Human rights in Ukraine 2011. XVI. SOCIAL AND ECONOMIC RIGHTS

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1. Overview

Ensuring of social and economic rights is a priority for the state, which, under the Constitution, is a legal and social state, where a man is declared the highest social value. And accordingly, the level of observance of these rights reflects the level of national development, the level of attainment of the goals outlined in the Basic Law.

Unfortunately, the systemic problems with observance of socio-economic rights continue pestering the country. Despite government’s efforts intended to reduce poverty in the country, improve living standards and social security, the effectiveness of these actions was not high, and, moreover, the problems only deepened in some areas.

The scale of life of ordinary Ukrainians continues to decline, poverty remains topical for many people living in Ukraine. This inefficiency of government’s measures intended to improve the quality of life and combat poverty is recognized even by the public agencies monitoring the effectiveness of budget spending.

In this context, it is impossible to avoid the problem of inadequacy of the existing cost of living index, as well as applications in the social security system of such a shameful indicator as the guaranteed subsistence minimum. In addition, there continues to increase the gap between rich and poor. All this renders the whole system of social protection in Ukraine illusory.

There are serious problems with realization of basic elements of the right to adequate standard of living: the right to safety and quality of food and water, the right to adequate housing. The disregard of these rights in Ukraine remains systemic, and quite often public efforts in this direction are ineffective.

The reform of the system of privileges, which needs urgent attention of the state, is worthy of a separate note. However, such reforms require a systematic approach that would rather not be based on how to refrain from giving people opportunities to get them, but to provide benefits and social benefits only for those who really need them. Unfortunately, in 2011, in Ukraine the authorities went on limiting social and economic rights by making the relevant legal provisions to the Law on State Budget for respective year.

It is equally important to pay attention to the changes in social security for elderly people. There are various estimates of the pension system reform, but virtually every pensioner may experience some adverse effects of this reform, but nobody knows weather s/he experiences any positive effects. This question has no clear answer.

All this leads to the conclusion that Ukraine is still very far from the standards set out in its Constitution, as well as from the standards that have long been the norm in European countries. For Ukraine, achieving these standards remains a dream, the way to the implementation of which is still very vague.

2. The right to adequate standard of living

2.1. Guarantees of the right to adequate standard of living

The quality of life in Ukraine continues to decline. Specifically, according to the study of the global quality of life conducted by such international publication as International Living, Ukraine is ranked seventy-third alongside with Namibia, Botswana, Tunisia, Morocco, Trinidad and Tobago[2].

The experts, who conducted the study, took into account a number of parameters: cost of living, cultural development, economic situation, climate, environment, and civil liberties.

They also evaluated the quality of infrastructure, health care and security status.

The rating appraisers believe that over the last year the economic situation in Ukraine deteriorated. Having analyzed the level of interest rates in Ukraine, inflation, GDP growth rate and its per capita percentage, the authors of the study concluded that the Ukrainian economy was one of the most backward in the world. With these parameters it belongs to the three worst economies. It is followed only by Zimbabwe and Somalia.

The quality-of-life reduction is also confirmed by the data are released by the Legatum Institute in its compilation of Legatum Prosperity Index[3]. This ranking included nine subratings: the economic level, personal freedom, and quality of life to name a few. It is important to note that the calculation of the economic level takes into account the situation with Ukraine’s compliance with adequate standards of living, including adequate food availability and accessibility of human habitation.

In addition, it is important to note the negative dynamics of Ukraine’s position in this rating. From 2009 to 2011 the performance of Ukraine kept going down[4]; there is a negative regularity in such effectiveness of Ukraine’s compliance with the right to adequate standard of living.

In the context of ensuring the quality of life there are important indicators of poverty in the country and those ways in which the state chooses to reduce poverty in the country.

According to official figures, poverty declined in Ukraine; Ukrainian authorities report that thanks to their efforts poverty in Ukraine fell by 2.3%, reaching its lowest level in a decade. “This was a result of almost 25% increase of the subsistence level, more than 12% rise of the average pensions and 10% rise in real wages,” reads the statement of President of Ukraine Viktor Yanukovych[5].

At the same time, the trade unions maintain that poverty in Ukraine is on the uptrend. For example, Deputy Head of the Federation of Trade Unions of Ukraine (FTUU) Serhiy Kondriuk says that the monthly poverty line makes UAH1025 and less in Ukraine. “According to recent data, we have 25.4% poverty level in Ukraine. Every fourth Ukrainian is unable to earn her/his living, not to mention members of his family,” said S. Kondriuk. According to him, every second family with three or more children is living below the poverty line[6].

The sociologists also do not share the opinion on poverty reduction. The official statistics takes into account the increase in per-person money supply, but does not reflect what the average Ukrainian can afford for the money, says Head of the Ukrainian Institute of Social Studies Olga Balakirev.

“This is crafty statistics. People increasingly feel impoverished,” maintains the sociologist. According to her, the poll shows that last year, in order to survive, 85% of Ukrainians had to save on their food, recreation, leisure, and clothing. “One fourth of Ukraine’s population considers them poor.”

According to the Kyiv International Institute of Sociology, the number of those who are short of money to buy enough food increased to 17.5% in the first half of 2011, also the number of those, who can afford to buy some expensive things (such as TV or fridge), but cannot buy everything they want, decreased (from 7.1 to 4.9%). The number of those, who can buy whatever they want, decreased from 0.2 to 0.1%[7].

