17. ECONOMIC AND SOCIAL RIGHTS
1. General overview
Having undertaken the commitment of becoming a socially oriented state, Ukraine should have aimed its efforts at enhancing its citizens’ well-being, paying special attention to the most vulnerable categories of society.
In reality, however, Ukraine is very far from implementing relevant changes while systemic problems, registered in this area, testify to the decrease in protection of social and economic rights.
Lamentably, the life quality standards are also going down, while indicators of relative and structural poverty are increasing. Same is true of the cost of living as a bottom line indicator for the whole social security system. Currently it does not reflect the basic needs of an individual, as it does not take into account the whole set of necessary expenditures and is based only on the minimum set of food products and obsolete list of consumers’ goods and services.
Besides, the indicator of guaranteed basic subsistence is still used in defining certain types of social protection. It means that in fact the state is incapable of ensuring even basic living standards. Although this indicator is, in fact, much higher for certain categories of population, it is still widely used.
The guarantees of such essential elements of right to adequate living standards as food and water quality and safety also remain questionable. The experts state that the efforts of the government to change this critical situation for the better proved inefficient.
The right to adequate housing was in the center of the state’s attention in 2012. Authorities were proactive in implementing an ambitious program of affordable housing. The reality, however, proved that the program was majorly based on populism, and not on the real desire to achieve progress in this area. As a result the program failed to provide affordable housing and for the umpteenth time showed lack of understanding of the problem by the state authorities.
Trying to exercise their right to privatization of their rooms in dormitories Ukrainians faced serious difficulties due to the imperfections and faults in respective legislation and lack of uniform judicial practice.
The reforms in the social protection areas were limited to the governmental measures aimed at “manual adjustment” of the amounts of social benefits according to budget capacity and to traditional increases in pensions and subsidies by several dozens of hryvnas preceding the elections. No systematic activity in reforming social protection system has been carried out; moreover, aforementioned “manual adjustment” of the amounts of social benefits only reduced the guarantees of social and economic rights.
The adoption of Strategy for reforming the system of social services, which became a guideline document in the area, is, certainly, most welcome. The implementation of the previous Reform Concept, however, does not leave much ground to optimism.
The results of pensions’ reform also look bleak. The reform unfortunately did not lead to the increase in pensions, and such an increase can be hardly expected in the future. It also failed in making pension system fairer and in decreasing the Pension Fund deficit. On the whole, none of the goals declared by the reform have been achieved.
2. Right to the adequate living standards
2.1. Guarantees of the right to the adequate living standards
Right to the adequate living standards is one of the fundamental social and economic human rights. It was proclaimed as far back as 1946 in the Article 25 of the Japanese constitution. In 1948 this norm was reflected in the international law, i.e. in part 1 of the Article 25 of the General Declaration of Human Rights. – “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services.” Similar provisions, though, without mentioning living standards, can be found in the Article 11of the American Declaration of Rights and Duties adopted in April 1948.
Further on this right was secured in part 1 of the Article 11 of the International Covenant on economic, social and cultural rights (“everyone’s right to standard of living adequate for himself and his family, including food, clothing and housing” and in the p.1 of the Article 4 of the European Social Charter “the right of workers to reimbursement which ensures standard of living adequate for them and their families”. The guarantees of this right are specifically stressed in the Article 27 of the Convention of the Child’s Rights and the Article 28 of the Convention on the Rights of the Disabled.
It is noteworthy that the quality of life in Ukraine in 2012 has further deteriorated. According to the data obtained by Legatum institute in the research on defining Legatum Prosperity Index Ukraine now ranks 71st among 142 countries[2]. In this rating it is preceded not only by its neighbors Russia and Belarus, but also by Columbia, Botswana and Paraguay.[3]
Significantly, 8 sub-ratings were factored in into this rating: level of economic development, individual freedoms, quality of life and some others. The economic development level was evaluated in the focus of Ukraine’s adherence to the requirements of adequate living standards, and, in particular, affordable nutrition and housing. Statistical data used in the rating were obtained from the UN Organization, World Bank, OECD, WTO, Gallup, Economist Intelligence Unit, IDC, Pyramid Research et al.
Alongside with quality of life, efficiency in overcoming poverty is another important factor in assessing the guarantees of appropriate living standards. Keeping absolute, relative and structural poverty at low levels is among the most significant criteria in this assessment.
Expert Lyudmila Cheren’ko (Institute of Demographics and Social Studies under NASU) evaluated Ukrainian progress against one of the criteria of population poverty, i.e. absolute poverty, pointing out the aggravation of situation with regards to other criteria, i.e. relative and structural poverty, as well.
Thus, the absolute poverty index for the country in 2011 showed decrease as compared to the year 2010 – from 16,8 to 14,6 based on the criterion of cost of living; by international index – 5 USD per day per capita based on purchasing capacity - from 2,5% to 1,7%.[4]
At the same time the expert drew attention to the key criterion of the poverty level, i.e. relative poverty. It shows how the revenues of society are distributed and what the underlying principle of distribution in various walks of society is. If this index is stable, then the results of economic growth regardless of its characteristics are proportionately distributed among various population groups – the indigent will not get the same share of profits as the rich. In fact the gap between them and the well-off people will grow even deeper with economic growth.
According to L.Cheren’ko positive changes in relative poverty index were registered in 2010; then in Ukraine this index amounted to 24.1. The year 2011 marked end of crisis, but the indicators show that there is no return to the situation before crisis. The index which amounted to 24.1% in 2010, in 2011became 24,3%.
