Wednesday, 20 April 2016

Remuneration of Public Servants in Ukraine - Should It Be Higher than the Average Salary?

In 2016 average salary in Ukraine is $175 per month, which is $2100 per year (additionally ~20% of various direct taxes are deducted from this sum, as well as 20% VAT on any purchase). It roughly equals country's GDP per capita. Average state pension is $60 per month. Note that private pension system is still in its first stages of development; millions of pensioners receive minimum pension which is $45 per month. This $1.5 per day sum is actually lower than the poverty line approved by the World Bank at $1.9 per day.
These numbers are direct result of corrupt public service, law enforcement, prosecution, and courts. Yet numerous foreign and home-grown experts demand raise of state-paid salaries "in order to fight corruption". Is it a reasonable demand?


The Constitution recognizes Ukraine as a social state base on the principle of equality of its citizens. Teachers are guaranteed to receive salary not lower than one in industry sector. As of moment, $60 per month is a starter salary for a young teacher; a professional with 30-year experience may expect $120 per month, which is even lower than the average! What is worse, a professional well-experienced surgeon is paid $100 at maximum in a state hospital (healthcare system is free and almost exclusively is provided by the state).
The whole country needs reforms. Of course, naked Russian aggression, war, occupation of the Crimea and parts of eastern provinces of Donetsk and Luhansk is a restraint. Yet examples of other countries involved in war, namely Israel, prove that reforms are possible to implement. Restrictive factors include mostly population rejecting tightening the belts.
They say, that true income of Ukrainians comprises "black market cash". To some extent it is true, e.g. the unemployed tend to find jobs without paying due taxes; small entrepreneurs pay tax based on their turnover, but their turnover is not susceptible to estimation, so its scale is usually hidden. Despite seemingly unlimited possibilities for tax evasion, not so many citizen resort to it - it is mostly available to private businessmen.
Salary is the major source of income fro the most of able-bodied population. Disabled citizen depend on social allowances - state pensions (due to age, disability, death of breadwinner).
Question "Why do public servants demand higher salaries?" should be rendered as "Do public servants have any grounds to demand higher salaries?" and later "Should taxpayers keep that quantity of ineffective state institutions with licensing and repressing functions?"
- total corruption and coverup;
- Soviet way of thinking of the old generation officials;
- post-colonial outlook of the new generation of the politicians;
- need for comprehensive reforms, e.g. total reorganization of economic sectors;
- fear of social unrest as numerous jobs are to be lost;
- fear of the labour force migration, especially brain drain.
Can a $1,000 salary restrain a public servant from taking a $1,000,000 bribe? Today MPs spit in eyes of Ukrainians, as they show presents and prizes many times more expensive than their salaries in their income declarations. Disbalance in salaries proportions is to lead to social unrest, but not to the victory over corruption. Only true patriots will abstain from taking bribes; and this cannot be motivated by shamefully unjust salary ratio. If $1,000-2,000 salaries are introduced for the public servants, they would better relocate them to elite ghettos protected by policemen with $270 salaries.