Report No. 11 I7"A Ukraine Employment, Social Protection, and Social Spending in the Transition to a Market Economy April 14, 1993 Europe and Central Asria Departments lIIVN (EC3/4HR) Human Resources Division FOR OFFICIAL sJSE ONLY sG ', ' > , ~~~. vv ' " . , *,^ . . \ . . .A; J ~~~~~~~~~'j,> WR'->4 s'} b -V > i >;~~~~~~~~'3 s|"'s e ? ' 5 <~~~~~~~~~~~~~ e;R ~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0,"T~~~~~ Currency Unit-Karbovanets (Krb) Exchange Raes: KRB $e (End of Period) December 1992 715 March 1993 2000 April 1993 3000 WEIGQH AND MEASS Metric System GLOSSARY OF ABBREVIATIONS AND ACRONYMS AIDS Acquired Immune Deficiency Syndrome BCG Tuberculosis vaccine BMW Bavarian Motor Works CEM Country Economic Memorandum CSFR Czech and Slovak Federal Republic DPT Diphtheria, pertussis, and teanus vaccine EC Europe Community ES Employment Serice FY Fiscal Year G7 Group of Seven (bighly industrialized countries) GDP Gross Domestic Product HIV Virus hypothesized to causes AIDS IAS IndustrW Adjustment Service ILO International Labor Organization IMF International Monetary Fund MOE Ministy of Education MOP Ministry of Finance MOH Ministry of Health MOL Ministry of Labor MOS Ministry of Statistics MSW Ministry of Social Welfare OECD Organization for Economic Coordination and Development R Ruble SDR Standardized Death Rate SSR Soviet Socialist Republic SSUZ Technical colege UN Linited Nations UNDP United Nations Development Program UNFPA United Nations Family Planning UNICEF United Nations International Children's Emergency Fund USSR Union of Soviet Socialist Republics VUZ Universities WDR World Development Report WHO World Health Organization I7ISCAL YEAR Januay 1 to December 31 FOR OMCIJAL Use ONLY Execuve Summary .............1 ntroduction ..1... I CanUkrlne AffordIts PogiramofSocial Protetlon? ...................... I 'heProblemnof Employment . ................................ S Co n o nlg U nem plo ................................. . 6 SOw Protection .................................. 9 PublicSocialSvics ................................. 13 EducadonandTralningServius .................................. 14 Hedth Sevices .................................. 1S 1. Soda Conditons and Sodal Prot^eon . ................................ 21 Introducdon ....................................... 21 Imnlicatios of Demogrhy for Health . .............................. 25 Mortdity ad Health Status ...................................... 25 Health of Mothers and Children . ................................... 26 Morbidity ........................................ 27 =Occuation1Jury and Poution ................................... 29 Labor Force ......................................... 30 The Social Safety Net .... ...................................... 30 Retirement, Disability, and Survivors' Benefit .......... ................. 31 Allowances and Beneft ........................................ 31 Poverty Groups ........ 33 Main sLs forSocWilPrograms .................................. 34 A Bias for Hope .............................................. 35 Souc and Uses of Funds for the Social Sector, 1992 ......... ............. 35 2. The Changng Labor ak ....................................... 39 he Labor Market in a Command Economy . ....... ................... 39 Labor Mart Strcture ................... 40 Open and Hidden Unemployment .................... 41 LaborMobilityanud Migration ................... 43 Wages and lcomes .................... 43 Collective Bar_gnlg and Unions ............ ............... 44 UnemploymentForecast .................... 44 3. PboUcyRsponses to Epoyment Proba .............................. 47 IncomesPolicy .............................. 47 Active Labor lakt Policies ............................... 47 Retaining .............................. 48 Grants for the Unemployed .0..................................... SO Wage subsidies ......................... 50 I This document has a retricted distribution and may be used by recipients only in the performance of their officid duties. Its contents may not otherwise be disclosed without World Dank authorization. 1u licWorks .................... ............................ 51 Employment Services ............................. 51 Unetnploymnent Benefits ............................ 51 Financing Labor Market Policies ............................ 53 Statistical Information ............................................ 55 4. Rehaplug LaborMarket Polides ...................................i.57 Incomes Policies ..57 Active Labor Market Policies ..57 Introduce Flexibility in Retraining Pogra.. . 57 Handling Mass Layoffs ..58 Design of the Unemployment Benefit .59 Pinancing Labor Market Policies .61 Employment Program Administration ..61 Monitoring Labor Market Adjustment ..63 Total Spending on Labor Market Policies ..64 S. CashTrnsfers,USSRtoUkralne .65 How the System Evolved .66 Price Compensation .71 Transition to Ukrainian Independence .71 Conclusion 75 6. Retirenent, Disability, and Survivors' Beneafts ..77 Pensioners and Benefits ..77 Sources of Funds ..78 Uses of Funds ..79 Pension Fund Surpluses and Deficits ..79 Recommendations..80 Normal Retirement Age ..81 7. Allowancesand Benefits ..85 Sources of Funds ..85 Uses of Funds ..85 Reconmmendations ..88 Protecting a Poverty Line ..88 Prerential Treatment for the Poor ..89 Beyond the Crisis ............ 89 8. Educatlon and Tralning ........................................... 93 The Education System: Dimensions and Structure ..... ................... 93 Sector Organization .................. 94 EducationPFinancing and the Use of Resources ....... ........... 100 9. benlthsrvces .................. . 107 Health System Development ....... ........... 107 Health Sector Organization and Management .................. 107 ii ldwth SyomiR ow . ............... Illt CNurre Jass1. *.*.*.. ..... .... ... ...... .... ........ ........ 112 R bq ..... 119 R.pots Prepare by 1kaUb a,i Consutants for the St* .. . .. .. .. .. . .. .. . ... 119 OtkerSouO ... 120 Chaptw rNot..................... ........ .................. 129 Sta sOcal Amem ................................................. 134 ffl TABLES Table S.1: Past, Current, Suggested, and Susainable Policy for Public Sodal Spending ... 3 Table S.2: Tecnial and Financal Assistanee Requirements for Exetion of Social Sector Reform Program, 13-19. ................................ 20 Tablel.1: ntena aComprwLsonof,o lIndicators ........................ 21 Table 1.2: IntnmatIonal Comparison of Public Spending on the Sodal Sectors, 1"98 199 . .......................... ............................ 22 Table 1.3: Population Growth Ukraine, 1981-1992 (in lousands) ......... ....... 23 Table 1.4: IJfe Expectancy and Survival by Gender, Ukraine and Selected Countries ..... 24 Table 1.5: Ministry of Health Estimated Demand for Contvceptvs for 1991 ... ...... 27 Table 1.6: Pesioners and leir Benefts, January 1, 1992 ...................... 32 Table 1.7: Income Distribution, 19M1990 ................................. 34 Table 2.1: Employment by Sectr in lternationaPesppectve .................... 40 Table 2.2: An nternatlonalComparLson of Car and Telephone Density .............. 41 Table 2.3: GDP Drop ane, Unemployment Rates in Selected Eastern European Countries and Ukrane, 19..89.. ........ ................. 45 Table 3.1: Sources of Funds for Unemployment-Related Activities, May 1992 Projection for Full Year .............................................. 53 Table 3.2: Uses of Funds for Unemployment-Related Activities ................... 54 Table 4.1: Ratio of Labor Staff to Unemployed Workers In Selected Countries, 1988 ..... 63 Table 4.2: Current and Suested Program for Employment-Reated Activities .... ..... 63 Table 5.1: Socil transfers, select countries, late 1980s, percent of gross income ........ 67 Table 6.1: PensIoners and Thir Benefits, January 1, 1992 ...................... 78 Table 6.2: Projeed Sources of Funds for Pnsons .......... .. ............... 80 Table6.3: UsesofPensiim Funds ....................................... 81 Table 6.4: Changes in Pmson Spending 1991M . . ..83 Table 6.5: Curnt, Suggested, and Sustalnable Policyfor P'enons .84 Table 7.1: Projected Sources of Funds for Allowances and Benefits, 1992 .... ........ 86 Table 7.2: Projected Uses of Funds for Allowances and Benefits, 1992 .... .......... 87 Table 7.3: Curent, Suggested, and Sustnable Poliy for Allowances .... .......... 