 27 December 2009 http://ogo.ua/archive/2008-12-27/site/27903.

[22] A. Marmusov: “The “Single corruption contribution” system” // Dzerkalo tyznya”, № 3 (731), 31 Janaury – 6 February 2009 http://dt.ua/1000/1550/65280/

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