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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Liudmyla DENISOVA: “Our main task is to combat corruption within the system”

Social reforms will affect pensions first
22 January, 2008 - 00:00

Life never stands still. The world is progressing and placing new demands on the individual. Naturally, people are also making new demands on their state, which is responsible for their level of material wellbeing, social protection, and confidence in the nearest future. The social and labor spheres are the cornerstones of the viability of any country. These are the most topical, dynamic, and vulnerable fields of endeavor because they affect the life of practically every individual. This is especially true of such countries as Ukraine, where there is still no stability. What good news can Ukrainians expect in 2008 in terms of social policy and employment opportunities? What are the current priorities of the Ministry of Labor and Social Policy? Below Liudmyla DENISOVA, the newly appointed minister, comments on these issues.

Is there any good news for the citizens of Ukraine?

We have embarked on the next round of pension reform, and I have good news for 13 million pensioners: we are trying to get rid of pension evening-out procedures. In other words, they will be paid 1.3 percent as of Jan. 1, 2008, rather than the previous 1 percent for year of seniority, and 1.35 percent as of Oct. 1, 2008. This means that by October we will have increased pension payments by 50 percent, depending on the beneficiary’s average earnings. At the same time we are carrying out a second phase that envisages a threefold increase in average earnings from which pensions are calculated: if it was 306 hryvnias, then it will be 928 hryvnias a month by the end of this year.

Without a doubt, pension payments will not be increased proportionately for all categories of recipients. Until now the amount of such payments depended on the year of retirement. Let me give you an example. The Foton Plant in the Crimea no longer exists. One of its employees retired in 2000; another one retired four years later. There is a threefold difference between the pension payments due to both retirees, who occupied the same post. So we are actualizing the average monthly salary of the person who retired earlier to the average monthly of the person who retired later. Here’s another example: coal miners. At the Zasiadko Mines, people who retired in 1999 receive 1,100 hryvnias, while those who retired in 2005 are receiving monthly pensions of 2,300 hryvnias. From now on, the amount of the pension will depend not on the year of retirement but an employee’s seniority, average earnings, and the amount that was transferred to the Pension Fund.

The Ministry of Labor has a hotline available to anyone seeking explanations. Most calls are about the pension recalculation procedures. Hotlines have also been opened in administrative regions (oblasts) and districts (raions), so anyone can call and receive information without having to stand in line. Let me stress again that, as of Jan. 14, our pensioners will be receiving payments in two installments: the old amount as well as the difference between the old and new pension (recalculations). They will receive notifications by Ukraine Post, printed by our information center, which specify the average size of the salary from which the pension is calculated, the earnings ratio (which is different from person to person), and the actual amount of the pension.

It is very important for us to do this without wait lines, so that people do not get upset, because I remember what happened in 2004 in the Crimea, when these kinds of payment readjustments were being done. There were long lineups and some pensioners fainted while they were standing in line — all because the process was not automated. Now all pensioners are supposed to receive their money at their places of residence; if they receive this money through the bank, the money must be personally delivered or transferred to the recipient’s credit card. Every beneficiary can receive information from a given bank through the labor ministry.

We all talk about solving the demographic problem, but this is not just a problem of the childbirth rate but the extension of the maximum lifespan. In Ukraine, men have an average lifespan of slightly more than 60 years; women, 73. Therefore, material support for pensioners is another trend in solving this problem. By providing conditions for their well-being, we will help them live longer; we will help them receive money for rest and relaxation, treatments at resorts, and other kinds of health care.

Family and childbirth support is another trend. Several government programs will be financed by the budget in 2008. The cabinet’s action plan, which is being discussed by the general public, experts, and parliamentary committees, contains a major clause about support for low-income families. To this end, our reform will be carried out in several phases, proceeding from the underlying principle that all payments due to a mother who has given birth to another child, thereby expanding her family, are to be pegged to the family’s income and minimum living wage per child for which assistance is being provided. In other words, this government assistance will be issued depending on a family’s officially computed living wage. Naturally, this cannot be accomplished overnight, so this year it will be 50 percent of the minimum living wage; 70 percent in 2009, and we expect 100 percent by 2010. Today, the Ministry of Labor is developing appropriate measures aimed at issuing such financial assistance.

