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today 25.09.2016 13:36
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Kharkiv Human Rights Group Social Networking

XI. Socio-economic rights


1. General overview

2014 is surely one of the most difficult years of independence for Ukraine and citizens. The situation with observance of human rights, including social security is extremely difficult in conditions of revolutionary changes and war in the East.

Given this situation, the problem of poverty just got a new urgency and unfortunately, the government was not ready to accept new challenges. The government “freezed” the sizes of the minimum standards in 2014, increasing of prices led to further impoverishment of the population. In addition the incomes difference of rich and poor people remain deepening.

It should be noted that the cost of living as a bace parameter of the whole social security system hasnt been reflecting the actual minimum human needs for many years, since it ignores many costs vital for a human, based on a set of food, non-food goods and services, having long been long obsoleted. In addition, to determine the size of certain types of social security, the rate for guaranteeing the minimum subsistence level continues to be applied, reflects the inability of the state to perform even less than the minimum standard of living.

Despite some efforts by the State this year arised significant problems with social protection of internally displaced persons, as well as military personnel and other persons involved in the ATO. In legislative manner the substantial changes which would affect the social security condition, did not happen, although the reforming of social security remains a highly actual issue.

There are also no special progresses in ensuring of housing access. It is clear that the main focus of the state is aimed this year to solving the housing problems of settlers and soldiers. At the same time there is no saying that the state actions in this area are effective, especially there is no to say about any system changes to ensure the right to affordable housing.

Also the significant changes have not occurred as to problem of effectiveness of pension system, causing the negative aspects of the pension reform, which felt the majority of the citizens, continue existing. It is obvious that the government hasn’t solved some systemic problems in this area, since its main task was trivial ensuring the payment of pensions.

Among the positive changes it can be specified only the adoption of a long-awaited law on ensuring food quality, though it is half-measures, as it has no developed mechanisms of applying and does not provide for measures to ensure water quality.

2. Right to adequate standard of living

2.1. Assurance of the right to adequate standard of living

Pace of developments in the financial and economic sphere of Ukraine in 2014 does not give causes for optimism, because the depreciation of the hryvnia, increasing of fuel prices and cost of defense create conditions for growth of needs scales among socially disadvantaged groups.

Despite the fact that the income of 60% of the population remaine stable, over the past 5 years the feeling of poverty among the population have been increased from 53 to 65%[2]. In particular, for the period of 9 months of 2013, about half of the poor population has been living in extreme poverty (47.0%), so there are total equivalent expenses below 938 hryvnia per a person per month. The coefficient of poverty depth criterion was 21.9%, in absolute (criterion of the minimum subsistence level) — 20.9% with using of related costs and 18.3% — with incomes[3] using.

The main reasons for poverty growth in Ukraine are in particular growth of unemployment level, low salary and pension level, wage and social benefits arrears, the lack of a developed system of risk life insurance and targeted social assistance. It should be noted also the increase of inequality in redistribution of wealth between different social groups. Thus, according to the magazine “Forbes”, in the rating of billionaires in 2014 taken the lead 9 Ukrainian, their income estimated at 26,6 billion Dollars[4]. In turn, the constant and unlimited enrichment of a very narrow segment of society is inevitably reflected on the deterioration of the financial situation of general population[5].

Since 2011 in Ukraine has been realizing the State targeted social program of poverty reduction and prevention in the period up to 2015. The program aims to reduce the number of poor people among various social groups by means of: promoting employment and labor market development; improvement of mechanism of wages and social dialogue as a major factor for enabling decent work; development of social ensurance system; improvement of pension system; reforming of social security system and all that[6]. However, due to the extremely poor performance of the tasks provided by the Program, the level of poverty in Ukraine remains quite a serious and urgent problem.

It should be paid also attention to the issue of compliance with minimum social standards in the field of personal income. The basic state standards in the field of population income is a living wage, which is calculated such social protection on, as minimum wage; minimum pension according to age with monetary support; minimum size of unemployment benefits; child care allowance for children aged under 3 years; funeral grant and all that. In 2014 the cost of living was set below the actual size of the subsistence minimum in December 2013. Also the size of minimum wage has been left at the level of even lower than the actual size of it in 2013 that allows us to call 2014 the year of extreme savings.

Despite that minimum wages is the state social guarantee, its legally defined level is insufficient to provide extended labor reactivation, since it does not take into account the family (the cost for the care and raising children) and tax components (contributions for obligatory state social insurance and tax on income of physical persons)[7]. The minimum wage since the 1st of January 2014 is set at 1218 hryvnia, what makes 38.7% of the average wage for the previous year (3148 hryvnia), and in dollars USA ($1/7.99 hryvnia), allowed to spend on average almost $4.9 per day per one person in January (threshold amount — $5.0 dollars USA by purchasing power parity per day).