The structural criterion reflects the ratio between the budget of Ukrainian citizens and consumption. Under this indicator people who spend more than 60% of their budget on food, are considered poor. “While in 2010 41.2% Ukrainians fell under this category, in 2011this figure increased to 41.5%. The growth seems insignificant, but the positive tendency, alas, ended. Today we are several years back, at the level of 2006” – concluded the expert.
These objective signs of the deterioration of situation for certain population groups are confirmed by self-identification of the Ukrainian citizens: 60% called themselves poor in 2011, while in 2010 this figure constituted 57.8%.
Evaluating the actions of power bodies in overcoming poverty, L.Cheren’ko argued that some efforts to improve the situation have been made, but reforms, especially related to social domain, were incomplete. “The principle of revenue distribution needs serious revisions” – claimed the expert.[5]
Senior UNDP program manager Kateryna Rybalchenko confirmed that the share of population, whose consumption indexes are lower than actual cost of living, continues to grow, despite the fact that the country meets international index (i.e. 5 USD per capita per day), and the number of poor among children and employed population is decreasing. In 2011, this index amounted to 25.8 as opposed to 23.5 in 2010. This problem still waits to be solved.[6]
The poverty levels in the urban and rural areas show a tendency to convergence due to the deterioration of life quality indicators in the cities.
“For the fourth year in a row we have been observing convergence of poverty levels in the city and in the village. On the one hand, it is a positive sign, as before 2008 these indexes tended to diverge, creating larger gap between the city and the village. Over the recent years this gap has been diminishing, but not due to the improvements in the villages. On the contrary, the urban life indicators deteriorate, especially, in small towns” – stated L.Cheren’ko.
Meanwhile, the number of those who can be described as “middle class” (i.e. the group of population which can afford not only food, but also clothing, housing and leisure) decreased in Ukraine between the years 2008 and 2012. The gap between the poor and the rich has been growing over the same time period.
The Director of Kyiv International Institute of Sociology V.Paniotto confirms that the percentage of population considered “middle class” currently decreased from 10% in 2008 to the figure twice smaller.
However, the sociologist argues that people have tendency to conceal their revenues. For example, as far back as 1995 the sociologists found out that the Ukrainians’ expenditures in that year were twice higher than their incomes. On the other hand, the researchers analyzing the living standards of the Ukrainians have virtually no access to the information concerning the richest members of the society, although the property gap is evident in Ukraine.[7]
The ratio between total incomes of 10% of the richest and the poorest groups of population constitutes 5.3, including urban population - 5.4 and rural population – 4.6. The reality, however, is much worse, in the expert opinion: the actual ratio between total incomes of 10% of the richest and the poorest groups of population is assessed by them at 40 times.[8]
Increase in poverty and inequality of the society is caused, first of all, by irregular distribution of the revenues from the economic growth, deterioration of living conditions for families with many children, young adults, retirees, and low salary levels.
In 2012 the low indicator of cost of living in Ukraine still presented a serious problem, as this most important factor of social security system fails to reflect the real situation in Ukraine. Although the bureaucrats more than once stressed the need to solve this problem it remains unsolved causing a lot of frustration for Ukrainian citizens.
The established value for the cost of living ignores the whole range of necessary payments: for education, pre-school establishments for children, medical services etc. The cost of living index used today is a chimera, a curtain behind which the state tries to hide its incapability of fulfilling its promises in the social area.
Trade unions, and, specifically, the Federation of the Trade Unions of Ukraine, also point out the low index of the cost of living, adopted in the budget.[9]
Under calculations carried out by the National Forum of the Trade Unions, a healthy Ukrainian citizen needs 3980 UAH to satisfy his bare minimum needs. If a person is sick or has additional cultural needs (e.g. buying a book, attending theater or movies), he/she needs a minimum of 5000 UAH. Meanwhile the cost of living is calculated at the mean value of 1044 UAH, with average wages for the major part of Ukraine 2719 UAH, and, for some oblast’s (e.g. Ternopyl) - 1904 UAH.[10]
Besides, the mechanism for calculating this index seems rather dubious. Under the Law of Ukraine “On Cost of Living” the “consumer basket” including food products, merchandise and services used to define the cost of living is revised at least once in 5 years.
Procedure for scientific and public evaluation of the the “consumer basket” including food products, merchandise and services is defined by the Resolution of the Cabinet of Ministers of Ukraine № 1767 of 24.09.1999. Therefore, the ‘basket’ has not been revised for 13 years.
According to the official information provided by the Ministry of the Social Policy of Ukraine the relevant steps aimed at updating the list of food products, merchandise and services were taken as far back as 2005. The Draft Resolution of the government “On the approval of the list of food products, merchandise and services for the main social and demographic groups of population” devised on the basis of the expert board evaluation was considered by the Cabinet of Ministers of Ukraine in February, 2006, but no final decision was made.
The Ministry also claims that in 2011 a new Draft Resolution taking into account the results of the recent scientific and public evaluation of the list of food products, merchandise and services, carried out in December 2010, has been devised and submitted to the Cabinet of Ministers of Ukraine, according to the information received from the Ministry of Economic Development as the main agent. Currently the Cabinet of Ministers of Ukraine decided to postpone the decision with regards to the Draft Resolution of the Cabinet of Ministers of Ukraine “On approving the list of food products, merchandise and services for the main social and demographic groups of population” (Protocol of the meeting of the Cabinet of Ministers of Ukraine № 41 of 31.05.2012).[11]
This attitude clearly shows that the issue is not among the priorities of current government.
It is noteworthy that the shameful practice of using the index of the “guaranteed level of cost of living” in allotting certain types of social benefits continued into 2012. It means that the government either cannot or won’t meet even minimum requirements stipulated by the budget. Despite Presidential declaration that this indicator should be banned and numerous trade unions’ and NGOs’ appeals[12] the index is still there.