In addition, payments for individuals who are handicapped from birth and handicapped children will be increased. These families will receive two payments in January. The first one, the sum payable in December 2007, will be received after Jan. 15, and the second one, the difference between the old and the new payment rates, will be issued after Jan. 25. In other words, families with handicapped children who expect allowances will receive the higher payments. For the first time in Ukraine we are introducing long-term assistance to families with children. It will be differentiated according to the birth order of the child born in a specific family. In 2005, we introduced one-time assistance payable after the birth of a child. Now we no longer refer to it as one-time because if this is a first child, we pay a total of 12,240 hryvnias during the year: 4,800 hryvnias when the child is born and 620 hryvnias a month throughout the year; 25,000 hryvnias for the second birth, spread out over two years, with 4,840 payable at birth and 840 monthly for two subsequent years; 50,000 at the third and every subsequent birth, with 5,000 at birth and 1,250 hryvnias a month for the next three years.

We still have a lot of problems. For example, what do we do in the case of twins or triplets; adopted children; or if the parents are divorced and the father has custody of the child that is now the third in his new family. There are many nuances, but we will side with those who apply for payments, which should go to people who are raising children. I would like to emphasize that mothers who abandon their children will not receive any payments, but if it happens that for some reason a child is orphaned, then these payments are credited to the child (every institutionalized child has a bank account opened in his/her name, so that s/he will have some money after coming of age).

Now that we have differentiated payments, we are proposing — and we will be discussing this issue at a cabinet meeting — to make such payments on an average basis. Also, we must know exactly what we are going to institute: support for the institution of guardianship or the family? Our president has declared that 2008 will be the year of adoption and family upbringing. In the process of raising a child, the role of guardian or adopter is probably equal because the adopter assumes as much responsibility as a mother and father, having taking on himself/herself the obligations and rights in regard to the adopted child. We are going to propose that the Cabinet of Ministers grant equal rights to adoptive parents.

What measures are being planned to monitor the use by parents of funds provided for raising a child?

This money isn’t enough to provide a child with a complete education and raise it to be healthy. It is support from the government, so that parents can count on something from the state when they are planning a family, but it is not the main income. In order to monitor the use of this money, the Ministry of Labor, in collaboration with the Ministry of Health, the Cabinet of Ministers, and civic organizations, will create a national program aimed at supporting families, starting at the outset: to encourage expectant mothers to give birth to healthy children (our task is to give expectant mothers the possibility to deliver healthy babies and raise them, and to control the state’s payments to such families). Therefore, along with the draft of the family assistance payment procedures, we are submitting a joint proposal together with the Ministry of Family, Youth, and Sports, and the Ministry of Internal Affairs to organize data exchange, so that we can see how a given child is living and whether his parents are using this child’s money to start a business or for other purposes.

What other trends will the Ministry of Labor regard as priorities in 2008?

The social sphere cannot exist without the job market. We will be developing employment trends and enhancing the prestige of people who are employed; people must be interested in their jobs. At the moment we are seeing an abnormal situation, where people prefer to be on unemployment agencies’ waiting lists instead of looking for jobs. This situation verges on the absurd in rural areas, where welfare is two times higher than social workers’ salaries. Unfortunately, we are not well oriented on the labor market; we don’t know which industries require what retraining. Before I was appointed minister, I was responsible for the textiles branch, where I confronted the problem that technicians are no longer being trained. We must revive the practice of government contracts that require people who are trained in certain fields. We are doing an analysis and returning to this. Next, we will reorganize our government-run employment agencies because today they are concentrating on issuing welfare payments instead of focusing on retraining people and creating jobs. Their report reads that last year they created one million jobs. This is absolutely untrue. The truth is that a million people found jobs that already existed. The number of new jobs was 1,050. The State Employment Center has a staff of 15,000. How effective is their work?