92 Table 8.1: Student/Teacher Ratios In Ukraine and Other Countries, 1 .... ........ 94 Table 8.2: Enrollment and Teachers in Primary an Secondary Schools, 1991-92 ... .... 96 Table 8.3: Types of lltutions of Hgher L ning in UkrvAne ................... 98 Table 8.4: Enrolmuents and Faculty in Urainin Universities and in Equivalent Infitutons in Selected Countries, 1991-92 ............................. Table 8.5: Ukraine Univesitles, Students, Fculty, and Graduates, 1992 .... ......... 100 Table 8.6: Intational Comparison of Spending on Public Education, 1990, and Ukraine, 192...................................... ........ 101 Table 8.7: Forecast 1992 Education Spending ............................... 101 Table 8.8: Curret, Suggested, and Sustainable Spending on Education, 1993 and Beyond .............................. ..................... 104 Table 9.1: Sources of Funds for leal Care, 1992 ........................... 110 Table 9.2: Uses of Health Cre Funds, 1992 ....... ........................ i09 Table 9.3: Percentage Distribution of Mniy of Healh Spending on Local Health Inputs,1989,1991,and1 ..................................... 111 Table9.4: Currnt, Suggested,andSustanable Pocyfor HealthSpending ........... 115 iv FIGUS Flgure S.1: Innational Comparison of GDP Dod to Soca Seto Spendeng .... g... 2 Figure S2: Inte onal Comparison of Density of Automobile Ownershlp, 1987 ....... 5 Figure S.3: Internadonal Compadrso of Densty of Main Tdephone L3nes, 1986 ....... 5 Figure S.4: International Comprison of Employment by Econoomc Sector, Late 1980s ... 6 Fgure S.S:Induslal Employees on Leave without Pay1 92 ............ . 7 Figure S.6: Precentage of GDP Spent on Active and Pasdve Labor Market Pblicy In OECD Countries and UkrIne, 199 ...... ................... . 7 1igureS.7: Pesionersand Thr Beneftts,January ,199I ..................... 10 Figure S.8: Effecs of Aternatve Reirement Age PoblUes on Number of Rerd and DependencRatios, 19t89throug 2010 h .............................. 12 Flgure S.9: Potential Yeas of ufe Last by Cause ofDeh ....................... 15 FigureS.10: DistributionofPubllSpendingon lesthSeres ................... 16 Fige 1.1: Percntage Dishibution, Sources and Uses of Flunds in the Soci Secton. 37 Figure 8.1: D ram or Education Financing Flows and Organiation of the School Systae ................................................... 95 Figure9.1: Orgbltonandlnancingofthefleatb Systemn .................... 108 igure 9.2: Heal ExpendlturesofSelected Countries as aPerentofGDP ........... 113 BOXES Box1.1: InicatorsofHospltalResourAlocatedto Aborton1991 .... ........... 28 lox1.2: Keyssues forteShciaoSewrs ............... .................. 33 Box4.1: lheTeory ofIncomes Pobces .................................. 58 Box 4.2: The Practceoflnomes Poicies ................................. 60 Box4.3: FlnaCungLabw oMrketPoliUces ................................. 62 ox 5.1: Old-Age Cash Transfer Payments under the Former Soviet Union, 19.. 19..... 68 Box 5i: USSR Disability Cash Tranfer PAyments, 1956-1990 . ................... 69 BoxS3: NewTrasfer Pyments forFamles withi Clldren ..................... 72 Box5.4: UkrianinSocl WelfareLegislation,1991 .......... .. .............. 73 Box5S:1kralnhanSSocl WelfarePblcy Options ............................ 74 Box6.1: ThePenslonSysten ......................................... 79 v ACKNOWlIZGMENTS T'his report is based on a World Bank mission on employment and social protection tfiat visited Ukraine from June 29 through July 15, 1992. Contibutors to the report include Mr William McGreevey, Mission Leader, Mr Michal Rutkowski, Deputy Mission Leader; Mr Charles Griffin, sector analysis and performanc; Mr Aril Van Adams, training and active labor market policies; Ms Teri Bergman, unemployment and cash beft aminisaon; Ms Jeanine Braithwaite, cash benefits under the Former Soviet Union; Ms Babara Dabrowska, statistical data; Mr Myroslaw Kohut, population and health; Ms Marisol Ravicz, sector finance; and Mr friag Sirken, education and training. Preparation of this report benefited from cooperaion witb an IMF mission led by Mr Ke-Young Chu, Fiscal Affairs Department. Cooperation of officials of the Government of Ukraine is gratefully acknowledged, especially senior officials and staff of the MinisrS of EducatiGn, Finance, Health, Labor, Social Welfare, and Statistics, and with the Funds for Chernobyl, Pensions, Social Insurance, and Employment. Mission members visited government offices and facilities in Kiev, Kharkiv, Donetsk, and Yenakiyevo (Donbass region). Members had visited Chernihiv, Lviv, Yavoriv, Vinnytsia, and other cities during previous missons. The International Renaissance Foundation arranged for field visits and subsequent seminars and document translations. Regionl employment offices in Zhytomyr and Vinnytsia were especially helpful. During the mission, members participated in a seminar on July 7, 1992, to discuss 15 background reports that had been prepared by Ukrainian consultants. Tites of the reports and their authors are listed in the bibliography. The background reports provide an invaluable base for understanding and analyzing social sector issues in Ukraine. Mr. Basil Kavalsky, Director, Europe and Central Asia Department IV, led discussions of che draft report with govnment officials, February 1-5 1993. Mr. Mykola Zhulinsky, Vice-Premier, 'umanitarian Affairs, coordinated the governmentes response. Bank staff, which included Ms. Michelle kiboud, staff economist, and Mr. William McGreevey also met with members of Parliar..nt and the press. The report was prwared under the geneWal direction of Robert Liebenthal, Chief, Human Resources Development Division, Europe and Cend Asia Department mI. Russell J. Cheetham was the deparument director when work began; Mr Kavalsky became director prior to discussion of the report with govermment Otilia Nadora, Susa S. Sebastian, and Wendy Cagen prepared the manuscript for duplication. Mariou Ablera, Jeffrey Gauer, Rozena Ochoco, and Suman Rajpal, EC3HR support staff, contributed stily to the report preparation. Nicholas Burnett, Estelle James, Bruno Laporte, Mareen Lewis, and Alexander Preker were the peer reviewers. vi ACRIONYMS An AinaviAlNs AIDS Acquired Immune Deficlency Synidrome BCG Tubercuosis vaccine BMW Bavarian Motor Works CEM Cwntry Economic Memorandum CSFR Czech and Slovak Federl Republic DPr Dipheia, pertssis, and tetanus vaccine EC European Community ES Employment Service FY Fiscal Year G7 Group of Seven (higly industrialized countries) GDP Gross Domestic Product HIV Virus hypothesized to cmses AIDS LAS Indus'uial Adjustment Service ILO Interiational Labor Organzation IMP Ifernational Monetary Fund MOE Mistry of Education MOP Ministry of Finance MOH M nistry of Health MOL M nistry of Labor MOS Ministry of Statistics MSW i inistry of Social Welfare 9,ECD Crganization for Economic Coordination and Development R Ruble SDR Stadardized Death Rate SSR Soviet Socialist Republic SSUZ Technical college UN United Nations UNDP United Nations Development Program UNFPA United Nations Family Planning UNICEF United Nations Itrationd Childrenas Emergency -und USSR Union of Soviet Socialist Republics VUZ Universities WDR World Development Report WHO World Health Ornizaton vii EXECUIE SUMMARY P,TRODUMON shift of the labor force from a command to a market economy; second, it examines the 1. Tbe purpose of ftis report is to assess advantages of convertg the current system of how well Ukine's economy, society, and social protection to a poverty-focused, government are dealing with the challenge of sustable safety net apprcitc, including adjustment to market determinaon of prices and support for labor-force reassignment; and third, production. Can labor-market policies see it explores opportunities for enhancement of the workers through the transition to a economy efficiency and quality of social service, based on private production without their first education, and health programs. Key elements descndlng into povety? Is there an adequate of these programs must be maintained through se^ial safety net to protect the poor, the the transition as part of a safety net and as a disabled, and pensioners? Will public social cornerstone of policies encouraging economic saervices of education and health survive in a growth investments and in human capital. market economy, offering basic support to all citizens, regardless of their success or falure 3. The introduction of effective under competition? The answers to these