The trades unions insist that the minimum wage size should not be less than 45% of the average for the previous period (3265 UAH in 2013), that is — 1470 UAH. The International Labour Organization and members of the European Parliament believe that it should not be less than 60% of the average wage.

Also in Ukraine it continues to be used not even the cost of living to calculate many social benefits, and the rate of guaranteed living wage, which is only a certain part of a minimum guarantee. Thus, for the employable persons it makes 21%, and for children — 85% of the subsistence minimum. Use of this indicator shows the state failure to provide even the minimum level of legal guarantees of social and economic rights.

We should also dwell on the question of war in Donbas. In conditions of permanent warfare on the large territory of Donbass millions of citizens were cut off from the state aid. The citizens of occupied territories in Luhansk and Donetsk regions have been remaining without salaries and pensions in terms of people killing, destruction of buildings and infrastructure, stop of industrial enterprises, paralysis of government during the last half a year. Objective obstacles in the implementation of social security in time of war resulted in conditions of a humanitarian catastrophe in eastern regions.

The occupation of the Crimea by the Russian Federation and the war in Donbass led to the large number of internally displaced persons. As of October 2014 the United Nations gives a figure of more than 400,000 forced internally displaced persons in Ukraine. This is only the official data, the real number of internally displaced persons is unknown, but clearly exceeds the said value many times. A great number of immigrants require the implementation of a set of measures by the state — provision of housing, certain payments, provision of job vacancies, places in kindergartens and schools and the like. The rapid pace of developments showed that the state was not prepared for such a script. The migrants are actually forced to solve their problems on their own. Even in those matters where the state requires a basic assistance, the displaced people face the notorious bureaucracy. That is the state does not only help its citizens being the victims of war, and often simply defeat in the way. This situation is simply a flagrant violation of human rights in Ukraine and once again demonstrates the urgent need to reform the social security system.

2.2. Quality and food safety assurance

One of the main problems in the field of quality and food safety assurance is the lack of an effective system of food security, which would control a product from a supplier of raw products to the sale place of finished product.

In Ukraine for the control of food safety are responsible four bodies: — The Ministry of Health of Ukraine (State Sanitary and Epidemiological Service of Ukraine); — Ministry of Agrarian Policy and Food (State Veterinary and Phytosanitary Service of Ukraine); — Ministry of Economic Development (State Inspection of Consumer Rights Protection of Ukraine); — Ministry of Environment (State Environmental Inspection).

At the same time any of the above mentioned bodies does not totally guarantee the safety of the product, since they are controlling only certain fields of production without providing the control in whole section “from field to table”.

Now Ukrainian enterprises have only two control points. The first is checking of raw material according to the indicators provided by the state. The second is checking of finished product before sending it for sale. In production there is no control[8].

One of the problem examples related to food quality can be given the situation with import of fish products in Ukraine. What we buy and consume as fish can contain toxic substances, outdated drugs, and harmful artificial colourants of red colors (E102, E121, E124, E129). For example a herring can be colored as a salmon indicating on the package natural dyes (curcumin or red beet), but used synthetic[9].

The signing of the Association Agreement with the EU has set the task before the state to change the situation in the sphere of state control over the food quality and safety. An important step in this direction was adoption of the Law on the Safety and Quality of Food Products in July 2014, which provides for introduction of Hazard Analysis and Critical Control Points System for controlling the critical points in the production for food security. It allows prevention of health hazardous product manufacture throughout the production process.

The law provides for clarification of terminology, clarifying types of offenses and adequateness of measure of punishment, formation of single supervisory authority in the field of food safety, cancel of approval documents and procedures that are not available in the European Union, implementation of European control mechanism of GMO, in particular with regard to the registration of GMO sources, and not the products derived from them.

It should be noted that other important changes in legislation aimed at improving the quality control and food safety. In particular, those reflected in:

— Draft Law on animal identification (“On Amendments to Certain Legislative Acts of Ukraine concerning the identification and registration of animals”);

— Draft Law on state control in the field of food safety (“On state control in the field of safety and quality of food and feed, animal welfare”);

— Draft Law “On food”;

— Draft Law on by-products of animal origin (“On the by-products of animal origin unappropriated for human consumption”)[10].

In addition, we must understand that to make the necessary legislative changes — this is only a particular important step, but more importantly is the implementation of the provisions of the law in practice.

2.3. Assurance of adequate water quality

Analysis of studies of water quality in many areas of Ukraine indicates a deterioration of water compared to previous years. The percentage of chemical indicators exceedence is increasing every year.