The UN recognizes official statistics; however, it takes notice of the fact that their calculations are based on daily living expenses. “In developed economies they also consider those having less than $14 a day as poor. In Ukraine, there are almost 80% of such people,” says Ms. Kateryna Rybalchenko, manager of the UNDP. But if we count the number of poor according to the specific to Eastern Europe and Central Asia figure of $5 per day, the percentage of poor, of course, is smaller, she notes. And that is the level treated about in the official figures. After all, if Ukrainians are assessed by all-European criteria, there are almost 80% of the poor in the country[8].

“Four and a half percent of Ukrainians spend less than $5 a day. If we talk about poverty in Ukraine, we mean unequal access to certain benefits and resources. One of the manifestations of exclusion from economic life consists in insufficient income for basic needs. By results of 2010, 26.4% of the population can be considered divested”[9].

The gap between rich and poor continues to increase in Ukraine. According to the survey conducted by Razumkov Center in May, almost half of Ukrainians put themselves into the lower class. While the average salary in Ukraine is two and a half thousand hryvnias, Ukrainian millionaires and billionaires always take top places in the world ratings of rich people. The experts maintain that such stratification of society promotes instability, worsening of economy, boiling protest sentiments and destroys the middle class, which in the leading democracies of the world is the foundation of economy.

However, the government’s actions intended to reduce poverty and ensure people’s rights to adequate living standards proved ineffective. Thus, according to the conclusions of the Chamber of Accounts of Ukraine, the objectives set for the government in Poverty control strategy and Comprehensive program for its implementation in 2002-2009 were not attained, and poverty benchmark was never achieved. It has occurred for the simple reason that the Ministry of Labor as both the indentor and executor of the Complex Program of Poverty Control Strategy failed to implement it, which negatively affected the living standards and poverty level decline[10].

And from 2010 and up to the end of August 2011 Ukraine had no strategy or program of war against poverty at all. Such State target social program to overcome and prevent poverty was approved only on August 31, 2011.

In addition, the experts bring out another problem existing in Ukraine, namely the fact that the living wage, which is the criterion for the formation of salary and benefits, is still determined on the basis of sets of food, consumer goods and services approved eleven years ago by government regulation from 14.04.2000 No. 656. Since then the said sets were never revised, while according to section 1 art. 3 of the Law of Ukraine “On Living Wage” should be determined at least once every five years.

Besides, against the background of rising consumer prices in Ukraine in recent years, the cost of living is understated.

The understated cost of living actually leads to understated pensions, wages, allowances to low-income groups and decrease of real income of population.”[11]

This is a standing annual problem, but each year the state triggers a backlash. For example, the 2012 budget determines the monthly per capita living wage as follows: as of January 1 —  UAH 1017, April 1 —  UAH 1037, July 1 — UAH 1044, October 1 — UAH 1060 and from December 1 — UAH 1095. At the same time, according to the Ministry of Social Policy, the actual subsistence minimum in August prices amounted to UAH 1049, which exceeded the figures planned for January-September next year. That is, the planned budgetary indicators will not cover the planned price increase.

The same is with the minimum wage: they will not establish minimum standards for wages, because the planned subsistence minimum is lower than its actual size.

Analyzing the draft 2012 budget, the Chamber of Accounts of Ukraine came to the conclusion that due to the authorized establishment of low social standards the part of the poor by national criteria for the next year, according to the indicators in the State Program of economic and social development of Ukraine for 2012, will not decrease, moreover, over a quarter of population will become poor[12].

There also remained the topical problem of the use by the Cabinet of Ministers of Ukraine of the indicator “level of guaranteeing of the minimum of subsistence”, which contradicts the Constitution of Ukraine, the Law of Ukraine “On the State Social Standards and State Social Guarantees” and unlawfully restricts the level of public assistance. The use of this “surrogate” indicator shows the state’s inability to implement basic social standards and to ensure the growth of living standards.

And despite this, the Law of Ukraine on the 2012 State Budget once again provided the use of indicator “level of guaranteeing of the minimum of subsistence,” while this past March President of Ukraine Viktor Yanukovych stressed the need to eliminate this notion in Ukraine[13].

2.2. Food: quality and safety

Annually Ukraine spends about UAH 740 mln on the system of food safety; however it cannot ensure the desired result.

According to Sarah Ockman, Manager of the IFC Project “Food safety in Ukraine”, the European system of food safety differs from the Ukrainian one by clear differentiation of safety and quality concepts.

“The Security in Europe goes without saying. This is what the companies are obliged to provide for the consumers and the state is obliged to control for its citizens. Man should not be poisoned by buying goods in the store. At the same time the quality is rather a subjective category. The specifications are formed by consumer choice, i. e., the market. Accordingly, the government does not intervene in these matters,” she said.

Unfortunately, in Ukraine, everything is quite different: food market businesses are monitored by the Ministry of Health Care, Ministry of Agrarian Policy, Ministry of Economy, veterinary, sanitary, phytosanitary services, the State Committee on Consumer Standards, other ministries and departments.

“At the same time, — says Ms. Ockman — the public resources are used inefficiently. In practice, the above structures do not share information about monitoring. Their data are not systematized and analyzed. In addition, monitoring targets the final product, and not its production. Instead of preventing of the emergence of problems, in Ukraine they prefer to deal with the consequences”[14].

Unfortunately, they create only the illusion of food safety in Ukraine. For example, Ukraine, having joined the international agreements on biosafety, prohibited on the level of legislation the use of genetically modified organisms (GMO) on its territory without the state registration unless these products are used for state approbation (testing).