On the other hand, starting July 1, 2012 persons who lost their capacity for work and the disabled are entitled to “guaranteed level” at 100% of the cost of living index. However, for the children this index is still a far cry from 100%, amounting presently to 75%. For the working population this index has never been revised and constitutes lamentable 21% of the cost of living.
2.2. Quality and safety of food products
Ukraine ranks only 44th in the international rating with respect to affordability and quality of the food products. The rating was conducted by The Economist Intelligence Unit for 105 countries. As far as availability and safety of the food goes, Ukraine precedes Thailand, Peru and Tajikistan.[13]
As a basis for rating the experts chose the “food confidence” index. It means that people at any time have physical, social and economical access to sufficient and nutritive food, which meets their dietary needs for active and healthy life. The main components of the “food confidence” index include: affordability (family’s expenditures for food as compared to other expenses; availability (adequate offer, average daily delivery), quality and safety of the products (in compliance with food standards).
The quality of food products deserves a special discussion. As a member of NGO “Zdorovya” [Health] M. Lysenko points out, the soviet standards, which are not that bad, are still in force in Ukraine. The Ukrainian producers, however, find the cracks in the law, abusing the imperfections of the control system. [14]
Quoting the data collected by State Food Inspection she claims that about 97% of sausage products in Ukraine contain synthetic materials and dyes, to give just one example. Same is true of other products as well.
The manufacturers do not spare chemical components in their produce. Noteworthy, the majority of additives in Ukraine are used by the EU countries also. The difference is that there the law obliges the manufacturer to enumerate all the chemical elements added to the product, with E-codes, on the packing. The Ukrainian producers are smarter: if a product contains, for example, sodium glutamine (Е-621), they would write “taste enhancer” on the pack.
Besides, the manufacturers often (almost in 80% of cases, according to information from the State Food Inspection) cheat the buyers – they replace ingredients for the cheaper ones, which sometimes are health hazardous.
The State Committee for Food Standards claims that the majority of fakes occur in meat and dairy products. Vegetable oils are often detected in milk, butter, hard cheeses and cream, although they are not supposed to be there; soy, dyes and preservatives are often found in sausage and frankfurters.
The experts from the State Committee for Food Standards in total monitored 200 tons of dairy products in 2011. As a result 35% of the products were rejected and removed from the sales. The situation with meat is no better. Out of 400 tons of meat and meat products tested last year, 36% were rejected. Main causes for rejection: more moisture, than allowed by specifications, in the sausage; presence of starch, microbiological faults.[15]
Good quality and safety of the food products brought to Ukraine also remain a problem. Thus Director General of the “Lvivstandartmetrologia” company O.Kosyn’sky state, that 90% of the food products imported to Ukraine, are not fit for consumption.[16]
The aforementioned problems related to ensuring good quality and safety of the food products are obvious; therefore, in 2012 the issues of legal support in ensuring high quality and safety of the food products were actively discussed both in governmental structures and in the legislative body of Ukraine. In May 2012 a respective governmental draft law was submitted to the Supreme Rada. It was, however, criticized by the people’s deputies and till today has not been considered by the Supreme Rada even in the first hearing. In the same year 2012 the government submitted to the parliament draft law № 11008 “On novel food products”.
In experts’ opinion, this draft law contains serious faults. In particular, the Article 2 of the draft law puts biologically active supplements (which are to be registered in compliance with the Law of Ukraine “On safety and quality of the food products”) and novel food products containing and manufactured from GMO ingredients outside the scope of the said law. The state registration for this latter group of food products is not required either by the Law of Ukraine “On safety and quality of the food products” or any other normative and regulatory acts. In other words the products containing GMO are exempt from state registration and can be freely disseminated in the Ukrainian territory. The draft law also envisages that after novel food product is duly registered it can be produced and circulated by any market operator.
The President of the expertise center “Test” V.Bezrukiy opines that it is totally unclear why this law is needed. “Taking into consideration the fact that the Law of Ukraine “On safety and quality of the food products” contains a paragraph referring to “new products”, the introduction of a new law specifically addressing these products seems unnecessary. Appearance of new products is a constant phenomenon, technologies are permanently changing, new ingredients and their combinations come into being. The Ministry of Health issues hygienic conclusions on each ingredient. These conclusions specifically address the safety factors. So the introduction of the new law and registry are totally inexplicable, if all the new products are currently under control. The Ministry of Health presently does not even have the list of nutritive additives (E-indexed), and they want to introduce a new products registry! Doubtless it will hinder appearance of new products in the markets without no effect as to the food safety” – says the expert.[17]
Therefore, we come to the conclusion that despite some efforts to amend the law with regards to good quality and safety of the food products, at present no real changes have been made and the situation remains complicated enough.
2.3. Ensuring good water quality
Under the official data Ukrainians today are drinking the worst water in Europe.[18] Almost 80% of the drinking water comes from the surface sources. The majority of river basins, under classification of water bodies by level of pollution, can be described as polluted or much polluted. This information comes, in particular, from press-service of the Ministry of regional development, construction and housing and communal economy.[19]
In spite of serious recession in industrial operation within recent years, and consequent decrease in the discharge of waste water into the river basins, the tendency of environmental deterioration of these reservoirs still persists. The water reservoirs of I і II categories do not meet the standards either in sanitary-chemical or in sanitary-microbiological indicators.
