Higher minimum wage not to affect inflation pace – NBU

Raising the minimum wage to UAH 5,000 (US$181) from September 1 will have no significant impact on inflation.

"The increase in the minimum wage to UAH 5,000 from September 1 does not have a significant impact [on inflation], but when we see what parameters are included in the budget next year, we will see how this will affect inflationary indicators," Deputy Governor of the National Bank of Ukraine (NBU) Dmytro Sologub said at a press briefing on Friday, September 4, an UNIAN correspondent reports.

Read alsoNBU releases inflation forecast until late 2020Sologub also said discussions are underway on how exactly budget parameters will change in terms of the minimum wage, the tariff scale in the state and public sectors, as well as in terms of the budget deficit, since this is an important issue that should be coordinated within the cooperation program signed with the International Monetary Fund.

Inflation forecast

"There was an example in Ukraine in 2017 when minimum wage was significantly increased. Therefore, this time we're not talking about a significant increase compared to 2017. But after the crisis is over and the consumer demand recovers, of course, we will observe some impact [of wage growth] on the inflationary situation," he added.

Minimum wage in Ukraine: background

• Minimum wage in Ukraine from January 1, 2020, increased by UAH 550 (US$20), to UAH 4,723 (US$171) per month, or UAH 28.31 (US$1.02) per hour.
• On August 6, Ukrainian President Volodymyr Zelensky initiated changes to the national budget to raise the minimum wage to UAH 5,000 from September 1, 2020.
• On August 25, the Verkhovna Rada, Ukraine's parliament, passed relevant bill No. 3963 in the second reading and as a whole.
• On August 29, Zelensky signed into law the relevant bill.
• The increase is the first stage of the further gradual raise process. The second phase will be an increase from 2021 to UAH 6,000 (US$217), while throughout 2021, minimum wage should increase to UAH 6,500 (US$235).