macroeconomic policies, reform ofthe enterprise questions will affect policy makers' atitudes and sector, price reform, and financial restructuring actions on virtualy all aspects of economic all require an effective social safety net. Social policy. Without adequate security, the process policies, the subject of this report, are an of economic change, insofar as it requires integral part of any economic reform in Ukraine positive action by government, will be slowed and cannot be neglected or deferred. National and distorted by fear of the unknown. economic leadership must ensure that the social Decisionsmakers need to know what to expect, costs of adjustment are anticipated and to the what policies can ease the transition, and what extent possible provided for, and that the decisions will promote economic development implementation of policy changes minimizes the while assuring an enhanced level of well-being socW pain of conversion. for all. CAN UKRAINE AFFORD mU PROGRAM OF 2. This report lays out a strategy for SOCIAL PfOTEcION? Ukraine to make the transition to a market economy in the social sectors, taking into 4. The cost of the overall package of social account the widespread system of benefits and protection amounted to over 40 percert of GDP the high spending on education and healtL and twothirds of consolidated spending by inherited from the former Soviet Union. A Ukraine's state, social funds, and oblast budgets central pat of the strategy is the need to protect in 1992. This share of GDP assigned to vulnerable groups during the transition but pensions, allowances, subsidies and social within a financially sustainable framework. services far exceeded the estimated level of 25 After a description of social conditions and percent of GDP allocated to social spending in socW protection in Chapter 1, it considers the 1989190. Virtually no other government in the 2 ExecXIve Summay 6. The data in Table S.l, and in other PaIv tables on which it is based, provide a framework in which to analyze the problem of aggregate am,"- social spending. These data express public Uk10tC9 S= social spending as a share of GIDP, which Is a Wii Kur= measure of economic output that can be expected _b to chand e substantially over the next several years. Between 1990 and 1991, for example, Mubo - - I _GDP declined by about 15 percent, and there a * iS a_ was aufrther 14 percent decline between 1991 s WO *Mk M and 1992. Thus the denominator of this ratio, Figure .1: Intemational Compadson of becau.e it is not a constant, complicates the GDP Devoted to Social Sector Spending interprettion of aggregate social spending. For example, if the economy contracts further in 1993, social sector, then spending, for pensions, allowances, and wages for education and health workers, among other things, would all have to world bears such a burden (see Figure S. 1). eontract even more than does the economy as a lTis high share is the result of the several whole. Otherwise, the goods-and-services negative changes. Most significant has been the producing sectors of the economy, which are the collapse of output in stateepris since 1989, source of current wages and current thus lowering the denominator, which is GDP. consumption, would have to contract relative to Another factor was the effort to protect the real the system of social protection. It is difficult to value of pension benefits paid to 13.5 million imagine how the pressing needs of current recipients, stipends and in-kind assistance for consumption, exportable products that can pay 11.4 nillion students, and salaries paid to the for imports, and expansion of the private sector nearly 6 million employees from state and oblast could occur with so heavy a burden of taxaVon budgets, over half of whom deliver education to pay for social protection. Looking further and health services as part of the social safety ito the future, once the phase of output net. The burden of providing benefits or wages expansion begins, resources for the social safety to nearly two-thirds of the population, with only net can grow with the rest of the economic one-third working on directly- productive system. activities has come to, exceed any possibility of the economy and government to finance itL 7. In 1992, there was a notable increase in the share of public resources allocated to social 5. This report seeks to identify a basic prowtection and social services (Fable S.1); if this safety net that can protect those most in need level is unsustainable, as is argued later in this and to find ways to reduce public outlays among summary and in this report as a whole, some those current beneficiaries who can get along principles must govern the means by which the without subsidy, at least until the transition to a obligations of the state are trimmed back to a market economy is well along and the economy level that can oe fnanced. A principle that has has been stabilized. In the near term, however, guided analysis in other countries of Eastern even the best prepared safety net will fail to Europ and the former Soviet union is that those protect Ukraine, absent a sound macroeconomic who are poor, or are likely to be made poor by enmronment wift price stability and balance the events associated with the collapse of output, between revenues and expenditures in the public must be protectedfidly against erosion of their accounts. levels of living with adequate subsidies and social services. A first step in articulation of Ewecatlve Sunmay 3 this principle is stablishment of a realistic T'is step would require that government have poverty line, which may be considerably lower available some means to identify poor and than a level of living at the govenment might vulnerable groups, building on demographic currently wish to protect. lhe Plan of Action characteristics, such as family size, structure, for 1993 of the Government of Ukraine and composition, and including features of wognizes that "payments are made even to the residence, disability, and dependency on friends wealthiest strata of society." Concentrating or relatives outside the household, as wel; as resources on the poor and vulnerable groups is economic means that inciude the ability to work even seen as an essential policy decision, and to earn from past savingr. The Financing difficulties led the govement, early identification of those poor and vulnerable in 1993, to propose cutting the nber of enough to require public assistance will change, family-allowance recipients down to two million perhaps dramatically, over time if unemployment families from what had been 20 million families. strikes specific regions or singleindustry towns, Table S.1: Past, Current, Suggested, and Sustainable Policy for Public Social Spending Percent of GDP under Alternative Approaches Spending Actual Ex- Current Sumested Sustainable Policy Actions Required Category perience In Policy Program for Program 1989/90 1992 1993 Beyond 1993 _ _ Employment Expand active policies by and Labor - 0.8 2.4 37 strengthening Employment Market Policies Service; all cash benefits at single rate near minimum wage Flat-rate pension for 1993 near minimum wage; introduce Pensions 8 13.9 11.3 7.7 rso saving accounts in 1994; gradually raise retirement age beginning in 1993 Family Target on Single Parents and Allowances 1 8.8 6.2 3.4 families with three or more Allowances___ .________ ._________ . children, and elderly living alone Consumer Reduce in . 993 then eliminate all Subsidies 8.1 untargeted subsidies after 1993 Reduce unnecessary staff by attrition; eliminate stipends for Education 5 7.8 7.0 6.0 foreign students; reform vocational training to support _________ ________ ___________ _________ active labor policies Reduce hospitalizations and staff with out- patient care; cut Health 3 7.7 7.0 6.0 numbers of new medical students; expand pharmaceuticals Imports and production for selected essential drugs Total 25.0 44.1 36.9 26.8 introduce budgeting by objective Total__ _ 25.0 36.9 26.8 in selected ministries Source: See Tables 4.2, 6.4, 7.3. 8.8, and 9.7 for sectoral details for 1992 .mr' beyond. Estimates for 1989/90 based on IMF. World Bank, OECD and EBRD (1991). 