Thus, in accordance with the Program of State of Surface Water Monitoring the laboratory of water and soil monitoring of the Lviv hydrogeological-reclamation expedition conducted in 2014 the control of surface water quality in the 17 observation points, 11 water bodies in Lviv region. Based on these results, it was found that the water quality of the rivers of Lviv region does not conform to waters fishery, except one river, what is invariably associated with using of water resources for the creation of survival facilities.

The problems with the quality and safety of water resources in Ukraine are confirmed also by other studies held by the Central Geophysical Observatory[11], Kyiv Sanitary and Epidemiological Station[12], the State Water Resources Agency of Ukraine “Zhytomyr Regional management of water resources”[13] and the Dnieper basin authority of water resources[14]. Violations of water quality were found by procuracy of Volovets district, which conducted the control in Svalyava Interdistrict Office of the Head Office of the State Sanitary and Epidemiological Station in Zakarpattia region[15]

The general condition of the surface water resources in a region is adversely affected by a number of factors: discharge into water bodies untreated and inadequately treated wastewater utilities, agriculture and industry, pollution of surface waters by mining enterprises, unsystematic and uncontrolled use of chemicals in agriculture, lack of water protection zones and coastal strips on water bodies failure to comply with sanitary conditions of rural households and disorder of municipal landfills in settlements[16].

It should be noted that the legislation of Ukraine has 54 State Standards DSTU and 27 GOST, which are directly or indirectly related to the quality of drinking water. However, these standarts do not meet the requirements in force in the European Union, in particular, Council Directive 98/83 / EC “On the quality of water intended for human consumption.” Now checking the quality of drinking water in Ukraine is carried out on 28 indicators. At the same time there are over a hundred indicators in the European Union[17].

That is why there are some priorities directions of activities among the state environmental, health and economic bodies: the creation of conditions for stimulation of introduction of low-water and water-saving technologies; strengthening of management support efforts of entrepreneurs to establish domestic water purification equipment, speeding up the process of renovation, improvement, replacement of equipment in utilities; increasing of control over the discharge of polluted waters and viewing of sanctions for violation of sanitary legislation; revision of the regulatory requirements for wastewater discharges; increasing control over the use of herbicides by business entities in agriculture. For the organization of planning, financing and control over all activities related to improving the quality of drinking water, it is proposed to appoint a chief coordinator with significant powers. Only providing a clear organization, financing and strict public control over water use can achieve significant improvements in the preservation of quality of water resources, and consequently the health of the people[18].

2.4. Assurance of The right to adequate housing

The International treaties which Ukraine joined determine the basic standards of the right to adequate housing. The right to adequate housing is a part of the right to an adequate standard of living, and includes the following rights and freedoms: protection against forced eviction and unauthorized damage or destruction of a person’s home; the right to be free from unwarranted intrusion into the home, private and family life; the right to choose the place of residence, to determine where a person want live and freedom of movement; security of residence; restitution of housing, land and property; equal and non-discriminatory access to adequate housing; participation in decision-making on issues related to housing at the national and local levels; the right to housing that meets the minimum criteria of sufficiency (security of residence, availability of services, materials, facilities and infrastructure, affordability, availability of housing accommodation, physical accessibility, location, value in terms of culture).

The problem of affordable housing is an important issue in Ukraine, as a great number of people can not buy a house because of too high prices. Thus, the average salary in Ukraine as of September 2014 was 3481 UAH[19] (about 267.7 dollars USA), the average price per 1 sq. m. of living area not in the central areas of cities of Ukraine as of October 2014 is 883.64 dollars USA (about 11,487 UAH[20]). To purchase a one-room apartment, for example, 40 square meters not in the center of city at the average price, a person needs to raise about 35 345.6 dollars USA. If you count, it turns out that in 11 years people can save money for an apartment, if he set aside all his salary.

Following the procedure of UN-Habitat was introduced the formula for calculating of housing affordability index[21]. In Ukraine it makes 16.72[22]. This index reflects the ratio of the median price of a residential unit (this is the price, which is 50% lower itself, and 50% higher for itself) with a median of annual income of the family. Namely, what number of years a family will be able to save money for an apartment, if it set aside all of its income for its purchase. Index 16.72 is certainly not consistent with the concept of affordable housing in Ukraine. Last year it was 15.52[23] . In the United States it is 2.41, Sweden — 9.62, Netherlands — 6.54, Poland — 11.05.

Of course, housing affordability depends on economic factors. At the same time the government should take measures aimed at establishing the prices affordable for people, promotion for housing affordability, homelessness prevention and its reduction. Article 47 of the Constitution of Ukraine also states:

“The State shall create conditions under which every citizen will have the opportunity to build housing, buy it into acquisition, or to rent.”