“High levels of technogenic loads on water reservoirs and the use of deficient technologies in the treatment of water aimed at changing its quality and making natural water potable only in situations when source water comes from the surface sources of the I class do not allow for providing high quality and safe water for the population. As of today, practically all water sources can be approximately classified as III class while the conditions and equipment of the treatment facilities have not practically changed” – informed acting Minister of the regional development, construction and housing and communal economy of Ukraine O. Alipov.[20]
According to his statement, Dnipropetrovsk, Luhansk, Donetsk and Zaporizhzhya oblast’s have most serious deviations from sanitary-chemical norms in the water composition, while Donetsk, Luhansk and Kirovohrad oblast’ have most deviations from bacteriological norms.
Meanwhile the implementation of the national program of improving water quality is beyond any criticism. The collegiate of the Counting Chamber, having studied the results of the audit concerning the efficiency of the budget funds allocated for the national program of Ukraine “Drinking water for Ukraine” for the years 2006-2020, concluded that the program goal has not been achieved. The operation of the Ministry of regional development, construction and housing and communal economy of Ukraine in 2011 and that of the Ministry of housing and communal services of Ukraine in 2010 with regards to the issues of high quality drinking water supply for Ukrainian population was unsatisfactory. No significant changes in this area have been introduced; budget funds are used inefficiently and contrary to the legislation in force.
The efficiency of program’s first stage, i.e. till the year 2011, amounted only to 16.9%. Some program provisions contradicted the law requirements towards national programs. Specifically, the document did not enumerate other sources of funding, apart from the state budget. It meant that the whole burden of the program implementation fell on the rank-and-file taxpayers’ shoulders.
In October 2011 a new version of program, amending the majority of faults, was prepared. It also changed the areas of its implementation. However, it still lacked any provisions concerning the necessary measures for the development and renovation of the water-pipes networks, despite the fact that their technical condition is critical, the losses of water amount to one third, and in some areas, 40-50% of the total input. Instead, almost half of budget funds are to be allocated for the construction of local facilities for additional water treatment. The document provides no answer to the question, who and how will pay for the operation and maintenance of these facilities and how it will affect the final cost of the water for the consumers.
The Counting Chamber also points out that planning and coverage of state budget costs for program implementation is inadequate and insufficient. Under the most constrained budget funding some portion of money (almost 113 million UAH) allocated by the Ministry of finance and National Treasury in the late 2011. As a result, in some regions the work never started, while in the others its scope was very limited.[21]
The budget costs allocated in 2011 and first half of 2012 for the reconstruction and development of the centralized sanitation systems were used by the Ministry of regional development, construction and housing and communal economy of Ukraine unsystematically and in violation of legal requirements. This conclusion was made by the auditors sent from the Counting Chamber.
Meanwhile the technical condition of the systems and treatment facilities is constantly aggravating, making the problem of quality drinking water supply even more acute. Over the said time period the Ministry of regional development, construction and housing and communal economy of Ukraine failed to ensure adequate funding or efficient implementation of the tasks formulated by the national programs in the sanitation area, i.e. National program for reforming and developing housing and communal economy for the years 2009-2014 and National program “Drinking water in Ukraine” for the years 2006-2020.
The Counting Chamber audit established that the ministry’s operation was not aimed at specific end result, while planning and funding of the state budget for the implementation of the said programs remained unsatisfactory. The measures are not structured, without any visible progress for a number of budget terms.[22]
The Ministry of regional development, construction and housing and communal economy of Ukraine recognizes the funding problems, stating that currently the program is financed only at 20% against the total sum stipulated by the respective law.[23]
2.4. Realization of the adequate housing right
The realization of right to housing, declared by the Article 47 of the Constitution is not guaranteed in real life.
The level of citizens’ incomes, at the present housing and renting costs does not allow them, in overwhelming majority, to satisfy housing needs for their families. The public can only pay such amounts of money through mortgages, which are offered by the banks at current average rate of 15.3% per year with the down payment at the amount of 30–40% of the whole property value. State social standards (cost of living, first of all ) do not include public expenses for rent or purchase of housing at its market value.[24]
The housing prices in Ukraine are inordinately high, while the country is facing its permanent shortage. This was the conclusion of the UN European economic commission. In particular, if these prices are compared against the actual average wages, Kyiv is catching up with such megapolises as New York and London, leaving Moscow behind, conclude the UN commissioners.[25]
As of today, each Ukrainian on the average disposes of only 23 square meters of housing – almost twice less than in Europe and thrice less than in the US. Now about 1.3 million are waiting in line to get an apartment, while the real number of people in need of housing improvement is many times bigger.
As far as the housing quality goes, there are obvious problems of wear-and-tear of the houses, especially in the so-called “hotel-type” houses and “khruschchovka”s, which were built half a century ago. The rate of housing renovations now amounts to one hundred years (average life term of a house is 50 years).
About 90% of the total housing fund was built 20 or more years ago. Naturally, the condition of water and heat supply systems, sanitation is close to breakdown point. If the housing and communal problems are not dealt with immediately in the nearest future they can become social problems of first magnitude, alongside with poverty in the country.[26]
In order to address this problem the program “Affordable housing” was introduced by the head of the state among other social initiatives in March 2012. In its declaratory part it stipulated possibility of obtaining low interest- rate mortgages for the term of 10-15years. Potential participants in the program were promised that the absolute value of interest rate will not exceed 3% of total cost per year.