However, the results of the Chamber of Accounts’ audit of central executive authorities responsible for the state system of biosafety showed that the Law of Ukraine of 31.05.2007 No. 1103-V “On the state biosafety system for creating, testing, transportation and use of genetically modified organisms” was flawed and ineffective, and the introduced state system of biosafety was ineffective.

There is no single body coordinating activities in this area and taking responsibility for the regulation of genetic engineering activities carried out in closed and open systems, state registration, putting into circulation of GMOs and products containing them, export, import and transit of GMOs defined by law, which causes mass irresponsibility in this area.

In recent years the regulations of executive bodies did not provide for implementation of legal authorities ensuring national biosafety systems in creating, testing, transportation and use of GMOs[15].

2.3. Ensuring water quality

It is noteworthy that the problems in the field of water relations have assumed extraordinary significance for our country. Improving the ecological status of water resources, drinking water quality and prevention of further pollution of groundwater is essential to maintain the right to adequate standard of living.

Unfortunately, the situation in this field remains extremely difficult. Thus, the Prosecutor General of Ukraine stressed that the river basins used for domestic water supply became receptacles for millions of tons of pollutants dumped by enterprises and public utilities. In Ukraine there are about 73,000 such enterprises. However, the treatment facilities, depreciation of which reach up to 90% in some regions, cannot deliver water of adequate quality. All in all the ecological state of eighty-eight (88) percent of rivers (and their basins), according to the water quality classification in Ukraine, are categorized from “bad” to “catastrophic.” This is despite the fact that in Ukraine the quality of drinking water is monitored by only twenty-eight (28) indices, while in the EU by sixty three (63). Low quality drinking water is responsible for over 80 percent of diseases; therefore its consumption affects the duration of life interval to some extent[16].

The Prosecutor General’s Office of Ukraine stressed that last year, despite the threatening situation with drinking water, the Ministry of Regional Development, Construction and Housing and Communal Service invested no money in reconstruction and technical reequipment of regional water treatment plants. Ever since 2010 the bodies of the State Ecological Inspectorate conducted over 32,000 inspections, as a result of which almost 26,000 enterprises and agencies were brought to justice. It is noteworthy that the central administration of the State Ecological Inspectorate made answerable only one official (fine to the tune of $136).

During sixteen years the State Water Resources Agency of Ukraine did nothing to implement the basin principle of the public management of water resources declared in Water Code of Ukraine in 1995.

However, in this situation the Ministry of Environment and Natural Resources of Ukraine resorted to wait-and-see attitude leaving the activities of these departments uncontrolled. The Ministry of Health of Ukraine has failed to develop national standards for drinking water, hygiene and quality control.

It is also noteworthy to pay attention to how the law enforcement agencies help to prevent offenses and investigate criminal cases involving crimes in the field of water resources.

Thus, the Prosecutor General’s Office of Ukraine observes that in the country the law enforcement authorities brought before a court less than fifty criminal cases on crimes in the field of water resources. Of these, only five cases carried an indictment. Seven cases legal proceedings were eliminated for lack of evidence. That is one cannot name any current proceedings against the administration of major enterprises for unauthorized discharges of waste, water pollution and mass death of fish[17].

The program “Drinking Water of Ukraine” has also proved ineffective. In particular, the Prosecutor General’s Office found significant irregularities in the use of budgetary funds for the reconstruction of the centralized water supply and drainage system[18].

2.4. Realization of the right to adequate housing

The discussion on affordable housing has been going on in Ukraine for nearly a decade now, but it has not become more affordable.

According to researches, today the predicted average waiting period for free housing on the housing waiting list is 74 years. So, if at birth a girl is put on the waiting list, then in her old age she can get a long-awaited housing. While with boys it is a problem, because the average male life expectancy in Ukraine is 63 years.

According to official statistics, 70% of families are onn the housing waiting list for ten or more years. Every seventh person on the waiting list is from Kyiv. The young residents of the capital will need to wait for an apartment from the state for 130 yaers[19].

There are no effective social programs or loyalty and compliant loan programs for families of moderate means, large and poor. There are but scarce paper programs.

Because of stagnant residential development the “housing problem” can become a #1 social problem in the country. Today, on average, there are about 23 sq m per resident, i.e. almost twice less than in Europe and three times than in the U.S. There are about 1.2 mln families on the housing books. The situation will worsen still more because of continuous dilapidation and extremely slow recovery in housing. In 2010 they commissioned only 6 mln sq m (remaining 3 mln are legitimate objects built during 10-15 years), almost three times less than in 1990. According to the Ministry of Regional Development, since January the number of unfinished housing remained almost unchanged: about 4,000 objects totaling 17 million square meters (approximately 200,000 apartments). They need UAH 56 bn to be completed[20].

It seems that the Cabinet of Ministers of Ukraine understands the housing problem and is ready to combat it, though in words only. The emphasis is on feasibility of reducing interest rates for mortgage loans. But when it comes to action, they allocate but pennies.

Thus, in 2011, the Government invested into the state program “The Affordable Housing” two times less money than the announced amount: 150 instead of UAH340 million. The relevant decree “Some questions of the use of budgetary funds to provide state support for construction (purchase) of affordable housing” the government approved on February 28, 2011[21].

It is noteworthy that the draft 2012 budget generously foresees only UAH 200 million for the state affordable housing program, and reimbursement rates for mortgage to the tune of UAH 111 million. In fact, UAH 200 million is a sum allowing to build only two 100-apartment blocks or 35 thousand square meters.