4 *xecutive Swmwwy so goverment twst have the capacity to workers, acriculum development In monitor continuously and reshape its policies to technical training, and stengthening of addresi~ 'tew needs. The groups and their needs basic maternal and child health services; once identified, govermeat must :hen establish benefit levels necesr to keep those at risk out M Reduce public spending on food of poverty. As prices continue to rise, benefits subsidies, pensions for persons that would of course have to be adjusted periodically remain in the work force, stipends for to assure respect for the principle that those at sty dents who can finace their own risk be protected fully. education, and general family allowances given irrespective of need; 8. A second principle as that all benefits above the poverty line should be continued only * Seek efficiences in social-services to the extent that resources permit. The collapse spending by reducing unnecessary staff, in output, should it continue Into 1993 and introducing innovative approaches such beyond, wUi severely limit the capacity of the as outpatient treatment in health and state to make its principad transfer payments to computerized learning in education, and retirees, the disabled, and other pensioners, as expanding the role of private providers well as to Chernobyl victims, workers on sick who can cut costs but maintain quality. leave, fmilies with minor children, and, most notably, the unemployed, displaced workers. The strategic vision cannot be one principally of Available resources may be driven down, for a expenditure reductions but rather of shifting time at lost, to a level that would permit no resources to priority tasks of government. One payments, even those representng clear and means to assure that programs improve social ctain obligations of government, beyond social conditions and provide social protection is to protection for the poor and vulnerable. At that introduce a systematic budgeting arrangement point, government must make hard choices that for all social spending. Budgeting by objective distnguish falling into poverty frommaintenance is one approach to consider. Such a technique of a reasonable standard of comfort. Inaction, requires that all users of public social funds or lack of a clear policy choice in favor of present their program goals and intended protecting those at greatest risk, would probably approaches for central budget review, usually by result in acute misery for a significant share of the Ministry of Finance. Allocations then the poorest, particularly the rural elderly living depend on the importance of the goals and the alone and children in single-parent households. cost-eectiveness of the approaches offered. 9. The 1989-1990 program, which required 10. The central economic authorities can 25 percent of GDP, was barely susinable, and help the line ministries increase their it left many of the rural poor uncovered while effectiveness by challenging them to use still permitng inefficiencies and overstaffing in resources more efficiently toward very specific the area of social services. 'he 1992 program program objectives. Reorganization of the more required more than two-fifths of GDP and is a than sixty family allowances and other benefits source of macroeconomic destabilization. A will require direction from a central authority; strategy to reduce social-sector spending reshaping labor-market policies to get a more subsntially in 1993, and to return to a effective response from training programs sustainable level by the following year would offred by the Ministry of Education will also include three key features: require inter-ministerial coordination that would be difficult to achieve without central direction. * Shift resources to favor cash benefits for vulnerable groups, training for displaced 11. Private sector development in support of Executive Summaiy 5 a public social safety net will depend on the therefore better off with its full employment? creation of a sound legal framework, which does The answer is no: The command economy, not currendy exist. The government must create based on state orders, did not force high-cost both laws and detailed regulations that clarify the producers to cut costs to be competitive or rules of the game for such complex new tasks as respond to consumer demand by combining low tax accountancy, privately-provided training, and price and high quality that could win markets. a strucre of fees and prepayments for health- On two measures of consumer demand, the care services. Progress will be slow until the availability of private automobiles and framework for private initiative is in place. telephones, the USSR was far below both Western and Eastern European countries (see Figure S.2 and Figure Figure S.3). With the swuiea lIE ~ - change to cnsumer-demand-driven production, iw, _ I U I - ~ I the structure of output and the demand for labor Noray" .mun will change dramatically as well. As they move ,_. .,Soo into new productive activities, especily in the _ _bodwMk private sector, some periods of unemployment B_%Wm for millions of workers is almost inevitable. From Command to Market Economy a mo sooa0 400 Noo Smm bC ha 13. The command economy operates like a Figure 8.2: Intemational Comparison of single firm; exchange between departments is Density of Automobile Ownership. 1987 carried on with orders for physical balances, and central decision makers cause each branch or TUE PROBLEM OF EMIWYMENT state entprise to operate as part of a fully- itgrated unit. Enterprises deliver specified 12. On the day in December, 1991, ta quanties of outputs but are left to acquire Ukrainians voted for the nations independence, inputs, especially labor, with no requirement to there was virtually no open unemploymant - the minimie costs or to achieve cost-effcdve recorded rate was less than 0.2 percent. In that strategies in production. Without the price same month unemployment ranged between 2 signals of a market economy, enterise percent (Japan) and 11 ercent (Canada and managers acquire all the labor they can: By France) in the G7 countries. Was Ukraine construction of whole cities, as with new mining or manufacturing enterprises located outside exisdng urban centers; provision of education, c = " day care, health services, vacation centers and o *j**w*j* j other nonwage remuneration that could attract >_tuwEIEI.EI workers when direct wages were fixed by cental authorities. The command economy produces o_ uSIS_uIh wholesale hoardig of labor to assure aequate aE Whmo spncks to meet ihe onay goel of the cep ea m-fs planicng authorities, nlmelyg to produce a _OW specified quantity of output from the firm, °0r X w us 0 go w regardless of the inputs used. Such a firm _ NOW pw 1P would, because of the ineffliciently high costs of Fige S.3: Intemational Comparison of inputs, expire in a market economy. Where Denity of Main Telephone Unes, 1986 efficient competitors woud sell products below the cost of this very large firm, 6 Execue Summary 14. In most respects, the Ukrainian economy CONFRONTING UNEMLOYMNT in 1993, after more than a year of political independence from central authorities in 15. All OECD countries combine, in Moscow, continues to operate like a command different measure, active and passive labor economy, though with the further debilitating market policies and spend in a range from less than 1 percent of GDP to more than 5 percent (see Figure S.6).1 (Chapter Notes appear at the -''~' w m end of the text). Sweden, which Is In the middle U"*dKh !