The general condition of the surface water resources in the region is adversely affected by a number of factors: discharge into water bodies untreated and inadequately treated wastewater utilities, agriculture and industry, pollution of surface waters by mining enterprises, unsystematic and uncontrolled use of chemicals in agriculture, lack of water protection zones and coastal strips on water bodies, nonobservance of sanitary conditions of rural households and disorder of municipal landfills in the settlements.

With regard to public housing programs, there are the following options to purchase housing at the momet:

1. Receipt of soft loan for building or purchase of housing is settled by the Law of Ukraine “On the promotion of the social becoming and development of young people” in 2013. The soft loan is granted at the rate of 21 square meters per a person in the family, but the loan amount is calculated based on the laid-down cost of a square meter according to the data of the State Committee for Construction. As of October 2014, for example, this amount was 5042 in hryvnia, and as we have previously established, the average cost of asquare meter of an apartment at the market — 11,487 hryvnia. Thus, provided loan can cover only less half of the total value of property or the cost of its building.

Disappointing fact is that the soft loan program is almost not available[24] at the moment, as in I half of 2014 due to the difficult economic situation in the country the allocations were directed only to cover the unpaid financial obligations under the contracts for soft loans provision have been signed in 2013, and partial loan interest rate compensation of of commercial banks.

2. The program of cost reducing of mortgage loans is approved by the Cabinet of Ministers of Ukraine No. 343 from 25.04.2012. It provides assistance from the state in form of payment for major part of the bank loan for construction or purchase of housing. Thus, a citizen has to pay only 3 per cent per annum, the rest compensates the state. For this program in 2014 it was allocated 340 million UAH that exceeds on 40 million last year. It should be noted that the program is not very popular, because the banks set their own rules for loan repayment. The problem for the citizens remains the inability to repay the amount within the time specified by the bank, or the lack of funds at all.

3. The state program “Affordable Housing” has been suspended in April 2014 because of termination of funding[25], which provides payment of 30 percent of the normative square cost of affordable housing by the state, and a citizen contributes to your current account opened in an authorized bank the funds in the amount of 70 percent of the construction cost (purchase) of affordable housing.

Thus, only program of cost reducing of mortgage loans is only available. However, in 2014 it has been used only by 170 families[26]. In such a manner a little number of people succeeded to get from the state any assistance for housing purchase this year.

The Constitution states: “Citizens being in need of social protection provided for housing by the state and local governments free of chatge or for a reasonable fee for them in accordance with the law.” At present the waiting list for free housing containes approximately 808,000 families and singles[27] . Last year 6,000 families received new housing. If we assume that each year 6,000 apartments will be issued, the last in the list would get a flat in about 134 years.

The same situation is with the housing provision for the citizens being victims of the Chernobyl disaster. Among such people were 19,580 people[28] in line for an apartment as of January 2014. 12,625 of them have been waiting in line 10 or more years. In 2013 only 344 obtained a flat from almost 20 000. The Accounting Chamber acknowledged that the current system of housing providing for citizens being victims of the Chernobyl disaster is inefficient[29], including the lack of the target program and proper regulation of a question of defining the circle of persons entitled to an extraordinary provision of housing as the members of Chernobyl family led to the fact that their number is not reducing.

A significant number of Ukrainian citizens rent housing because they can not afford to buy it in the property. The right of availability to rent housing is constitutional. The average rent price of one-room apartment in the center of a city in Ukraine as of November 2014 is 257.07 dollars USA[30] . This is about 3342 UAH, while the average salary of the citizens is 3481 UAH in Ukraine. It is obvious that a citizen with average salary can not rent an apartment on his own, not to mention the life level in case of rentering a flat by him.

If we talk about such violations as illegal evictions, there are the most cases of eviction children in Ukraine in 2014. So, in a family that had been deprived of parental rights, the parents were illegally trying to sell a house in which their children[31] were registered. In another family mother has written out a daughter from her apartment[32], deliberately concealing the fact of termination of parental rights. Actually, these violations have been made by other individuals, not the state, and in both cases the prosecutor’s office thrown weight behind the children.

With regard to violations of the right to adequate housing by the state, that is, its own structures, so a number of violations of children’s rights in housing sphere was detected in Rivne[33], which were commited by parents, surrogate parents, guardianship authorities, heads of boarding schools due to improper execution of their responsibilities to monitor the property safety, which belongs to the children and timely registration of inheritance. In Kharkov have been illegally issued certificates[34] of ownership for an apartment, which are living two famalies with little children according to the warrent in. At this moment are in progress the legal proceedings on the claim of one of the families on the recognition of property rights to third parties on housing invalid.