The need to increase these allotments is discussed in the National Bank, and in the Parliament. According to First Deputy Chairman of the National Bank of Ukraine Yuri Kolobov, one of the key tasks of the state today is to create conditions to boost demand for the building sector. “As the central bank, we see that there are enough resources in the banks (equivalent of over UAH 60 billion is on the correspondent accounts, UAH 55 billion are invested in internal bonds, and UAH 20 billion are in the cash-offices of banks). But the key issue is the price of resources. With the current 10% inflation rate the banks attract hryvnias at 12–14%. Accordingly, the loans they can make at annual minimum of 15%, — says the first deputy chairman of the National Bank.

And the price of resources is one of the main factors that actually render impossible the purchase of accomodations by those who need it. The interest rates on loans are gradually declining; however, for the majority of potential home buyers they remain unsustainable. According to the chairman of the board of Finance & Credit Bank Volodymyr Khlyvniuk, in order to arrange a mortgage for $60,000 (in equivalent) at 15% per annum, the borrower must make UAH 14,000 monthly. While according to the State Committee on Statistics, as of past August the average official salary of employees in Ukraine made UAH 2694[22].

According to the National Institute for Strategic Studies, today, in order to buy a two-room apartments, 75 sq m, the average Ukrainian has to work 20-30 years, while a citizen of Chile — four years, Honduras — 4.7, Turkey — 5.6, and Brazil — 6.3 years. And one cannot expect changes for the better, while the state is unwilling to tackle the “housing problem”. It is only a matter of political taste in which way the government gets down to work on it: through subsidizing borrowers, development of infrastructure, deregulation of building or all of this together. But it is important that the government does something to realize the human right to adequate housing.

The problems of the hostel lodgers also remained topical in 2011. It is important to note that due to the existence of this problem, on September 26, 2011 President of Ukraine Viktor Yanukovych approved the law “On Amending Certain Legislative Acts of Ukraine (on improvement of the legal rights of the hostel lodgers)”, which prolonged up to 2015 the opportunity to privatize premises in the hostels. This document also extended the three-year moratorium on condemnation of hostels.

The only problem is that these three years may fly by as three days. And in 2014, these same people will face the same challenge: they will be evicted. Therefore, by itself, extending the moratorium solves nothing.

on the one hand, the law, offers a radical way out of the situation: create a special government program and transfer all hostels to municipal property for further free privatization by inhabitants.

The state-owned hostels or hostels included in the authorized capital of enterprises with the public majority share are to be transferred to municipal property for free. If the state has no share in the company or the share is less than 50 percent, the hostels of such enterprises have to be redeemed. Then people can go over to free privatization.

However, the big problem of this law is that it does not foresee a specific amount of money from the state budget for the transfer. By conservative estimate, such transfer needs UAH 1.2 billion (600 million per every subsequent year).

These funds should be used to something to make the hostels, many of which are in deplorable condition, elementary suitable for living. And thereafter they can be transferred to communal ownership and privatized.

Thus, there exists the legal document allowing privatization of hostels today, but implementation of this law is still very doubtful[23].

However, much of the hostels together with the enterprises were privatized in the past, and the owners now are trying to evict people from these hostels by hook or crook.

There is an exemplary situation of violation by business owners or managers of human rights of the hostel lodgers in Lviv Oblast. In some cases they try to evict people, in other cases they cut off public utilities, including heating, because of owners’ debts[24]. The Odesa enterprise “Micron” has been dealing with this problem for several years now. Despite the fact that the State Property Fund protects the interests of the lodgers of the hostel belonging to this enterprise, there is still no positive court judgment[25].

There are serious problems with ensuring the right to adequate housing for vulnerable population. In particular, there is the issue of compliance with housing rights of orphans and children deprived of parental care.

Thus, according to the Prosecutor General’s Office of Ukraine, the local authorities and local self-government bodies do not take measures to save property and homes of children, which are put to children establishments, child care, under guardianship, foster families or children’s family-type homes. They fail to control its use, maintenance, guardianship, because of what the premises are left without care, used by a third party free of charge, for other purposes, or ruined.

For example, due to failure of Daryivska Village Rada of Kherson Oblast to preserve the house of orphans, it is in ruins and unfit for habitation.

The agencies of guardianship, while providing consent to the alienation of housing premises or property of children not always ascertain the intention of parents to provide children with equivalent housing or other property, as a result of which the children lose it in contravention of the law.

Thus, the agencies of guardianship of Uzhhorod City Executive Committee of Transcarpathian Oblast failed to check the ability of the family to buy a new home and gave consent to the alienation of the apartment, the right of use of which belonged to two kids. As a result, the family sold the apartment, and did not purchase a new one. Following the objection of the public prosecutor on 20.10.2011 the permission of the executive committee to dispose of the housing premises was canceled. To protect the housing rights of children the public prosecutor initiated consideration of the case and dispossession proceedings.

There are also widespread violations by local authorities and local self-government bodies of the requirements of the Housing Code of Ukraine on providing housing to orphans and children deprived of parental care[26].

In addition, it is important to note that virtually no public programs are working properly to provide affordable housing for young people. The program providing young people with housing in 2002–2012, initiated by the state and aimed at improving living conditions for young families, was botched by the state. In particular, such was the conclusion of the Chamber-of-Accounts’ Board on the audit of the effectiveness of state programs intended to provide young people with housing premises.

Thanks to the Foundation for Youth Housing for 2002–2010 annually the housewarming parties were given only by 2.8% of young families who were on the housing register[27].

