Ukraine's Rada votes to raise minimum wage from Sept 1

The Verkhovna Rada, Ukraine's parliament, has passed in the second reading and as a whole bill No. 3963 initiated by President Volodymyr Zelensky to increase the minimum wage to UAH 5,000 (US$182.55) from September 1, 2020.

Read alsoCabinet promises. GDP, forex rate, and wages outlook for next three yearsThe relevant document was backed by 295 MPs with the required minimum of 226 votes, an UNIAN correspondent reported on August 25.

According to the explanatory note to the bill, it provides for a gradual increase in the minimum wage to improve the quality of life of citizens by raising the income of the economically active population.

Additional labor costs are proposed to be provided by UAH 3.5 billion (US$127.8 million) in cost savings under the Public Debt Service budget program received, in particular, due to the deviation of the actual exchange rate of the hryvnia, Ukraine's national currency, against foreign currencies, compared to the forecast rate.

"In addition, given the proposed increase in the minimum wage, it is envisaged to increase the target tax revenue by UAH 541.3 million [US$19.8 million], including from individual income tax - by UAH 461.3 million [US$16.8 million], and value added tax from goods produced in Ukraine (works, services) taking into account budgetary compensation worth UAH 80 million [US$2.9 million]," the explanatory note said.

Minimum wage in Ukraine: background

• 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.
• The minimum wage in Ukraine from January 1, 2020, increased by UAH 550 (US$20.08), to UAH 4,723 (US$172) per month, or UAH 28.31 (US$1.03) per hour.