Fairly widespread fact was eviction due to inability to pay the debts on loan to the bank, especially of families with small children or large families. An example is the number of families in Rivne region and in Cherkassy[35] [36] [37] [38]. To protect such families which have no effective access to another property, usually become community activists and others who do not represent the state.

A significant obstacle for solving the problem of affordable housing assurance is the rapid aging of housing and this is due to objective reasons — speed of construction of a new housing dramatically slowed, capital expenditures from the state budget for repair and reconstruction of housing repeatedly decreased. Reconstruction and repair volumes constitute only 30% of needs[39] . Unfortunately, today you can find single cases of violations of the right to affordable housing, they occur by exceeding the time for construction of residential buildings, as well as in cases when such buildings will not put into operation at all. For example, a similar situation was described in the judgment of the district court Darnitsky in Kiev. The plaintiff have concluded the contract with a construction company, mortgage center and the State Fund for Youth Housing Assistance and partially paid the cost of future apartment, however, despite the parties’ agreement on the estimated date of setting the construction object into operation in the III quarter of 2011, the object was not put into operation even in 2014[40].

3. Right to social protection

3.1. The system of social protection and security

Among the main problems in the field of social protection of Ukrainian population it can be said the following questions require immediate solutions:

— Extremely rapid cost growth of services, including those that provide health care, education, culture, does not match their quality;

— Ineffectiveness of budget management of available financial resources as the main managers and individual social institutions;

— “Manual” management of government the social security sizes, establishing the size of these payments depending on the financial capacity of the state;

— Lack of funds for financing activities in the field of social protection.

To solve these and other issues at the national level the state should ensure the implementation of active measures such as social assistance, which is to help people being in a difficult situations to be saved from poverty and not to be left behind society. In turn, passive measures are also important that provide social insurance, treatment and prevention of disease, increasing levels of education and skills, which are aimed at preventing situations that threaten human well-being.

In general, social protection and social security are the most expenditure category of the State Budget of Ukraine, the volume aheads of health, education and economic activity costs. During 2009–2011 the amount of annual expenditure on social protection and social security averaged 61456,37 mil. UAH or 28.6% of the total expenditures of the State Budget of Ukraine. When carrying out the analysis of expenditure on social protection and social security of the state budget in absolute terms we can observe its growth. The volume of expenditures of the State Budget of Ukraine on social protection was 63540,2 mil.UAH that is greater by 12022,6 mil.UAH compared with 2009, but less on 5771,17 mil.UAH than in 2010. However, despite the considerable amount of social expenditures, the quality of social services and other social protection measures in Ukraine has been still remainig relatively low compared with other countries[41]. Social needs of the most vulnerable groups are not being met adequately, since the size of social benefits in 2014 can not be considered as sufficient to ensure those needs[42].

In order to enhance the effectiveness of the social assistance system, the main direction of its reforming should be, in particular, the transition from social benefits to the system of targeted social assistance that would help to support those people who really need it, as well as significant savings of public funds. Social benefits proved to be ineffective for today, because the significant part of their beneficiaries is persons being far from poverty. In addition, there is an inequality between citizens to exercise the right to benefits, because the significant part of beneficiaries is unable to exercise physically their right.

At the same time, sadly, but the state is focusing on other pressing and critical problems than improving the level of social protection. Despite the fact that now all forces in the country are aimed at meeting the needs of ATO, we should not close our eyes to the problems in the social sphere. The neglecting such a sensitive sphere as social security can lead to the appearance of the “inner front.” It is clear that the problems have been accumulating in the country two decades and at the same time to solve tha problems in a short time will failed. However, it must be started now to solve the existing problems in the complex, taking into account possible pace of developments tomorrow. If newly elected authorities will continue to put the most pressing issues on the long finger, it is likely that it will not hold out for a long time. As of today, despite poverty and difficulties, people are willing to tolerate some time to live better in the future. But this credit of trust should be used by authorities efficiently and as soon as possible.

3.2. Housing and communal benefits and subsidies as part of social protection

Sensitive blow against all socially vulnerable people caused an increase of utility prices. Cold and hot water, electricity and heating, all these utilities benefits raised so much so that they overlap the modest incomes of the people.

Constant price growth for natural gas does not give cause for optimism. The so-called gas war between Ukraine and Russia, IMF demands to bring the prices for gas for citizens to market levels led to the already described increase of utility prices. In addition, as a result of the war in Donbass coal mining has practically ceased, which led to a deficit in the domestic market.

According to the State Statistics Service of Ukraine, in January–August 2014 the subsidies for reimbursement for housing and communal services have been assigned for 589 thousand families. The total amount of subsidies assigned in January–August 2014 was 55,3 mil. UAH. Average size of a subsidy per family is 75.2 UAH.