The auditors take note of the fact that in nine years the state program providing young people with housing premises for 2002–2012 was underfunded from the budget for more than UAH 790 million, and the volume of commissioned housing made up only 12% of the target figure; as a result three thousand young families did not get an apartment.

“Especially hopeless is the situation of youth in rural areas where only two families got housing premises, as well as among scientific pedagogic and teaching staff. For this period were only 132 people, or 0.5%, had a stroke of luck and got preferential bank loans. No conditions were created for the development of youth housing complexes and sociotechnopolicies.”

The Chamber of Accounts notes that the projects were frozen due to poor management of funds and resources by the fund and its supervisory board of investments to the tune of UAH 140 million and construction credits.

Solving the housing problem of young people, projected by the Government, remains a dream. The inability of the state to help young people to solve the housing problem reduces confidence in the effectiveness of public administration, creates social tension[28].

3. The right to social protection

3.1. The system of social protection and social security

From the Soviet Union Ukraine inherited the system of benefits and privileges, which now creates a precarious situation. it is no coincidence that in the European Community our country is called “the country of benefits.” The eligibility to benefits in Ukraine is regulated with 50 normative legal documents which are constantly amended and the number of which increases. The total of beneficiaries has reached 13 million and more people who are eligible for benefits on social basis and about 3.2 million on professional one.

This indicates that almost half of the population of Ukraine is entitled to benefits. There is an overall amount of 600 privileges that need more and more money every year, which is a significant burden on the budget and prevent satisfying other needs. Both Soviet benefits, and ill-conceived new ones not only very fail to solve problems of social protection, but create social tensions and inequities. The parliament keeps registering new initiatives that are not aimed at adjustment, but at haphazard and financially uncovered increase in benefits. The standard of living of the population in Ukraine is going down, and various benefits prevent modern system of social protection from tackling the issue[29].

In this context, an important way of benefits reforming in Ukraine is to increase the efficiency of providing benefits and increased targeting. However, targeting now is out of the enquiry, because there is no targeting at all when determining benefits, but benefits are reaped by all representatives of a certain category of citizens.

Instead, each year the government stops certain legal provisions on privileges. Thus, in recent years, the Verkhovna Rada of Ukraine, periodically adopting the law on state budget for the relevant year, tends to stop many regulations establishing certain benefits and compensations to some categories of citizens.

2011 was no exception. On June 14 the Verkhovna Rada of Ukraine adopted changes to the law of Ukraine “On State Budget for 2011.” According to paragraph 4 of the Final provisions of this law in 2011, the rules and regulations of many laws of Ukraine, which define that the amount of social guarantees for Chornobyl disaster fighters, servicepersons, children of war, and veterans is paid in the manner and amounts set by the Cabinet of Ministers of Ukraine based on available budgetary financial resources of the Pension Fund for 2011. This means that it is the government that annually shall have the right to establish specific dimensions of individual payments to vulnerable population groups depending on the financial situation in the country.

The Law of Ukraine “On State Budget for 2012” also contains legal provision determining that the regulations concerning social security of Chornobyl disaster fighters, children of war, veterans are realized in the manner and amounts set by the Cabinet of Ministers of Ukraine within available financial resources of the State Budget of Ukraine and budget of the Pension Fund of Ukraine for 2012.

In fact, this is a narrowing of the content and scope of rights to ensure an adequate standard of living, which is prohibited by Article 22 of the Constitution of Ukraine. It is noteworthy that for a considerable number of Ukrainian citizens the appropriate privileges, compensations, and guarantees make an addition to the main sources of livelihood, necessary component of constitutional right to ensure the standard of living.

The Constitutional Court of Ukraine awarded its decision and noted that the State by special laws of Ukraine introduced some social benefits, compensations, and guarantees that were a part of the constitutional right to social protection and legal means of exercising this right, they were mandatory, and equally had to be followed by the government, local self-government bodies and their officials. Failure of the state to fulfill its social obligations concerning certain individuals puts citizens in unequal conditions, undermines the credibility of a person to the state that naturally leads to violation of the principles of social rightful state. In addition, many benefits, introduced by the law of Ukraine “On Militia”, “On public procurator’s office”, etc., are not privileges, but guarantees and other means of professional activity of certain categories of citizens, effective functioning of certain agencies.

This position of the Constitutional Court of Ukraine was determined by the need to protect current conditions in the interests of many citizens who are deprived of benefits and really get nothing in return from the state and will stay in poverty.

Therefore, given the above, in mid-2011, the deputies of the Verkhovna Rada of Ukraine made constitutional representation to the Constitutional Court on the unconstitutionality of these amendments to the law on state budget for 2011.

However, in its decision No. 20-rp/2011 of December 26, 2011 the Constitutional Court of Ukraine made a decision which changed its approach to the assessment of the capabilities of the state to limit the socio-economic rights and actually empowered the Cabinet of Ministers of Ukraine to set the size of social safety in manual mode.

Particularly, the Constitutional Court applied a proportionate approach in assessing the prescribed limits. This approach boils down to ensure that the legislator in making laws regarding the protection of social rights should follow the principle of proportionality between social protection and financial capabilities of the state, between the interests of each individual and the state as a whole.

One should look at the fact that this approach contradicts almost all previous practice of this court in similar cases. Many experts opine about doubtfulness of this approach.

