Cabinet of Ukraine imposes wage controls (01/03/93)

Cabinet of Ukraine imposes wage controls

by Dmytro Filipchenko
Special to The Ukrainian Weekly

KIEV - Ukraine's Cabinet of Ministers examined new governmental decrees designed to stabilize the financial and economic situation here, during a meeting on December 29.

The cabinet dealt with six directives in particular, including "On wages," "On wages for workers of state budget institutions and organizations," "On the raising of the minimum wage and pensions," as well as regulations dealing with the imposition of duties on goods being exported from Ukraine, the workings of industrial concerns formed jointly with government institutions, and the leasing of premises to trade, food and general service concerns, Viktor Pynzenyk, Ukraine's vicepremier and minister of the economy, told journalists on December 29.

He said that these decrees had been drafted by President Leonid Kravchuk. The minister stressed that they were part of the government's program of economic transformation, which would be elaborated at a later date.

As of January 1, the government intends to set the minimum wage at 4,600 coupons per month, as well as a maximum of 60,000 coupons per month. State budget institutions will be given a grid of 29 salary levels for their employees. Workers with the lowest level of qualifications will receive the minimum wage, while those with the highest will be given a salary at 13.8 times that amount. Mr. Pynzenyk said that this would entail a wage freeze for all government employees apart from those who are most impoverished and least financially secure.

Strict controls through tariffs will be imposed on the exportation of any kind of Ukrainian industrial products. They will be imposed in hard currency values, ranging from 10 cents U.S. (e.g. for wallpaper) to $140 U.S. (e.g. for refrigerators). The government is seeking to establish some kind of order in the sphere of so-called "small businesses," which have acted as middle-men between state enterprises and commercial structures. They have become the source of extensive corruption and "legal" siphoning of funds from the republic's economy.

The government has barred state enterprises from forming any other kind of companies, and has forbidden executives of state enterprises to engage in business. All existing "small businesses" are to be privatized in the coming year.

Mr. Pynzenyk also announced that the government intends to introduce amendments to the existing law on foreign investment. He said that "foreign investors are afraid to come to Ukraine because they are being offered easements so grandiose that they do not exist elsewhere in the world." According to the minister, from now on the incentives would be offered only after the actual transfer of funds into the country.

In addition, the vice premier stated that the new currency of Ukraine, the hryvnia, would not be introduced until the inflation problem is adequately resolved. He claimed that according to his government's calculations, the inflation rate will be reduced to 3 percent per month in December 1993. "In order for things to get better, sometimes you have to endure a period of pain," said Mr. Pynzenyk, but emphasized that "our government is willing to work with all constructive elements who favor the course of reform."

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