However, right after that many experts expressed their doubts as to the feasibility of the program goals, describing it as populist. The readiness to allocate budget money for mortgaging caused mistrust. By certain estimates, annual direct expenses of the state then could have reached 20-25 billion UAH. “This money can be found within the budget – argued one of the analysts. – It will mean, however, the downsizing of all the other programs.” [27]
The government, however, immediately offered its own vision of the mechanisms for the low-interest mortgages in the country. Right after the President’s social declarations, the Cabinet of Ministers clarified that no one intended to grant mortgages from the state budget. State money should go to cover the difference between the declared social rate and the real rate offered by the commercial banks. This approach, however, was met by the analysts, with a measure of skepticism as well. Taking into account that in March average effective rate for mortgages in Ukraine reached 24.35% a year, the bankers were far from assuming that the government would be prepared to pay over 20% of the mortgage rate.
The skeptics were right, to a certain extent. After April amendments to the budget of 2012 and approval of Resolution І № 343 of the Cabinet of Ministers of Ukraine which legitimized the “Order of reducing the cost of mortgage credits…”, the conditions under which the borrowers could access the inexpensive mortgage plan, and the governmental money resource for the program implementation in the current year were clarified. The Cabinet of Ministers of Ukraine first quoted 2 billion UAH for target use, but the state budget granted twice smaller amount for the “Affordable housing” program in 2012. And the government-approved Order established the highest mortgage rate reimbursed by the state at 16% and shortened the payment cycle from 15 to 10 years.[28]
Evidently, the state undertook the commitment to recompense no more than 13% of the bank mortgage. The borrower, moreover, had to meet certain criteria as to his/her annual income – not less than 55 thousand UAH per year for the family consisting of three persons. Only those who in fact needed “improvement of living conditions” were qualified to participate.
The implementation of “Affordable housing” program started in mid-May, less than two weeks after the Cabinet of Ministers of Ukraine Resolution № 343 was made public. First “cheap mortgage” was granted to a Sumy city resident. The event was broadly covered by media. Looked like such a dynamic launching makes the fulfillment of the task (i.e. providing housing for over 30-35 thousand families by the end of 2012) set up by the Cabinet of Ministers of Ukraine quite feasible. But the initiative started to slow down as early as May 23, 2012; the need for “adjustment of the mechanisms” of low-interest mortgages arose.
The program turned out unrealistic in terms of payments made by the families waiting in line for better housing, while unfinished construction as the only cheap housing available proved unattractive for potential clients. That is why in late May the aforementioned Order was amended by widening the circle of potential beneficiaries. It was allowed to grant mortgages not only for unfinished construction, but also for the apartments, which were built in the former years, but not sold.
These amendments, however, did not help. By mid-June only 40 low interest mortgage contracts have been signed; by the end of the month only 30 million UAH out of 72 billion UAH, stipulated by the state budget in 2012, were allocated for the program. At the same time the number of residents willing to take part in “affordable housing” program amounted to 7.5 thousand, while developers could offer by that time 4.7 thousand apartments.
Although the Ministry does not advertise this fact, too rigid requirements towards borrowers in the earlier versions of the document significantly decreased the acceptance of a program by its key agents, i.e. banks. Out of all the numerous banking institutions of the country “Oshschadbank” was, probably, the only bank which dealt with lowing the mortgage interests on the regular basis within the framework of the state program. And even this bank operated on enforced-voluntary basis. The seven commercial banks which announced their engagement in “affordable housing” participated in the program only partially, within limited number of mortgages in a couple of Ukrainian oblast’s.
All these developments led to “Gerzhinvestproekt” management rejection of the idea to build “presidential neighborhoods” in fall of 2012. “Affordable housing” will be reduced from the national program into a usual social assistance program.[29] In general, authorities’ operation in the implementation of this program can hardly be qualified as efficient.
The members of vulnerable categories of society and young adults, in particular, also find it difficult to exercise their right to the adequate housing. The “Affordable housing” program and the program of low interest mortgages enabling the purchase of apartments by the citizens in need of housing improvements, are not popular among the young.
According to V.Hryshchenko, the head of all-Ukrainian “Ukrmologzhytlo” Association, the young people describe these programs as “Housing affordable to the rich”, as in the first case, immediate payment constitutes 70% of the housing cost, and in the second – 25% of the housing cost. Both amounts are unaffordable for the young.
V.Hryshchenko stated that according to the association study, a young person considers him/herself successful if he/she earns 4 thousand UAH per month. None of the Ukrainian regions can boast of an average salary at this rate. “Therefore, all these programs are not fit for the young” – he summed up.[30]
The Prime Minister of Ukraine M.Azarov also points out, that in order to meet the requirement for affordable housing mortgage the young people in Ukraine should earn 5-6 thousand UAH a month.
Despite the fact that the term of the state program completion was moved from the initial 2012 to 2017 it will hardly be instrumental in resolving, even partially, the housing problem the young adults of Ukraine are facing.
The housing for the orphans and children deprived of parental care also remains a crucial issue. As of today, 38 thousand children in this category need housing.
According to the information provided by the Prosecutor General Office of Ukraine, the local authorities and self-governments fail to introduce a network of public housing for the orphans and children deprived of parental care. Only 19 institutions of this type operate in Ukraine. Definitely is not enough to satisfy the needs of the children, but even these institutions are sometimes used contrary to their goals. [31]
Thus, the director of Khmelnitsky oblast’ social hostel accepts the minors to this institution without proper instructions from the oblast’ social centers for the children, families and young adults. As a result the students of the local agrarian lyceum reside in the dormitory, although they are entitled to rooms in the lyceum dormitory free of charge. In the meantime the young people leaving orphanages are obliged to rent apartments.[32]
In 2012 the problem of Ukrainian citizens residing in the hostels and dormitories and not owing their homes also remained crucial. After the Law “On ensuring the realization of property rights by the residents of the dormitories/hostels” was passed, Ukrainians residing in the hostels and dormitories and not owing their homes, acquired the right to privatize residential and auxiliary premises in the said dormitories. However, due to the poor control on behalf of the state authorities, courts and prosecutor’s offices, inertia of local self-governments the provisions of the law are not adhered to. Significant number of appeals and complaints submitted to the Supreme Rada Committee by the dormitories’ residents, point out the violation of their right to housing.