In particular, they say that being guided by the constitutional principle of separation of powers; the Constitutional Court of Ukraine should avoid judicial law-making, substituting of their decisions for existing regulations or create new ones. The Constitution of Ukraine does not contain instructions for restricting human and civil rights in the event of insufficient financial resources. Therefore, having recognized the constitutionality of this limitation, the Constitutional Court will primarily legitimize provisions not provided for by the Constitution in violation of the requirement of art. 64 of the Basic Law. Secondly, according to European researchers, the practice of constitutional courts should avoid institutionalization of certain structures of social rights: the constitutional justice should focus not on the total system, which guarantees the protection of social rights, but on protection of social rights as the final product. The legislator has the freedom of system choice, while the court only checks the product of the system from the point of view of realization of such rights[30].

It is important to say that this decision of the Constitutional Court of Ukraine virtually eliminates the possibility for people in court to defend their social and economic rights, in volume defined by laws.

There were concerns over the “intentions” of the state to reform the system of privileges and protections by empowering the Cabinet of Ministers of Ukraine to set in manual mode the specific amount of benefits depending on the financial resources of the state. These “intentions” were outlined in the government bill #9127 “On state guarantees for the enforcement of judgments,” which was actually twice submitted to the Verkhovna Rada of Ukraine in January and in September 2011.

And if the first time this bill was not even considered at the assembly meeting of the Verkhovna Rada of Ukraine, the second time, on September 9, 2011 the Parliament adopted the document as a basis.

But in the context of the Constitutional Court ruling No. 20-rp/2011 on December 26, 2011 the challenge issued by the government, including the possibility of manual control of social guarantees, was already met. Therefore, there emerged a danger that the Cabinet of Ministers of Ukraine would use its normative legal instruments to reduce the size of social security specified in the law and to save financial resources of the state. And people will actually have no opportunity to defend their right to these guarantees.

Thereby the state creates a myth that there is a real reform of benefits based on social justice, myth that Ukraine implements the state policy in the social sphere. Instead, in Ukraine there is no public thought-out social policy, there is no proper coordination among the authorities responsible for its implementation, particularly among the Verkhovna Rada of Ukraine, the Government and the Ministry of Social Policy of Ukraine; as a result there is no coordination among bodies of power. For example, the Cabinet of Ministers of Ukraine adopts the Strategy of adjustment of the the system of granting privileges to certain categories of citizens by 2012 establishing a moratorium on the introduction of new categories of benefits, the Verkhovna Rada of Ukraine periodically passes laws implementing new exemptions; however, the Ministry of Social Policy of Ukraine does not know how to execute the above strategy and practically does nothing for its adoption[31].

The state has no overall vision of the problem making it impossible to achieve social justice in public policy in the social sphere. Instead of a consistent reform of benefits, the state from time to time takes chaotic inconsistent steps in this area: it may pass a law on benefits, and it may actually revoke privileges empowering the Government of Ukraine to establish their sum depending on the financial situation in the country. These contradictory actions by the legislative and executive powers destroy coordination among local bodies of power responsible for local policies in the social sphere.

In addition, it is important to note ineffective spending of budget funds to finance benefits. The State declares the effectiveness of the current system of benefits which is able to provide at least a minimum standard of living for recipients of benefits. However, the main sources of financing of those benefits are national and local budgets. Some of these costs bear on enterprises, where the preferential categories of citizens either worked in the past or work now, and enterprises providing utility, transportation and other services. But the amount of money needed to fulfill social obligations is actually enormous. Therefore, the benefits are often underfunded, or other areas of public life remain underfunded donating redistributed costs to fund benefits.

In general, the national budget cannot withstand such a load numerous benefits that exist in Ukraine. The lack of funding leads to reduction of social and economic rights of citizens[32]. So, very often the recorded benefits are nothing but declaration. This, in turn, gives people the opportunity to set up defense of their right in national courts and, in case of failure, to take a review against such judgment in the European Court of Human Rights.

This way, the existing system of benefits does not render social assistance to the poor and is too great a burden for the state budget. The government is trying to secretly reform these benefits, but the absence of sound public social policy does not help.

3.2. Guarantees of social safety of elderly persons

First, it should be noted that the amendments to pension legislation attracting criticism by trade unions, opposition and researchers[33] and undergoing a long discussion were at long last introduced into Ukrainian legislation in 2011.

On July 8, 2011 the Verkhovna Rada adopted the Bill of Ukraine “On measures to ensure legislative pension reform” in second reading, and on September 6 introduced clarity, which was called “technical”. Although there is still appeal investigation of these “technical” adjustments underway, the majority of changes to pension legislation came into force on October 1, 2011.

Therefore, Ukraine actually introduced quite strict system of pension provision as a choiceless mechanism to ensure its balance, in contrast to the wide arsenal of socially neutral and economically reasonable measures that could enlarge the base of pension income.

Despite all objections Ukraine begins phased retirement age increase for women from 55 to 60 years. There remains rather strange approach to retirement during the transition period that smiled upon pensioners born from 1956 to 1961. Under to pension legislation, the increase for these women will take place at a rate “six months twice per year”[34].

They tried to sweeten the pills. For women born before December 31, 1961, the pension calculated by the formula increases by 2.5% for each six months during later retirement in the period from 55 to 60 years.

Unfortunately, this is less than peanut incentives for later retirement forseen in the Law of Ukraine “On measures to ensure legislative support for pension system reforms” for 60 years of age (for both men and women): 0.5% for each full month of insurance record for deferment of retirement for 60 months and 0.75% — if the delay exceeds 60 months.

It should be noted that increasing the retirement age for women to 60 years is ill-adapted to the constitutional provision, under which the adoption of new laws or amending existing laws shall not diminish content and scope of existing rights and freedoms (Article 22 of the Constitution of Ukraine).