At the same time the debt of population for housing and communal services amounted to 11 179,8 mil. UAH at the end of August. The average debt term of population for all services was 3.8 months.

As we see, the picture is not very encouraging. The increase of rate of inflation leads to increase of welfare expenditures. Given the difficult situation with the implementation of the state budget of Ukraine to cover all the social costs in 2014, it would be extremely difficult, if ever possible.

3.3. Social Security of participants of the anti-terrorist operation

It is also worth to mention the Social Security of participants of the anti-terrorist operations. According to the current legislation of Ukraine, a wide range of benefits and a variety of social welfare are provided for the participants in military operations. The most part of the year 2014 it could be observed a strange situation, when the decision as to provision of corresponding status[43] for participants in military operations has been delayed in every possible way. This was done intentionally or due to bureaucracy — it’s hard to say. But in any case, sufficiently large stratum of people is formed today in Ukraine that will qualify for proper social security in the future. In addition, a great number of families lost their breadwinners and also claims to certain benefits. Obviously, the situation of social security in the coming years will only become more complicated and without timely “surgery” can get out of control.

3.4. Social security protection of senior citizens

A lot of social problems remain after repeated social reforming in Ukraine. One of the most poignant is the pension provision. The current pension system of Ukraine is not able to protect the senior citizens from poverty. The lack of a pension culture, social justice, reliable financial mechanisms for providing of funds for decline of life are the characteristics of the national pension system.

The existing pension insurance system does not perform properly its main task, since the size of pensions does not mostly allow maintaining the minimum level of activity. It can be marked the following main problems of the pension system in Ukraine at the present stage: the low level of pensions of the majority of person who attained pension age; unbalanced budget of Pension Fund.

The pensions for the majority of people remain miserable; the funds contributed to their payment are huge on a national scale, and their sum is increasing with incompatible opportunities for economy and tempo every year. The main factor of poor functioning of the pension system is complicated demographic situation and the negative prospects for its development; macroeconomic situation in the country (inflation, unemployment, economic crises, etc.); significant “shadowing” of payments to employees[44].

Also among the weaknesses being unsettled by law should be mentioned:

— imbalances remain in the pension system, stipulated of preservation of special pension schemes (on professional grounds) for certain categories of citizens who have other (than common) terms of pensions;

— the final funding sources delineation of pensions is not reached;

— in spite of the measures that have been undertaken in connection with the revision of the Unified Rate Schedule and the minimum wage size, about the third of working people pays insurance contributions from the wages not above the minimum of its size, while certain categories of persons enjoy the benefits to pay insurance premiums;

— the size of pension duties for employers remains extremely high (33.2% — for employers and 2.5% — for employees), which also critically restrains the growth of legal wages, and consequently the base of charging of insurance contributions.

In general, it should be noted that in general the solidarity pension system, taking into account the demographic situation in Ukraine is not able to to provide the current level of pension replacement of lost earnings and the optimal differentiation of pensions without budgetary support.

Thus, the number of contributors to pension insurance makes 15,2 mil. people, and the number of pensioners — 13,8 mil. That is ordinary contributor finances 90.8% of average pension, and in some regions — and more, whereby the share of pension expenditures in gross domestic product exceeds 15%. While the government increased some social standards for certain categories of citizens since the 24th of April 2014, but these surcharges remain scanty miserable because of existing inflation level[45].

The solving this problem requires changes in the solidarity pension system and the introduction of a financial defined contributions, taking into account the features of the transition period, which are as follows:

— preserving and enhancing the principles of insurance for those who remain in the PAYG pension system (13 800 000 of current retirees and working people, who will not have a sufficient period for the formation of pension savings and will not be members of the obligate financial defined contributions system);

— combination of the use of PAYG pension system and financial defined contributions system for persons who have a sufficient period for the formation of pension savings in obligate financial defined contributions system;

— increasing of pension payments in the total amount by the mandatory pension savings for individuals who will begin their work after the introduction of the II level of pension system;

— development of non-state pension provision.

It should be noted that the adoption of the Law “On the introduction of a financial defined contributions of obligate state pension insurance” is a fundamental prerequisite for the formation of the II level of pension system, and the implementation of the law would ensure organizational and technical readiness for its functioning. While the law has not been adopted, the “Concept of further realization of pension reform,” which defines the introduction terms of financial defined contributions system, namely in the years 2014–2017 at the second stage of the pension reform.

There is no doubt that the introduction of financial defined contributions system of compulsory state pension insurance would create an opportunity for increasing the overall size of pension benefits by obtaining investment income and would strengthen the dependence of pension size from the labor contribution of a person, and consequently, the interest of citizens in the payment of pension contributions. Equally important is the fact that financial defined contributions system would inherit the funds recorded on a personal pension account, by relatives of an insured person in case of his premature death, and would provide payment risks distribution of low pensions sizes between the first and second level of the pension system and thus would insure the future retirees from the negative demographic trends and fluctuations of the economic development of the state.