I.Lysov, the first deputy head of the Supreme Rada Committee, stated that the implementation of the first law passed three years ago and enabling dormitories’ residents’ privatization of their apartments showed inefficient operation of power in the process. About 500 thousand of Ukrainians could not exercise their right in privatizing their housing.[33]
I.Lysov stressed that today eviction of dormitories’ residents without providing them with the alternative housing as required by the law is a most acute problem. Same applies to local self-governments’ procrastination in the privatization processes. The owners of the dormitories which became the part of the statutory capital of the associations, set up in the process of privatization, refuse to transfer them to public ownership.
3. Right to social protection
3.1. System of social protection and social security
The current system of public benefits needs reforming, as the procedure for their receiving is not systematized and does not allow performing the functions of the adequate social protection. The reforms consisting in cancellation of benefits for those who do not qualify and switch to target assistance and social services were defined by the President of Ukraine V.Yanukovich as a priority area for modernizing social security system. However, harmonizing the system with material status of various categories of population should go hand in hand with salaries’ increase, needed to recompense the lost benefits.
The conclusions concerning insufficient targeted assistance were confirmed by the experts from the Institute of Demographics and Social Studies under NASU. In particular, the Head of the department of living standards studies L.Cheren’ko stated that “the major share of benefits in Ukraine is received by well-off people... 10% of the poorest Ukrainians receive only 2% of the benefits, while 10% of the richest people get 22%. The whole population was divided into ten groups – from the poorest to the richest. This curve is growing depending on the group, i.e. the richer the person is the more social benefits he/she gets from the system”. L.Cheren’ko also stated that “practically each Ukrainian family (household) has at least one beneficiary of social services, receiving at least one benefit. If we add all the governmental social programs, assistance for the children, housing subsidies etc., we’ll see that over half of Ukrainian population participates in the governmental social programs”… [34]
At the same time, despite the proclaimed goals the actual state measures aimed at reforming of the social protection system were inefficient. Thus, analyzing the Project for the improvement of public social assistance system results, the Counting Chamber of Ukraine pointed out that in 2011its implementation gained momentum, but the Ministry of Social Policy managed to meet only one third of all the efficiency indexes for the project.
Improvement of the social assistance system should enhance its targeted nature and simplify the procedure for receiving the benefits, specifically, by means of “one stop” method. The Ministry of Social Policy lingered with the project implementation – instead of 2.5 months stipulated by the international agreement it took six.
The Counting Chamber also revealed that “one stop” techniques cannot be implemented in 100% in any region of the country. Indeed, the time needed to process an application for social assistance shortened, but the indicator of the number of processed application is lower than anticipated, due to the lack of the necessary modernization and insufficient administrative capacity both at the regional and at the local levels. The situation has not changed since last year. No analysis and monitoring of the subsidies’ payments have been conducted.
The lack of control over the project implementation at the central and local levels was also noted.[35]
The fact is the government decided not to introduce any innovations and chose the successful technique tested at the time of the pension reform, i.e. benefits reforms had to be implemented exclusively at the citizens’ cost.
Two years of rhetoric with respect to the need of the radical changes in the benefits distribution resulted in only two draft laws submitted to the Supreme Rada by the government. The first one (№9127) stipulated “manual adjustment” of the benefits for the “children of war”, “persons affected by the Chernobyl NPP disaster”, “Afghanistan war veterans”, the disabled and war veterans and other categories. This initiative provided authorities with the tool enabling them to decide at its own discretion when benefits are to be withheld, when they should be significantly increased to demonstrate the efficiency of power operation and its reforms to the public (e.g. on the eve of elections). By the way, the goal, phrased in this law, was achieved by the state in 2012 through respective amendments to the law on budget, so that today the amount of various types of public assistance is defined by the Cabinet of Ministers of Ukraine on the basis of the available budget resources.
The second draft law (№9516) proposed restricting the right of single mothers to public assistance.
Thus the public received an unambiguous message from the government: the culprits of all the defects of social policy in Ukraine are “children of war” “persons affected by the Chernobyl NPP disaster”, “Afghanistan was veterans”, the disabled and war veterans, and, obviously, single mothers.
An idea made public by vice Prime Minister S.Tyhypko concerning the “indirect evaluation of public revenues” was another novelty in the Ukrainian reforms. The “income monitoring” program was supposed to cover 2.5-3 million families – beneficiaries of social subsidies and benefits for families with low income, single mothers, recipients of child care assistance till the child reaches the age of 3.[36]
The response of public, experts and mass media to this “reform initiative” was easy to predict. The consequences of incompetent and unwise bureaucratic actions is evident – the reform of the public assistance system, so badly needed for this country, was once again postponed indefinitely.
Only on August 8, 2012 The Concept for reforming social services system (adopted in 2007) was replaced by the approved Strategy for reforming the system for delivering social services. In fact this new document recognized the fiasco of the former Concept and rephrased the same tasks, which were put forward in 2007 and never fulfilled. However, assessing the earlier measures, taken by the state in order to achieve the goals, one becomes most doubtful as to its capacity and good will needed for the implementation of the new Strategy.