_ of the range, reles on active labor market uaw= ~ ~~~~~~~~policies; the United State favors passive incomes support, and most other countries blend these approaches. Since March 1991 Ukraine has had an Employment Fund, managed by the inu~~~~m4 ~~Employment Service (ES) of the Ministry of Labor, that can finance both active and passive ° o 4 policies. In 1992, active labor market policies "a" Uintam& am om will use 62 percent of Employment Fund Figure S.4: Intemational Compadson of resources, 28 pucent will go to passive policies, Employment by Economic Sector, Late especially cash benefits to laid-off workers, and 1980. administion will absorb the remaining 10 percent. These services are financed by a 3 absence of clear central direction and a vast percent payroll tax on enterprises that provided breakdown in dhe flows of inputs and outputs 18.8 billion rubles to the Employment Fund, in that characterized the integrated firm that was 1992. Total cost was 0.8 percent of GDP in the Soviet economy as recendy as 1985. The 1992, excluding the three-month severance pay structure of the economy's labor force is that enterprises must give to redundant workers. decidedly different from that of high-income When unemployment eventualy rises, more (OECD) and upper-middle-income economies. resources and a wage-tax rate higher than 3 A larger share of Ukrainians work in agriculture percent will be needed unless general revenues and industry, a smaller share in services (see can be allocated to employment services. Figure S.4). Even in the services sector, as will be clear in the discussion below about education 16. The illusion of full employment is and health services, there are significant beginning to disappear. A recent survey by the distortions that have led too many into public Employment Service of the Ministry of Labor employment and too few into service asked 333 firms that employ nearly half a occupations that are usually found in the private million people how many are on unpaid leave. sector of developed economies. Restrucuring About a quarter of all workers were in such a the labor force will be quicker and easier if the postion in the first half of 1992, many on leave government abandons the system of resident for a month or more (see Figure S.5; Chapter 2 permits and the practice of imposing a tax on the offers further details). Today's hidden employer or employee when a permit is issued unemployment would become open if enterprises (the propiska system). Overall, a thd of lose access to credit and their managers sense an Ukraine's labor force will have switched from irreversible collapse of demand. The social and primary and secondary, and into tertiary service politica costs of mass layoffs are high, and activities, by the end of the transition to a govenmnent will probably put them off as long market economy. as possible; in Eastern Europe, about two years elapsed between the start of adjustment and the point at which unemployment began to rise. Execuive Summay 7 No *Al_buN 01 VA*w ~ ~ W Lnw a = _ Figure S.S: Industal Employees an Leave without Pay, 1992 - Figure S.6: Percentae of GO)P Spent on AcFive and Passive Labor Market ftXcy in OECD Countries and Ukndne, 1992 Based on thtexperienc and thie 25 percent decline in output so far in Ukraine, there may be 3 million unemployed, about 12 percent of the labor force, by 1995. Ohapter 3 and 4 consider what measures can be taken to reduce the for its staff; and, perhaps most importn, negative impacts of unempl.oyment but also assistance in reforming worker traning oxamines ways in which te transition can programs, which must be made mnuch more enmhance Ukraine's productiviy in the future fle3dle to deal quicldy wit the needs of the wihactive labor market policies. large nmbers of displaced workers. Privte sector, eipread trainiing where skill Active I0wborarket Polices requirements are well underskno, have proved to be thie most sucessfill training programs. 17. Expendivare on active policies divides Experience in OECD countries suggests thiat eqalily between job matching (creation) and early interventions in cases of mass layoffs can training/reftrining. Worlcer reaW, job and shorten thie period of unemploymenlt and get skfls mathing for thie unemployed can pay for wresreemployed. Assistance tD the themselves and can be a cost-effective solution unemployed tD create small enterprises and to to rising unlemployment as command economies purcbase raw materi;s and production tools can undergo the transition to a market economy. A incease the productivityof te displaced worker policy of equipping displaced workers with new who is wiflling to become self employed. Such skills can increase their employability and programs may be sukable for 2-3 percent of facilitate theff movement intD new jobs. III displaced workers and must include 1992, ES reurained onlly 2,500 of some 30,000 complementary services of technical assistane unemployed workoers. Ifumemployment were to on production, marlceting, accountin, and rise to 3 million, a hundred tines the curret mnaee level, ES would face a considerable challenge to expand its active labor market policies. With 18. At 1he same time, there is a need tD adequate extemal technical and 9inancial assur a minimum absolue level of consumption msisance, it can do so. Ile Employment to poor and vulnerable groups that might fall Service needs computers to automate its 30b- below a subsistence level. Is i8unlliay that matching service; advice on software many people fail tD meet minimum caloric developmient tD make its systems work:; traing stadards. Nonedieless, goverment must be 8 Executve Swniy vigilant about the risks of undernutrition. benefits, which may be essential social Protection of the needs of future generations, protection but do litte to put workers in new now at risk of malnutrition, must receive high jobs. The conflict between these two uses of a priority in assigning the limited resources single source of money suggests that separate available to the needs of poor and vulnerable financing may be essential. A solution may be groups. to guarantee that not less than half of Fiiployment Fund resources should be assigned Passive Polkies: Unemployment Benefits to active labor market policies. For example, if the need for cash benefits exceeds half of 19. Enterprises must pay 100 days of wages Employment Fund resources in any three-month from the date of notification of layoff, according period, those needs should be financed from to the March 1991 Employment Law. general revenues of the state budget. Thereafter, the dismissed worker reports to the local employment office and is eligible, after a Design of the Unemployment Benefit ten-day waiting period, for cash benefits, which are 75 percent of the worker's past average 22. With millions unemployed, it will be wage for the next three months and 50 percent much simpler to pay all claimants the same of average wage for the following six months benefit, regardless of their past wage; to scale but never less than the minimum nor more than payments individually would swamp the capacity the average wage. of the ES. An alternative would be to set two or three payment levels depending on age and Passive Poclies: Wage Subsidies experience. In Poland, an earnings-based system proved to be too expensive and complex. 20. Some employment offices use Additional cash benefits based on family size Employment Fund resources to pay wage should be eliminatd as they are inconsistent subsidies to selected state enterprises to induce with the principles of an insurace system. them to keep redundant workers. Wage There is little justification for giving benefits to subsidies will slow the pace of adjustment. voluntary quits, school leavers, and other new International experience suggests that the costs entrants to the labor force. The current cost of of such subsidies far outweigh any benefits, benefits would be cut 16 percent by excluding because they just substitute the unemployment of these claimants. Money saved from unnecessary one group for another and go mostly to labor- benefilts can be devoted to help train the inive entprses that hire unskilled workers unemployed and find them new jobs. even without subsidy. Employment Progr Administrtion What Works Best 23. The ES staff is adequate to handle 1993 21. Active labor-market policies can help year-end estimates of 400,000 unemployed. address the problem of unemployment and Mass layoffs may not occur at all in 1993, and should not be crowded out by the need to subsantially higher unemployment could be provide unemployment benefits. With taining, forestalled until 1995. There is time to prepare displaced workers can find new jobs; spending adequately to address the problem. That on an active Employment Service that counsels preparation will require four steps: workers may pay off in a fister transition to a new work environment; and a job-matching *TMlnlng. Trin ES staff in management and program can facilitate job search. Nonetheless, provision of active labor-market services of job mass layoffs will put a premium on spending matching, early intervention in mass layoffs, Employment Fund resources on immediate cash training program development and management, Excuive Summny 9 and administration of a cash-beneft system. approach at summarizing policy action required, and possible exteal technical and financial *ProcurmenLt Prcure essential equipment assistance, is followed In each of the areas and softwe to support staff work and traiing. reviewed for this report. *Innafsutue Develop aning-program infrastructure in cooperation with the Misty of SOCaAL PRFOTEON Education and private entities that can offer training. 