Another problem is job safety, which is actually nonexistent in Ukraine. Explosions in coal mines are the result, while the cause is the lack of control over working conditions, and an incorrect payment form. A miner has to produce the largest possible amount of coal in order to receive more money. When Yulia Tymoshenko and I were in Donetsk, local miners said — strictly off the record — that they have to wear special sensors on their coveralls in order to cover up the real picture (because that was the payment procedure). And so the Ministry of Labor will do its best to make working conditions safe, so people won’t have to risk their lives. This will be done in all industries. Can we not say that a physician in a rural community, where people have to wait for days for an ambulance, performs heroic work? What about women who deliver mail in villages? Some of them have been murdered because they were delivering pensions to people. Another important trend is improving peoples’ health. The Social Insurance Fund for Temporary Disability deals with sick leave payments, although this institution should be focused on systematic health improvement. We must consider changes to tender purchase procedures and make them really transparent. The fact that prices for health resort accommodations are being dictated on the market in order improve the health of as many people as possible at these prices is intolerable. There are various health resorts in various regions of Ukraine, but if we depend only on market demand — being aware of a variety of corruption schemes (which will be overcome, I’m convinced) — we won’t be able to find a solution to this problem. Therefore, such tenders must be decentralized on the governmental level.

Our next problem is working with physically handicapped citizens. Today there are many buildings under construction, which will not have ramps for the handicapped. Unfortunately, this issue is being overlooked by the authorities. Together with the Social Insurance Fund for Temporary Disability we are tasked with making this the top issue. Prosthetics is another problem. I will share some information with you. The director of Ukrprotez has already been fired. After studying the records of this business, the Accounting Chamber uncovered a huge number of violations. The Ministry of Labor is responsible for this because it is one of Ukrprotez’s customers. We are conducting an inventory of this business, along with large-scale inspections to check their use of assets. Then we will issue our findings.

Considering your professional experience, how long will it take to implement all your plans?

Our main task is to combat corruption within the system and change the flow of budget expenditures on the social political program. There are no limits to improvements. We may be busy carrying out one reform today and another one tomorrow because our life never stands still. For example, what should we do to inform our people so that they don’t stand in line waiting at all those departments? We have to create a database. As a matter of fact, we have purchased the required equipment; we received support from the World Bank, and they are urging us to act faster; they are asking why we aren’t using the money they gave us. Unfortunately, there is a kind of inertia in our system; we haven’t learned to make good use of money, to use it for the good of people. There are 80 information kiosks in Ukraine where you can learn, for example, how much you have in your insurance account. Information allows people to make plans, like getting another job, insisting that their employers do the payroll a different way, and so on. It is impossible to solve all these tasks at once; we have stages of reform to carry out every year. This year’s priorities are pension reform, a uniform tariff rate (we will increase the minimum wage by five times), a different approach to payments issued to low-income families, emphasis on retraining in the employment sphere, and assistance to the physically handicapped, so that they can become full-fledged members of society.


Liudmyla DENISOVA, Minister of Labor and Social Policy of Ukraine; b. July 6, 1960, Archangelsk, Russia. Citizen of Ukraine since 1991. Enrolled in Arkhangelsk’s teacher training college; graduated in 1978 as a certified kindergarten teacher. Graduated from Leningrad State University’s Law School in 1978, and in 1995, from the Tavriisky Institute of Entrepreneurship and Law, Faculty of Economics, majoring in accounting and auditing.

Her career began in 1979, when she was an instructor at a daycare center in Andeg, Archangelsk oblast. In 1979-80 she worked as an instructor at Daycare Center No. 78 in Archangelsk. In 1980-89 she worked as a court secretary, office manager, and later as a consultant to the Archangelsk Regional Court. In 1990-91, she was a legal consultant with the Crimean Regional Committee of the LKSMU (Young Communist League of Ukraine); in 1991-92 she was a special personnel inspector in Symferopil, deputy head of the department for proceeds and commercial activities of the Crimean Republican Board of the Pension Fund of Ukraine. In 1992-93, she was acting head of the Crimean Republican Board of the Pension Fund of Ukraine. In 1993-98 she headed the Crimean Republican Board of the Pension Fund of Ukraine.

In May 1998 she was appointed Minister of Economy of the Autonomous Republic of the Crimea and was Minister of Finance of the Autonomous Republic of the Crimea from July 1998 to July 2001.

In 2001-02 she headed the Directorate of the State Treasury of the Autonomous Republic of the Crimea. In 2003-05 she chaired the supervisory board of the Gumatex Corporation. In 2005-06 she was appointed CEO of Gumatex. In 2006-07 she was an MP of the fifth convocation of the Verkhovna Rada of Ukraine, deputy chairman of the Parliamentary Committee on Social Policy and Labor. Member of the sixth convocation of the Verkhovna Rada since 2007.

By Oksana MYKOLIUK, The Day