One of the Strategy provisions stipulating annual revision of the amount of funding needed for its implementation in compliance with available budget can only increase these doubts.[37] Most probably, the tasks of the Strategy will never be fulfilled due to the lack of financial resources. І
3.2. Housing and communal benefits and subsidies as a component of social protection
The Ukrainian system of allotting funds from the state to the local budgets to cover benefits and subsidies granted in housing and communal services, is faulty and cannot ensure fairness and justice in the process. This was the conclusion of the Counting Chamber Collegiate on the results of the respective audit.
In the course of the audit this body pointed out that a number of regulatory norms stipulate benefits for certain categories of population, apart from the vulnerable categories of society, and, therefore, lead to their irregular distribution. Persons entitled to benefits and members of their families enjoy these benefits without any restrictions or considerations with regards to their incomes. Such principles of rendering social services are contrary to the principles of fair and unbiased distribution of the social wealth among the citizens.
The reimbursement mechanism, under which the utility companies are recompensed for non-received payments for their services to the welfare recipients, causes debts and inefficient subvention costs management. The use of clearing agreements (pay-offs) between the budget and utility companies as well as restrictions in monetary subventions are among the major causes of this situation. As a result, the debt of local budgets to the utility companies providing services out of subvention costs increased by 535.8 million UAH. Meanwhile the subvention appropriations are 448.2 million UAH short of the planned indicators. It affects negatively the results of economic operation and quality of the services provided to the population.
So far no feasibility study on specific norms of energy use as a basis for calculating the amount of subsidies has been conducted. In calculating the amount of discounts and subsidies, the obsolete norms for natural gas use, which have not been revised for over 15 years, are used. It does not help its saving. Instead the need for larger subsidies arises.
The subventions allocated to utility companies (in 2011the amount exceeded 6 billion UAH) to reimburse the cost of services to benefits recipients can only partially mitigate the problems in the area of communal services. There are still other factors to be addressed in this sector - the rate of wear and tear of the equipment, excessive losses of energy and water resources, tariff rates, constrained financial and economic situation of the utility companies ( in 2012 the enterprises of the industry faced losses amounting to 2.5 billion UAH ).[38]
3.3.Guarantees of social protection for elderly citizens
Unfortunately the measures pompously described as “pension reform” did not eliminate numerous detrimental phenomena inherited by the Ukrainian state from the era of “highly developed socialism”.
The first one is the excessive number of tax and pension obligations which arise when a person is legally employed and receives lawful salary.
This causes a lot of problems in Ukraine, both in financial and social areas, as legal waged labor becomes economically unprofitable; creates the situation when an alternative extrinsic source of funding to cover overhead expenses is needed, or calls for scheming with the goal of concealing the real amounts of main source - legal wages.
As a result the “shadow” economy thrives, wages are “converted”, national currency is not secured, inflation grows etc, while in the social area diligent, honest and highly efficient labor is discredited and hopes for external support and other anti-social phenomena come into existence.
Pension reform was introduced exclusively at the rank-and-file citizens’ expense. The retirement age for women was increased by 5 years; insurance term was increased by 10 years; the pensions were calculated at minimum rate; the rights of working pensioners, persons affected by the Chernobyl NPP disaster, the disabled and the veterans restricted. Meanwhile, the pension system for the bureaucrats and recipients of “special” pensions remained in fact the same. Following the reform, two pensions systems are functioning in Ukraine: one is for average citizens, whose pension is calculated at 45% of their salaries; the other is for the bureaucrats, whose pension constitutes more or less 80-90% of their salaries.[39]
So, the pension reform failed to resolve any of the issues it addressed. First, it did not increase the amount of pensions and it is hardly bound to happen in the nearest future. On the contrary, the pensions are constantly downsized. Even the public authorities had to admit that at present they are incapable of ensuring the desired level of pensions for the whole retired population of retirement age .[40]
Second, it never made Ukrainian pension system more just. The comparison of pensions is quite demonstrative: an average pension of a rank-and-file citizen constitutes about 1400 UAH, the serviceman pension - 2 thousand UAH, Chernobyl liquidator -– 3 thousand UAH, customs control officer – 4.5 thousand UAH, prosecutor - – 6.5 thousand UAH, judge – 7.5 thousand UAH, member of parliament – 15.5 thousand UAH. According to the Pension Fund the largest pension in Ukraine as of October 2012 amounted 15 624 UAH, the smallest –to 882 UAH.[41]
Third, this pension reform by no means would balance the budget of the Pension Fund. Despite of public promises made by Serhiy Tyhypko to the effect that the reform would decrease the budget deficit of the Pension Fund, in 2012 the said deficit grew from 57 billion UAH to 65 billion UAH.[42]
Approving pension reform the government undertook three obligations: devising the draft law on legalization of the salaries; draft law on uniform method of calculating pensions and cancelling special pensions, promised by S.Tyhypko personally and updating the pensions calculated on the basis of 2007 salaries by January 1, 2012. Only this latter promise has been fulfilled. That’s the only measure undertaken by the government on the eve of elections.[43] It did not change, however, the otherwise dismal picture.