25. Social protection under socialism Included labor pensions related to labor or labor *Monitoring and Analytic Capacity. Enhace service and social pensions paid to the dependent capacity to monitor and respond to the changing or disabled. The basic legislation regulating labor market, both mass layoffs in failing state cash transfers includes the 1956 all-union law on enterprises and new employmet opportnities in peasions for workers and employees, the 1965 the private sector. allff-nion law on pensions for collective farmers, and the 1990 pension law, which provided that ;The Ministy of Labor must begin soon to cash-transfer payments, at a base rate of 55 reassign staff and train them for work in the ES; percent of pre-retirement wages, are not taxable it must also acquire a management information and are paid regardless of other income. The system and related equipment (betwen 1,500 1990 law increased the cost of benefits, and the and 5,000 personal computers) as soon as numbers receiving them, considerably; there possible to support staff work. The Ministry of were then 9.7 million old-age and disabled Labor has a management plan for this area of Its pensioners in Ukraine, and the number had work and has itemized its needs for staffing, grown to 13.5 million by the middle of 1992, technical assistance, and training, some of which including 362,000 people in the security sector will require substnti exte assistace. The (see Figure S.7). World Bank and others could help in this area, beginig with an assessment of needs and 26. Recently, over half the population consultant services on system design; assistance received one or more cash benefits: A quart with the procurement and set-up training and of the population receive disability, retirement, support would be warranted. or survivors' benefits; twenty percent receive student stipends and related free board and 24. In Table S.1, the line entitled roo; over half receive family allowances for "Employment and Labor Market Policies," children under age sixteen; more than 10 percent describes current, suggested, and sustainable received Chernobyl Fund payments and a smal spending in these areas, as a percentge of GDP, percentage receive unemployment benefts. The for the years 1992, 1993, and beyond 1993, state subsidizes food, transportation, and shelter. respectively. Ihere is then a summary statement Education and health care are provided at no of policy actions required in this area of social cost at the point of service; enterprises provide sector policy. This line appears in Chapter 4 as day care services for children under age six, the bottom line of Table 4.2 (page 62), which paid maternity leave for three years, and provides further detais about spending and vacation sanitoria for employees. Ukraine has policy actions that are discussed in the full text implicitly adopted a policy of income smoothing of this report. Table S. 1, Table S.2 (pWae 19) is that complements its assistance to low-income similar to Table S.1, except that it offers details families. Periodic wage adJustments and the on a possible program of external technical and expansion of the numbers of pensions and family financia assistance that could support allowances are recent steps taken to insure government policies in this area. This same agait declines in real incomes, even for those 10 Ewecuve Swnrmwy R Ativ she of Pensom Nunbt and of Penione rawCmeswd) oth. 0 100 200 '00 400 600 00 Pomot Of MfdNMl Pwasl t?O Rubles) Uoasm Minsty at Oosiw vmfam Figure S.7: Pensioners and Their Benefits, January 1, 1992 well above porty levels. A major isue is particularly in the design of unemployment and whether the objective of income smoothing can health-insurance schemes, may prove to be be pursued simultaneously with social protection costly and thws must be carefully conceived prior for the poor and vulnerable during conditions of to implementation. extreme austerity. Retiment, Disability, and Survivors' 3nfs 27. In the longer run, the principles of risk sharing, social insurance, and ernings-related 28. Pensions are the largest component of benefits should gradually be restored as the the social safety net, and they are essentW to the economy strengthens and public obligations no well-being of millions of the elderly poor and longer constitute a threat to macroeconomic disabled. At least severa miUlion live on the stability. Unemployment insurance and workers edge of poverty in ural areas, ofken alone and compensation are prepaid benefits with fee with no relative to provide any means of schedules that vary by industial group acording support. Eight milion of the pension to risk in many OECD countries. Successful beneficiaries have income so low as to qualify social insurance schemes protect members of for low-income allowances. Data from the 1989 many societies from income loss associated with cemus show that 10.9 million people have illness nd aging and against the risks of high passed redrement age of 55 for women and 60 costs for health care where private medicine for men; their numbers are projected to grow to prevails. Government can create a regor 12.3 million in the year 2000 and 12.6 million framework that encourages saving so that in 2010, thus increasing the demands on pension individuals and families self-insure for their old fund resources. age and other financial needs and risks that differ widely from person to person. Al these 29. Ihere are anomalies in the pension Saw. steps require a broad legal framework that Benefits are not provided to the elderly becase defines privatesector development and its they retire; they are provided automatically responses to the demand for financial services because of reaching retrement age. Thus as that help reduce social risk. Experience among many as a quarter of the 11 million recipients of Eastemn European countries in recent years redree pensions cotinue to have wageeanings. indicates hat false steps in these areas, A qwarter of disability pensioners may also be Ewcwive Swnary 11 workdig because once the pension is awarded It of GDP. is permanent, and many of those declared disabed subsequendy recover and ret to * Benefits. Reduce the benefits of the 25 work. Some workers, of whom miners are psrcent of elderly and disabled perhaps the largest group, can begin to re peysioners who continue to work, saving a pension on the basis of 20 (women) or 25 up to 19 percent of total pension (men) years of service completed, wbich may spending. occur well before pensionable age is reached. About 7 percent of workers retire early on this * Early Retimnt. Abolish the option basis. Reducing some of the payments to some of early retirement, saving up to 5 of these recipients would probably not cause percent of total pension spending. them to fal into poverty. Raising retirement age would yield no Immediate 30. Despite the obvious Imortance of savings since that reform would have to be pensions in the well-being of many recipients, phased in gradually over a number of years. It there may be ways to reduce pension payments may also be inaWropriate to cut all benefits to while maintaing benefits for those who need those stll working or who retired early. Ihe them. One option is to allow inflation to erode Government of Ukaaine is reviewing its options the real value of pensions to a level that can be but does not expect to raise redrement age financed. The burden of that policy will fall immediately. heaviest on those leas able to defend themselves from price increases, the poorest members of P!sonal Secrty Acoounts society. A second option, the one recommended here, is to eliminate benefts to those who do not 31. A more attractive option than raising urgently need them. Sevenld measures could, retiement age, one being considered in the when taken together, reslt in significant Ministry of Social Welfare, is to institute a reductions in payment while stil protecng poor system of pe lseuity accounts that would and vulnerable gmups: permit a more flexle approach to retirement. Ablebodied workers could continue to work as Retirement Age. Raise normal long as they wish, with related provisions for retirement age to 62 or 65 for both many means to transfer pension rigbts to third women and men. Men have a life parties or to use them for such purposes as expetancy of 72.4 at age 60, women's fiancing private annuities or other expenses that life expectancy is 79.5 at the same age, do not intfere with te income-security so there is litde justfication for earlier prvisions of pension law.2 Ptral acounts reirement for women. 