The Parliament Approved Amendments to the State Budget to increase the minimum wage to UAH 5 000, beginning September 1, 2020 

Today, August 25, 2020, the Ukrainian Parliament supported a draft law initiated by President Volodymyr Zelensky, “On amendments to the Law of Ukraine “On the State Budget of Ukraine for the year of 2020”. The draft envisions a gradual increase in the minimum wage and its establishment in the monthly equivalent of UAH 5 000 starting from September 1 (increase by 5.9%).

"At that, the ratio between the size of the salary of an employee of the I tariff category of the unified tariff system (UTS) and the minimum wage, which has made up this year 44.5%. To implement these initiatives, the draft amendments to the state budget for 2020 provide for an increase in expenditures by UAH 4 billion," said Finance Minister Serhii Marchenko in his statement in the Parliament.

The increase in expenditures for the payment of increased minimum wages and salaries of an employee of the I tariff category of UTS will be carried out due to the following:

- cost savings under the budget program "Public Debt Service" in the amount of UAH 3.5 billion, which is caused, in particular, by the deviation of the actual exchange rate of the national currency against foreign currency compared to the forecast used while preparing the state budget for 2020 (with amendments);

- revision of the forecast of state budget revenues in connection with the increase of the minimum wage from September 1, 2020 to UAH 5,000.

Thus, revenues will be increased by UAH 0.5 billion, including personal income tax and military duty (UAH 0.4 billion), value-added tax on goods (works, services) produced in Ukraine, taking into account budget reimbursement (UAH 0.1 billion).

"In general, the proposed changes will stimulate the growth of consumer demand, will ensure the de-shadowing of "gray" wages. This will allow to increase the budget revenues of the Pension Fund, strengthen the stability of the budget and the pension system, as well as improve the protection of labor and social rights of citizens," said Sergii Marchenko.

The law is balanced and will allow improving the quality of life of citizens by raising the income of the working population.