The third component of the system of non-state pension provision is based on the principles of voluntary participation of citizens, employers and their associations in the formation of pension savings in order to obtain the citizens of pension payments, which will be in addition to the pensions of the first and second component.

This level in accordance with Ukrainian legislation (Law of Ukraine “On private pension provision”), can be created in the form of voluntary non-state pension provision accorfing to the pension schemes with defined contributions. Such a system will make non-state pension funds (open, corporate and professional), banks and insurance companies. Namely the system of non-state pension provision is an alternative solution of the problems arising as a result of the pension reform.

But despite the fact that the market of non-state pension insurance is extremely advanced, it is developing rather slowly. The main reasons of this phenomenon are the low income of population and mistrust in the financial sector.

So, with the introduction in Ukraine the new pension system it should be focused on reforming of PAYG pension system (first level), establishment of obligate financial defined contributions (second level) and development of a voluntary financial defined contributions (third level).

The content of reforming the pension system consists, on the one hand, in ensuring the basic principles of social equality, the same for all protection from poverty in middle age, gradual increase of pension sizes in accordance with state social guarantees, and on the other — in the elimination of social differences, benefits and privileges. Under these conditions the pension system will be able to provide the necessary condition for all old people who have worked.

4. Recommendations

1. To reform the system of social benefits assurance: to implement the separation of legal rules to those that guarantee social and economic rights, and those that provide certain privileges in connection with encumbering of post or defined merits.

2. To stop the practice of legal provisions that guarantee the implementation of socio-economic rights.

3. To provide full funding of legislative guarantees enshrined in the law for observance of social and economic rights, to stop the practice of “manual control” in determining the amount of social benefits.

4. To improve the calculation of cost of living, in particular, to adopt a new set of food and non-food range of products and services, to establish a new method of calculating this indicator.

5. To refuse using the indicator “assurance level of living wage,” which unnecessarily reduces the minimum social guarantees, which are declared in the legislation.

6. To implement the procedures to regulate the quality of food, as well as the safety and quality of drinking water.

7. To take measures for ensuring the affordability of housing, to prevent unjustified eviction from housing (especially vulnerable groups), violation of rights of access to housing of vulnerable groups.

8. To ensure adequate funding, clear and effective mechanisms for implementation of the program of social housing assurance, as well as developing a network of reunification centers, social accommodations for homeless people;

9. To improve the work to ensure social protection for vulnerable social groups in connection with the increase of tariffs for housing and communal services, in particular, the functioning of a transparent and effective system of housing and utility incentives and subsidies.

10. To reduce gradually the share of direct government funding of social needs and to increase the share of funding from the population based on the increase of income, especially wages, pensions and other forms of social transfers.

11. To provide a rigid connection between provided social benefits and the sources and mechanisms of costs compensation to their suppliers;

12. To introduce the unified approaches to determining the size of the state budget for reimbursement to providers of beneficial service.

13. To continue reforming the pension system through the introduction of legislative provisions on the funded level of the system, to create the preconditions for this.

14. To resolve the issue of pensions payment for persons who are leaving for permanent residence abroad to the countries whom no international agreements have been concluded in terms of pensions with.

15. To avoid a discrete increase of the minimum pension; to make an indexation rule, according to which the pension increase will be tied to the consumer price index, calculated for social groups with different incomes.

16. To provide an implementation guarantee of the decisions of national courts relating to the payment of social benefits, where the defendant is a state.

[1] Prepared by M. Shcherbatyuk (UHHRU)

[2] Unemployment level in Europa is great heiher, as in Ukraine — Expert


[3] Monitoring of situation in social sphere in Ukraine of April 2014 http://cpsr.org.ua/index.php?option=com_content&view=article&id=392:-2014-&catid=17:2010-06-10-20-44-31&Itemid=24

[4] 9 Ukrainians entered the raiting of billionaires 2014 http://forbes.ua/ua/business/1366517-9-ukrayinciv-uvijshli-do-rejtingu-milyarderiv-2014

[5] Some improvement problems of social protection system in Ukraine http://eprints.oa.edu.ua/1580/1/topish konp8_17012013.pdf

[6] The state target social program of poverty reduction and prevention in the period of 2015//


[7] Social justice assurance http://www.psv.org.ua/arts/Spetcvipusk/view-1443.html

[8] Safety food http://www.eurointegration.com.ua/files/4/e/4e344a6-ec-harchi-pr2.pdf