'he reducdon In could be built inidally with the distribion of the depedency burden is shown in owne ip rights in mutual funds made up of Figure S.7 for the year 2000 and 2010. publcly-distributed shares of prvatized state Retirement age could be raised by one enpises. Retirees' claims to such shares year for each of the aext two or ie could be designed as annuities that, like current years for men and by one year for each reiement benefits, terminate with the of the next seven or ten years for recipient's death, the shares then reverting to the women, and currnt beneciaries woud Pension Fund for subsequent distribution to ne not lose their entidements. By the year caimnts. Idendfication of practical designs for 2000 pension payments wold be 20 such a scheme would merit high pririty in any percent lower than they would have program of exal tecnical assistace. been without raising the retrment age, which is equivaent to about 3.5 percent 32. To reduce pesmion spending along lines 12 Executve Sumnay suggested for 1993 in Table S.1, that is, to reduce the shAe of GDP allocated to pensons from 13.9 percent of GDP in 1992, to 11.3 F P t_ percent of GDP in 1993, and 7.7 percent of wnmtPdlow GDP beyond 1993, woud require that ftgONf I immediate measures be undertaken on an aowitpgn emergency basis: Introduce a untary benefit for St all pensioners at a level that protects pensioners fully against the risk of acute poverty. lbis flat- Men" rate benefit would be a temporary measure until " ' the economy improves. Such a change could C 2 4 0 e 101*1*4 result in savings eqvalent to about 30 percent Nwnbr of Retird PeOPe (NOW") of total pension spending, about 4 percent of ! go GDP. The cuts woud f)l on those best able to absorb them; they would leave a progrm that De Ras should improve the safety net for the most muwnstt paw viunerable pension recipients. pa- f K 33. Table S.l, Table S.2 suggests key areas MO Z -!z of external technical and financial assisance that 0 Mu U would be required to stegthen pension & ti m progrms. These include advice on data collecton and analysis to describe more 1 , SO 40 e accurately the characteristics of the recipient POuS SW M100 of Vkd1 Ago population by age, sex, income, residence, I|-eo ia0ooo GMw a family size, support systems, and other features am" Wm ea*bcM that would inform the Minsy of Social Welfare Figue 8.8: Effects of Altenative about the needs of the beneficiay population. Rerement Age Policies on Nmnber of The ministry and the pension fund also need Retred and Dependency Ratios. 1939 advice on how possible cbanges in benefts will through 2010 affect various individuals and groups in the population. There is also the need to strhen management and aminstive capability given the great responsibilities placed on these agencies. allowances did not differ substantively from one Alowances and Benefits another; simplification and reduction in the number of benefits is an objective that led the 34. In 1992 UkrIe offered over 60 cash govenmet to recommend a new, simpler allowances and assistnce programs, some aimed pro early in 1993. Still, many allowances at low-income and vuinerable groups, others are funded, administered and distributed by designed for the general population, and those sevd agencies; others are funded by one targeted to Chernobyl victims. B fs targeted agency, adminsered by a second and ditributed to Chernobyl vicdms accounted for 39 percent by a third. Government spent less on failmy of social assistance spending; aid to vulnerable aBowances in the past than it does now; groups, 37 percent; aUlowances available to the Chernobyl costs were covered more broadly population as a whole, 23 percent. Many across the USSR, for example. According to Ewcuie Sumnaiy 13 the data in Table S.1, these program ww programs. reul 8 percent of GDP. If they are to be reduced because of resource limis of Consumer Subsidiee government, the reduction should respect the need to prote vulnerable groups and other 36. Consumer subsidies, especially those for fundamental claimnts to state suppot. The food, were meant to compensate for the following suggestions point to programs that Immediate price increases expected in January deserve priority and others that may be 1992; thgovement proposed to abandon them candidates for reduction: thereaft. In the wevnt, consumer subsidies cost S.1 percent of GDP in 1992. There is general * Protect Important Benefits. agreement that such subsidies are Inefficient as Allowances for sick pay, maternity a means to provide social protection; their leave, short-term disability, and benefits elimination could thus save 5 percent of GDP. for Chernobyl vicdms, should be Part of that savings could complement family generally protected. allowances and assistance for pensioners living in poverty. The suggestions in Table S.1 * Shift The Burden of Sick Pay. recognize that elimination of all subsidies wil EWnies should be held resposible not be possible In I993, for which year 3 fDr sick pay and at lst some portion of percent of GDP might still be expected to be short term disability pay to avoid spent. ITereafter, however, it should be overburdening the sickness fund. possible to do away with this costly, inefficient, and inquitable use of resources. * Retarget Other Benefits. Most other benefits shoud be offered only to PUluC SOCIAL SERVICES families in specific vulnerable groups.3 37. Government in Ukraine finances and Savings from these guidelines could be as much provides the key social services of education and as 25 percent of total allowance spending in the health, and the budget needs of these esntl first year it was implementd. Details of activities should be protected and their quaity recommended changes appear In Chapter 7. enhancedwhere necessay. These programs are Again in reference to Table S.1, a reduction of scheduled to spend 14 percent of GDP in 1992, spending in this area from 8.8 percent of GDP far more than the 8 percent (5 percent for in 1992 to 6.3 percent of GDP in 1993, and 4.4 education and 3 percent for health) that was percent thereafter would be in the right direction typical of the 1980s. Employment in these of flsca balance while protecting the needs of seors has grown far faste in the past decade vulnerable groups. Eady in 1993, the than in other secors. Teachers and health Government of Ulaine was already taking steps workers now seek salary parity with the in the right direction by reducing the number of industrl sector where wages have traditionally beDefits and targeting those that remain on been 50 perce higher. Increasing costs of vulnerable groups. imported pha cals, and the need to absorb the additional costs of converting to 35. There is considerable need for technical Ukrainian as the language of instuction, put assistance to support reforms in ftis area (see added stain on these services. A major Table S.1, Table S.2). The most important challenge is to maintain quality while reducing would be to help the government reorganize and future spending in these areas back to the level, rationaize its many programs. Budgeting by as a share of GDP, that prevaied before the objective could combat the likely waste that may curren crisis. have emerged over time in the proliferation of 14 Exective Swary EDUCATION AM TRANIG SitVIcEs in 1992, should probably decline to 7 percent of GDP In 1993, and 6 percent of GDP thereafter, 38. Ukraine has a large ad diversified to what woud be a sustnable level CTable S. 1). education system. Its coverage is extensive from Staffng ratios are bigh when compared to other prool through seconday, and emolment countries, suggesing some possibility of saving rates at post-secondary level compare favorably on staff costs. UNESCO data show that with those in countries with similar income developing countries spend 3.8 percent of GDP levels. The dropout rate is negligible and the on education and developed countries spend 5.8 repetition rate Is very low. Teacher pcet of GDP on tis sector. Tbe former qualifications are high, with most teachers in Soviet Union spent roughly the same share as urtban areas having several yeas of post- developed countries. These comparisons across secondary education. There are 10.9 million coutries and across time suggest that 6 percent fill-time students, and hundreds of thousands of of GDP for public education spending may be part-ime students, enrolled in 47,500 the highest sustainable level. These changes establishments employing 1.8 million, of whom would be accomplisbed by seveal key measures: 1.1 million are teachers, resulting in an overall student/staff ratio of 5:1. And in higher * Staffing. Reduce staff to levels education, Ukraine's studentteacher ratio is but commensurate with the student-teacher a third to a tenth the level prevailing in most ratios observed In other countries; cut countries. In the 1980s, the number of teachers' the production of new teachers by the college graduates nearly doubled, while pedagogical intes and schools. education graduates at higher-level insdtudons increased by 60 percent. But there are now too * TedmIcal Curricllum. Reform few complementay resources for the education vocational and educational training and system to be able to maintain the level of quality the technicums to make them betttr able already achieved. to serve the needs of displaced woikers who need retraining. 