Also, the changes to pension legislation immediately increase for ten years the normative duration of insurance record for pension: from 20 to 30 years for women and from 25 to 35 years for men. This provision covers only new pensioners.

Also increases the minimum insurance record for the old-age pension — from five to fifteen years. The person with minimum insurance record can apply only for social assistance.

The law introduces the maximum scale of pension (including increments, promotions, additional pension, target cash benefits, pensions for special merits before Ukraine, indexing and other payments to the pension established by law, except for extra increments to certain categories of persons who have special merits before Motherland) at 10 living wages for the disabled. This rule will affect only those, who will retire after the Law goes into effect, i. e. after October 1, 2011.

So, now there will be privileged pensioners not only depending on which law — general or specific — they they were granted their pensions, but the date of application for pension as well. Such a restriction violates the principle of equal treatment of insured persons liable to receive pension benefits and fulfillment of obligations regarding payment of insurance premiums for the compulsory state pension insurance.

Also, the changes affect special pensions, in particular, they will increase the retirement age for men having special merits to 62 years, the sum of special pension is reduced from the current 90 to 80% of the wages and working pensioners having special merits will get their pension in the sum of conventional one.

Painful is the issue of pension modernization. This problem is aggravated at intervals of three or four years, and until now in Ukraine there is no effective system of pension indexation[35].

The existing law regulating the determination of the salary for retirement involves modernizing income of persons at the time of their application for pension. But the use of the index of average salary for three calendar years preceding the application changes the very essence of the approach to the determination of earnings for pension calculation and leads to an artificial lowering of it.

The amendments to pension legislation pay a lot of attention to the second (compulsory savings) level of pension system. But this does not mean that Ukraine is about to introduce it.

The issue of mandatory system of compulsory savings may need more time to tackle than the pension reform.

It should be noted that the main messages since discussions at the end of 2010 remained unchanged. The implementation of mandatory accumulation system in Ukraine is planned from the year which will grant the non-deficit budget of the Pension Fund of Ukraine. the question remains open whether it will be 2013 and or 2014, and therefore the state may actually delay the introduction of this system for a very long period of time. In particular, the figures planned in the draft state budget for 2012 testify to a difficult financial situation in the medium term.

The third level of the pension system is based on the voluntary participation of citizens, employers and their associations in the formation of pension savings in order to grant the citizens their pension payments that will be in addition to the pensions of the first and second levels. The principle of voluntary participation significantly reduces or ends government financial responsibility for the minimum acceptable results or compensation for losses (of course, the functions of supervision and control remain). Therefore, the creation of the third level is much easier and usually precedes the introduction of second one.

At the same time in Ukraine, unfortunately, the financial instruments are underdeveloped and may not convert retirement assets into an effective investment resource; there are doubts about the reliability of the mechanisms of protection against inflation and all sorts of abuse.

In general, the non-government pension system existing in Ukraine is very conservative and inflexible: mainly due to tough government regulation. Its implementation is hampered by low incomes of the vast majority of population, lack of transparency and lack of confidence, and underdeveloped market infrastructure. In the present situation the society and the state must determine socio-economic priorities, particularly on the prospects of non-government pensions[36].

4. Recommendations

1. To reform the system of social benefits: to discriminate between legal norms granting social and economic rights, and those that provide certain privileges in connection with holding certain positions or particular merits.

2. To stop non-compliance with the legal norms granting realization of socio-economic rights.

3. To provide full funding of legal guarantees of adherence to social and economic rights.

4. To improve the calculation of the minimum of subsistence, in particular, to adopt a new set of food and a set of non-food goods and services, to adopt a new methodology for calculating this indicator.

5. To annul such index as “the level of provisions for the minimum of subsistence,” which groundlessly reduces minimal social guarantees stipulated by law.

6. To improve regulation of food quality and safety and quality of drinking water.

7. To make arrangements for affordable housing, prevent arbitrary eviction from housing premises (e. g., hostels), violation of rights to housing affordability for vulnerable groups.

8. To ensure adequate funding and clear and effective mechanisms for implementing of programs intended to provide social housing, as well as development of a network of centers for reintegration, social hotels for homeless.

9. To improve social protection of vulnerable population in connection with the increase of tariffs for utility services, in particular, the functioning of transparent and efficient system of utility benefits and subsidies.

10. To gradually reduce the share of direct government funding of social needs and to increase the share of funding by residents based on the increase of all incomes, especially wages, pensions and other social transfers.

11. To implement uniform targeted social assistance in the event of unforeseen circumstances in life: death of a relative, serious disease, natural disaster, and social conflicts.

12. To harmonize social benefits and sources and mechanisms for reimbursement of their cost to providers.

13. To implement a uniform approach to determining government expenditures on reimbursement to providers of special benefit.

14. To go on reforming the pension system through the introduction of legislation on the accumulation levels of this system and create the conditions for this.

15. To avoid discrete increase in the minimum pension; introduce indexation rules for pension increases tied to CPI calculated for groups with different incomes.

16. To improve regulation and supervision of non-government pension funds, taking into account international experience and advice.

17. To guarantee the execution of judgments of national courts onsocial assistance payments, where the State is the defendant.

[1]  Preapared by Maxym Shcherbatiuk, UHHRU.