4. Recommendations
1) Reforming social benefits system: separating legal norms guaranteeing social and economic rights and norms granting certain benefits on the grounds of specific office or merits;
2) Putting an end to non-compliance with legal norms guaranteeing social and economic rights;
3) Providing full funding to ensure guarantees of the social and economic rights stipulated by the law; putting an end to “manual adjustments” in establishing the amounts of social assistance;
4) Improving the cost of living estimates; specifically approving the new list of food products, merchandise and services, using new calculation methods for this index;
5) Rejecting the “rate of cost of living coverage” index as it groundlessly lowers the minimum social guarantees proclaimed by the law;
6) Enhancing control over the quality of food products as well as quality and safety of drinking water;
7) Introducing measures aimed at supplying affordable housing; banning unjustified evictions (e.g. from dormitories) and violations of the right to affordable housing for the vulnerable categories of society;
8) Providing adequate funding and clear and efficient implementation mechanisms for social housing programs; developing the network or reintegration; social hostels for the homeless;
9) Improving social protection for the vulnerable categories of society with regards to increased utility services’ tariffs; specifically, introducing transparent and efficient model of housing and communal discounts and subsidies’;
10) Decreasing eventually the share of direct public funding of social needs and enhancing the share covered by the citizens due to the increase in their incomes, first of all, salaries, pensions and other types of social transfers;
11) Ensuring direct connection between social benefits and sources/mechanisms of their cost reimbursement for the providers;
12) Introducing uniform approaches in defining the amount of state budget expenditures for the cost reimbursement to the providers of services at discount rates;
13) reforming the pension reforms further on by introducing legal provisions ensuring accumulative nature of this system; creating reform-favorable environment;
14) Avoiding random increases in the amount of minimum pensions; introducing indexation which will allow to bring the pensions increase into compliance with consumer costs indices, estimated for various income groups of population;
15) Improving monitoring and regulations of non-governmental pension funds with due regards to international expertise and consultations;
16) Ensuring enforcement of the national courts’ rulings with respect to payment of social benefits by the state.
[1] Prepared by M.Shcherbatyuk, UHUHR
[2] Legatum Prosperity Index 2012 http://prosperity.com/Ranking.aspx
[3] Improvements Ukrainian way: In the prosperity rating Ukraine went down to 71st position. http://ubr.ua/
[4] In Ukraine the poverty levels in the cities and in the villages are converging – expert http://economics.unian.net/ukr/detail/143731
[5] В In Ukraine the poverty levels in the cities and in the villages are converging – expert http://economics.unian.net/ukr/detail/143731
[6] In Ukraine the poverty levels in the cities and in the villages are converging – expert експерт http://economics.unian.net/ukr/detail/143731
[7] Over the last 20 years poverty level increased substantially in Ukraine http://epravda.com.ua/news/2012/08/24/332727/
[8] On poverty in Ukraine // Trade unions bulletin http://psv.org.ua/arts/Spetcvipusk/view-1246.html
[9] Cost of living as of September 2012 http://fpsu.org.ua/
[10] Ukrainian citizens needs at least 4 thousand to survive – estimates http://radiosvoboda.org/content/article/24708850.html
[11] Re: the list of food products, merchandise and services http://mlsp.gov.ua/
[12] On poverty in Ukraine // Trade unions bulletin http://psv.org.ua/arts/Spetcvipusk/view-1246.html
[13]Ukraine ranked 44th in the world in food quality rating http://news.dt.ua
[14] Ukrainians cannot afford healthy high quality foods http://ridna.ua/
[15] Ukrainians cannot afford healthy high quality foods http://ridna.ua/
[16] Expert: 90% of the imported foods in Ukraine are unfit http://bei-food.blogspot.com/2012/10/90.html
[17] The law on “novel food products” can poison the manufacturers’ life http://economics.unian.net/ukr/detail/135573
[18] Life quality starts with water quality http://day.kiev.ua/231675
[19] Drinking water quality seriously deteriorated in Ukraine http://news.dt.ua/
[20] Drinking water quality seriously deteriorated in Ukraine http://news.dt.ua/
[21] Good quality drinking water is becoming a luxury http://ac-rada.gov.ua/
[22] From treatment facilities towards high quality water: the programs are in place, but the funding is not http://ac-rada.gov.ua/control/main/uk/publish/article/16740309
[23] National program “Drinking water for Ukraine” is funded at 20% of actual need http://minregion.gov.ua/
[24] Affordable housing: utopia or near future? http://psv.org.ua/arts/suspilstvo/view-1136.html
[25] The prices of housing are inordinately high in Ukraine — UN http://news.dt.ua/
[26] Two or three percent look like fantasy http://dt.ua/
[27] Affordable housing is unaffordable http://news.finance.ua/ua/~/2/0/all/2012/07/04/282808
[28] Affordable housing is unaffordable http://news.finance.ua/ua/~/2/0/all/2012/07/04/282808
[29] President’s national project “Affordable housing” is closed down http://news.dt.ua/
[30] “Affordable housing” and mortgages are not popular with the young – expert http://economics.unian.net/ukr/detail/137607
[31] Prosecutors defend children’s housing and property rights http://gp.gov.ua/
[32] Prosecutors defend children’s housing and property rights http://gp.gov.ua/
[33] Compliance with the laws of Ukraine with respect to the housing rights of dormitories’ residents was discussed at the hearing of the Committee on construction, urban development, utility economy and regional policy http://portal.rada.gov.ua/
[34] Main benefits in Ukraine are enjoyed by the rich http://news.dt.ua/
[35] Slow modernization of the social protection system http://ac-rada.gov.ua/
[36] Stagnation era http://economics.lb.ua/state/
[37] On approving the Strategy for reforming social services system http://zakon2.rada.gov.ua
[38] Counting Chamber of Ukraine. System of housing benefits and subsidies is not all fair http://ac-rada.gov.ua/
[39] Social policy failures http://glavcom.ua/articles/5801.html
[40] The “regionals” confirmed that decent pensions are not to be expected in Ukraine http://news.dt.ua/
[41] Deputies, judges and prosecutors have the highest pensions http://pravda.com.ua/
[42] Pension reform crashed –- Pavlo Rozenko http://siver.com.ua/
[43] Serhiy tyhypko – Decent pensions –governmental duty to the elderly citizens http://kmu.gov.ua/