[9] On our tables can be qualitative and not expensive fish http://www.golos.com.ua/Article.aspx?id=357289

[10] It is offered to adopt 5 laws in Ukraine that will make products safety http://4vlada.com/ukraine/36086

[11] About environmental pollution in Kiev and Kiev region in September 2014 http://cgo.org.ua/index.php?fn=k_zabrud&f=kyiv&p=1

[12] It is forbidden swimming in all beaches in Kiev //


[13] Water quality in Novgorod-Volynskiy got better, but is not yet “normal” //


[14] http://dbuwr.com.ua/upravlinnya-vodnimi-resursami/monitoring-yakosti-vodi/685-stan-vod-protyagom-grudnya-2013-r-sichnya-2014-r.html

[15] In Volovechchyna prosecution office demands to remove infringements of sanitation norms in the area of potable water and water supply //


[16] Monitoring http://oblwodgosp.gov.ua/monitoring-0

[17] How do we know, what we are drinking?


[18] Water quality in Ukraine — one of causes of malignant neoplasms http://uapress.info/ru/news/show/4155

[19] State Statistics Committee datahttp://www.ukrstat.gov.ua/

[20] http://www.numbeo.com/cost-of-living/country_result.jsp?country=Ukraine

[21] #ind3

[22] http://www.numbeo.com/property-investment/rankings_by_country.jsp

[23] http://www.numbeo.com/property-investment/rankings_by_country.jsp?title=2013

[24] Financing of subsidized housing for young people is hindering through the lack of funds of the state http://www.ac-rada.gov.ua/control/main/uk/publish/article/16744255

[25] The programms of affordable housing “70/30” cut off funding in Ukraine http://economics.unian.net/realestate/903806-v-ukraine-prekratili-finansirovanie-programmyi-dostupnogo-jilya-70-30.html

[26] http://www.molod-kredit.gov.ua/cms/zdeshevlennya-ipoteki/statistika-zi.html

[27] http://ukrstat.org/operativ/operativ2007/zf/zf_r/2006_r.htm

[28] http://ukrstat.org/uk/druk/publicat/kat_u/publposl_u.htm

[29] The problems in the system of housing assurance of Chernobyl victims has been remainig http://www.ac-rada.gov.ua/control/main/uk/publish/article/16743232

[30] http://www.numbeo.com/cost-of-living/country_result.jsp?country=Ukraine

[31] Parents were illegally trying to sell a flat in the center of a city, in which their two little children were registered //


[32] Mother has written out a daughter from her apartment http://www.objectiv.tv/160914/103299.html

[33] Abuse of housing rights of children was detected in Rivne http://charivne.info/news/U-Rivnomu-viyavleno-porushennya-zhitlovikh-prav-ditey

[34] Two families with two little children have benn illegally evicting from the flat in Kharkiv http://atn.ua/obshchestvo/v-harkove-dve-semi-s-maloletnimi-detmi-nezakonno-vyselyayut-iz-kvartir

[35] Community activists in Rivne didn’t allow once again to expel the Naumchuks due to failure to pay the currency credit by them http://4vlada.com/photonews/1028

[36] Bank intends to leave dishouse a little child in Rivne http://vse.rv.ua/news/1401953773-u-rivnomu-bank-hoche-zalishiti-bez-dahu-malolitnyu-ditinu.html

[37] Family of 7 persons can be dishouse in Rivne http://rtb.rv.ua/company/tele/video/6168/

[38] Family with 3 litlle children have benn evicting from their own flat (foto, video) 

[39] Legal aspects of solving of housing problem in Ukraine http://www.zgia.zp.ua/gazeta/VISNIK_34_14.pdf

[40] Legal decision of Darnytsia District Court in Kiev from the 8th of July, 2014 // The State Adjudication Record http://reyestr.court.gov.ua/Review/39775556

[41] Present state and developing problem of social protection system of population in Ukraine http://webcache.googleusercontent.com/search?q=cache:eFsEocOlYLkJ:mino.esrae.ru/pdf/2012/1%2520Sp/690.doc+&cd=3&hl=uk&ct=clnk&gl=ua

[42] In accordance with the Law of Ukraine “On State Budget of Ukraine for 2014” the level of a living wage (guaranteed minimum) for the assistance assessment in accordance with the Law of Ukraine “On state social assistance to needy families” in percentage correlation to the cost of living for basic social and demographic groups of population is: for able-bodied persons — 21 percent, for children — 85 percent, for people with disabilities — 100 percent according to the corresponding subsistence level.


[43] Why do not work benefits for participants of ATO? http://www.i-law.kiev.ua//-----/

[44] The problems of pension system in Ukraine

[45] Changes in pension legislation //