Pay the minimum wage: what will the minimum wage be in 2023?

Officially employed full-time citizens must ensure that the employer is paid at least the minimum wage. How has the minimum wage changed in Ukraine over the years, what will be the minimum wage in 2023 and what to expect next?

In 2022, the minimum wage was once increased from 6,500 UAH to 6,700 UAH from 1 October 2022. With this indicator, Ukraine will enter the new year 2023.

In accordance with the 2023 State Budget, there is no increase in the minimum wage in 2023. Focus in his new review “To reach a new level. How and how much will Ukrainians earn in 2023?” the publication states inside The law “On the State Budget of Ukraine 2023” of January 1, 2023 established that the minimum wage for the whole year is 6,700 UAH per month. The cost of living in 2023 has also not changed – 2,589 UAH per month (general indicator).

Recall that because of the war, the government was forced to abandon its previous plans to increase the minimum wage, which was planned to increase from 6,700 UAH in 2023 to 7,176 UAH from 1 January.

How should the minimum wage change in Ukraine in 2022-2024?

  • January 1, 2022 – 6500 UAH
  • October 1, 2022 – 6700 UAH
  • From January 1, 2023 – plan UAH 7176 / actual UAH 6700
  • From January 1, 2024 – plan 7665 UAH

It seems that the correction of the minimum wage level in 2024 will depend on the improvement of the situation at the front in 2023 and the prospects for the recovery of the Ukrainian economy.

Recall that the systematic increase in the minimum wage has been going on for about five years in Ukraine and is aimed at casting a shadow on the labor market. On the eve of 2017, the doubling of the minimum wage from 1,600 UAH to 3,200 UAH from January 1 received a huge reaction from society. Also, each subsequent increase in the minimum wage was less sharp, but its growth was consistent. As a result, this figure has more than quadrupled in five years.

Historically, in Ukraine, a significant part of employers officially pay their employees only the minimum wage with the following taxes:

  • 22% combined social contribution (ESV)
  • 18% personal income tax (PIT)
  • 1.5% military tax (VZ)

The amount in excess of the minimum wage, employers usually pay “in the envelope”, that is, tax-free. Thus, by raising the minimum wage, the state increases the tax base and revenues to the state budget at the expense of ERUs, personal income tax and EOI. After all, even companies that pay “combined” salaries are forced to raise their official share to the “minimum wage” level.

In 2023, the net minimum wage in Ukraine will be 5,393.50 UAH. This amount remains after paying UAH 1306.5 tax – 18% personal income tax and 1.5% OT. Another 1,474 UAH (22% of ERUs from 6,700 UAH) must be paid by the employer.

Previously Focus He wrote of taxes whose level depends on the minimum wage (one tax for entrepreneurs, one social contribution) in 2023, as well as other relevant tax changes. And the situation in the labor market and wage growth prospects Focus He analyzes in detail in the review “To reach a new level. How and how much Ukrainians will earn in 2023.”

Source: Focus

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