[2]  International Living’s Quality of Life Index 2011 http://www1.internationalliving.com/qofl2011/?field=final

[3]  Legatum Prosperity Index http://prosperity.com/country.aspx?id=UA

[4]  Legatum Prosperity Index (2009 versus 2011 Comparison) http://prosperity.com/index2011.aspx

[5]  The UN confirms the lower statistics of the poor in Ukraine http://dw-world.de/dw/article/0,,15467021,00.html

[6]  The poverty line makes UAH1,025 in Ukraine http://health.unian.net/ukr/detail/225542

[7]  Iryna Kyrychenko “And poor as friends of paradoxes?” “Dzerkalo tyzhnia”. Ukrayina”, No. 28, August 12, 2011 http://dt.ua/SOCIETY/i_bidniy__paradoksiv_drug-86039.html

[8]  The poverty line in Ukraine http://radiosvoboda.org/content/article/24265748.html

[9]  Ibid.

[10]  The program is over, the poverty remains http://ac-rada.gov.ua/control/main/uk/publish/article/16735678

[11]  For ten years now the Ukrainian Chamber of Accounts has not been combating poverty. http://epravda.com.ua/news/2011/10/19/302410/

[12]  The Chamber of Accounts of Ukraine: Findings of the analysis and expertise of the Bill of Ukraine On the 2012 State Budget of Ukraine http://ac-rada.gov.ua/control/main/uk/publish/category/412

[13]  State Budget–2012: Ukrainian Neo-Liberal Serfdom http://fpsu.org.ua/index.php?option=com_content&view=article&id=6367%3A-2012-&catid=60%3A2009-07-30-20-02-29&Itemid=34&lang=uk

[14]  In Ukraine, there is an ineffective system of food safety http://epravda.com.ua/news/2011/01/20/267343/

[15]  Illusion of safety — “Without GMO” http://ac-rada.gov.ua/control/main/uk/publish/article/16737495

[16]  Prosecutor General of Ukraine Viktor Pshonka has held an expanded meeting of the board http://gp.gov.ua/ua/news.html?_m=publications&_t=rec&id=98214&fp=81

[17]  Prosecutor General of Ukraine Viktor Pshonka has held an expanded meeting of the board http://gp.gov.ua/ua/news.html?_m=publications&_t=rec&id=98214&fp=81

[18]  The Prosecutor General’s Office of Ukraine has prevented illegal use of budgetary funds http://gp.gov.ua/ua/news.html?_m=publications&_t=rec&id=98067&fp=61

[19]  Privatization and/or eviction. This article is a continuation of the monitoring of the problems of monitoring of the lodgers of hostels http://tovarish.kiev.ua/print/Pryvatyzuv.html

[20]  We can but become the country of homeless. Vasyl Pasochnyk “Dzerkalo tyzhnia. Ukrayina” No. 37, October 14, 2011 http://dt.ua/ECONOMICS/yak_ne_stati_krayinoyu_bezdomnih-89663.html

[21]  The “affordable housing” in 2011 is not as available as expected. http://news.dt.ua/ECONOMICS/dostupne_zhitlo_u_2011-mu_bude_ne_takim_dostupnim,_yak_peredbachalosya-76446.html

[22]  How not to become homeless? Vasyl Pasochnyk “Dzerkalo tyzhnia. Ukrayina” #37, October 14, 2011 http://dt.ua/ECONOMICS/yak_ne_stati_krayinoyu_bezdomnih-89663.html

[23]  V. Matchuk. Three years for hostels: give either/or evict / / Ukrayinska Pravda http://pravda.com.ua/columns/2011/09/15/6588602/

[24]  The Lviv Oblast State Administration promises to solve the problem of hostel lodgers whose rights were violated http://zik.ua/ua/news/2011/10/20/315149

[25]  New business owners do not want to give hostels to residents for nothing–Tsar’kov http://golosua.com/ua/main/article/politika/20110921_novyie-sobstvenniki-predpriyatiy-ne-hotyat-otdavat-obschejitiya-jitelyam-za-bestsenok-tsarkov

[26]  The Prosecutor General’s Office of Ukraine and its bodies protect housing (property) rights of children http://gp.gov.ua/ua/news.html?_m=publications&_t=rec&id=98799

[27]  Chamber of Accounts of Ukraine: this unavailable “affordable” housing http://ac-rada.gov.ua/control/main/uk/publish/article/16736481

[28]  Chamber of Accounts of Ukraine: this unavailable “affordable” housing http://ac-rada.gov.ua/control/main/uk/publish/article/16736481

[29]  Truth and myths about benefits reforming in Ukraine. Center for Public Advocacy http://cga.in.ua/fckfiles/Pravda-Mify1.pdf

[30]  A. Blankenahel. Constitutional courts, social rights and social state // Constitutional Right: East European Review. — 2003, No. 1, p. 42–44.

[31]  Truth and myths about benefits reforming in Ukraine. Center for Public Advocacy http://cga.in.ua/fckfiles/Pravda-Mify1.pdf

[32]  Truth and myths about benefits reforming in Ukraine. Center for Public Advocacy http://cga.in.ua/fckfiles/Pravda-Mify1.pdf

[33]  Ukrainian Helsinki Human Rights Union. Annual Reports on Human Rights http://helsinki.org.ua/index.php?id=1298358010

[34]  Natalia Betina. Costly pension,– “Dzerkalo tyzhnia. Ukrayina”, No. 34, September 23, 2011 http://dt.ua/
ECONOMICS/doroga_pensiya__-88389.html

[35]  Natalia Betina. Costly pension,– “Dzerkalo tyzhnia. Ukrayina”, #34, September 23, 2011 http://dt.ua/ECONOMICS/doroga_pensiya__-88389.html

[36]  Belenkaya Yu.Ye. Non-government pensions in Ukraine http://libfor.com/index.php?newsid=82