Minimum wage can’t be raised, Ukraine PM Groysman says

The Ukrainian government doesn’t have the ability to
raise the minimum wage at the moment, Ukrainian Prime Minister Volodymyr
Groysman told the Interfax-Ukraine news agency in an interview published on May
2. “Everything is supposed to be balanced,” he said, adding that his
Cabinet’s unexpected initiative to double the minimum wage as of January 2017
to 3,200 hryvnias was based on “our thorough calculations.” However,
now it’s not possible to raise it further this year, he said. 

Recall, the 2018 state budget stipulates a minimum
wage hike to UAH 3,723 as of January, as well as provides an option to raise it
to UAH 4,200 as of 2Q18, providing economic conditions allow for that. Raising
the monthly minimum wage to UAH 4,200 as of 2Q18 would cost the budget between
UAH 13-30 bln in 2018, the Finance Ministry reported in April.

At the same time, Groysman said he thinks the average
monthly wage can grow to UAH 10,000 this year without raising the minimum wage.
Recall, the average wage in Ukraine amounted to UAH 8,382 in March 2018, or 24%
higher yoy.

Zenon Zawada: Ukraine
President Poroshenko needs something tangible to offer voters ahead of the
March 2019 elections and raising the minimum wage would have been one of his
few options. We believe it’s still possible he will try this, but he might have
to offer Groysman a concession in order to gain his support for the measure. It
certainly won’t happen before the summer since any minimum wage hike will
likely face fierce resistance from the IMF, which won’t approve of higher
budget expenditures amid underperformance of budget revenues.

Groysman’s statement indicates that he couldn’t
care less about the president’s ambitions. Though once thought to be his
protégé, Groysman has charted an entirely independent political course for
himself. He’s not like to be prime minister after March 2019, but Groysman will
remain a key player in Ukrainian politics for many years to come.