39. Chapter 8 briefly descrbes the levels of Instuction and some of the key issues at each * General Education. Speed reforms of level. The most serious problem is that general education by introducing lycees, resources are needed to introduce innovations in magnet schools, optional courses, and teaching, such as use of computers, modern odher innovations that are already software, new texts, and teaching materials that png to sen n education. can raise the quality of instuction. Staff reductions, pethaps by attrition, could help solve * Day Car Assist privaeector efforts the resource p.oblem. It is vita to reform and to replace the dedlining role of strengthen education, but those objectives must enterprises in provision of day care. be sought within the deterioraing fnanial resources that will realistically be avaiable to Tecre is an urgent need for a carefizl study of the sector over the next few years. lTe Law on how many teachers will be required at each Education provides that 10 percent of GDP level, from pres-hool to higher education, and In should be allocated to educaion, and other the various s-pialties of education. In the recent legislation proposes that teacher salaries aggregae, raising student-staff ratios to the should be made equal to those in man ring, averag level in developed countries would cut Neither condition is feasible during this era of personnel costs by 44percent and total education budget stringency. spending by 24 percent, to under 6 percent of GDP. Such a change could not and should not 40. Education spending, 7.8 percent of GDP be accomplished overnight, but one million Executve Swamauy is productive former education staff could produce HWATH SERVICES an additional 4 percent of grmss product. 'Me net gain to aggregate output could exceed 5 42. Atbirth,li&eexpeotncyinUkrainewas percent by the year 2000. 70.5 years in 1990, well below most European neighbors. The infat mortality rate Is as80 41. Along with staff reductions, education higher than In the rest of Europe although authorities could seek alternative means to Infectious and commnicable disease has largely finance education, including voluntary contributions, parental in-kind assistance in labor and goods, and, especally at higher levels of education, the introduction of tuitlon fees. Specific actions might include the following: mu _ - . Complementary Servces. Save up to h - 4 percent by targetting the recentdy enacted free lunch for preschoolers to needy families; provide free textbooks, maMma_ student stipends, and room and board 4 l only to students from poor families; d of Ub Lon su.aii * Foreign Student Subsidies. Save 5 Figure 8.9: Potential Years of Ufe Lost percent of the MOE budget by gradual by Caus, of Death attrition of the 20,000 foreign students now supported and suspension of any new invitations for costly, subsidized been brought under control. The greatest loss of study; life in Ukraine, males and females considered together, is from circulatory and respirayory * Language of Instruction. Intoduce diseases, neoplasms and injury. Many of these Ukrainian4anguage texts at a pace causes can be attributed to smoking, high consistent with normal replacement to cholesterol and fatty diet, alcohol consumption, cut out extra printing costs; and lack of exercise (see Figure S.9). Emphasis on curative medicine may be leading to * VocatIonal Schools. Eliminate some of misplaced priorities; more attention needs to be the 1,242 vocational schools that cannot given to prevendtng than to curing disease. adapt to training for a market economy. Abortn is the principal form of birth control; modern contraceptives could prevent unwanted * Dispklaed Worwkes. Seek donor pregnancies at considerable savings: Hospital assistance, as Germany has already costs of treatment for complications of abortion provided, tat addresses training have been estimated at 3-4 billion rubles in needs for displaced workers. 1991. Only 30 percent of contraceptive needs are being met; adequate services would cost but Early in 1993, the Government of Ukraine was a quarter of what is spent on hospital care for already taking a number of these steps. The treatng post-abortion complications. A government will undertake more intensive study reorientation of disease priorities could provide of key sector issues following up on the major a basis for considerable savings and greater conference report, *Ukraine Education in the effectiveness in pursuit of the Ministry of Twenty-First Century," now being prepared. Health's goal to reduce the principal causes of death and extend useful life. 16 bXcuive Swmmary 43. Health care spending accounted for 7.7 * 1PaI Production. Enhance percent of GDP in 1992, two-thirds of it capacty to import and produce essential allocated to hospital costs (see Figure S.10). drugs. While pharmaceutical prices have risen faster than those of almost any other input, It has * Health Finance. Consider options for become extremely difficult to obtain drugs; health insurance, prepayment systems hence spending declined on that essential inpuL and other innovations that can reduce Construction declined from 5.2 percent of total and improve quality of services. spending in 1989 to 0.1 percent in 1992, reflecting the fact that the state has no resources Halth Sector Human Reources to maintain its facilities. 45. From 1993 there will be a reduction in the intake of first-year students by 500 per year 44. The Ministry of Health could improe for a perio of 3 years to achieve a orm of 32 sector efficiency and bring down somewhat the physicians per ten thousand population. Some high level of public spending on health. medical schools have been considered for Spending could be brought down from 7.7 percent of GDP in 1992 to 7 percent of GDP in 1993, and 6 percent of GDP in subsequent years, which is a level substantially higher than was prevailing in the 1980s. Sector objectives HeWW E 8a would be served by the following steps: CO o * Admissions. Reduce hospital admissions by one-third, treating many conditions on an outpatient basis, along lines already adopted in OECD countries; reduce hospital bed supply to s w. Ot a North American levels making Rgure S.10: Disibution of Public comparable reductions in staff; withdraw Spending on Health Jervices unnecessary hospital beds from service, preferably by closing whole wards in closure to take into account what is now seen to order to gain full impact of staffing be an oversupply of physicians. There are plans reductions. to decrease first-year intakes and close some nursing schools. * Preventive Care. Focus staff resources and additional financial resources PharmacIcal Production outined in Chapter 9 on preventive care, especially maternal and child 46. lTe extreme scarcity of essential health programs. Develop health medicines and certain equipment available only education and communications programs in the West creates serious immediate problems promoting a more healthy diet, less for health care in Ukraine. Ihe breakdown of smoking, lower consumption of alcohol, exchange within the former USSR has left and beneficial exercise. Ukraine manufacturers without some key inputs. About one-third of the medicines of former * Management. Strengthen sector USSR are produced in Ukraine, mostly by 50 management capability. state-owned enterprises that had an aggregate pharmaceutical output of R1.2 billion in 1990 Ewce Sutmuay 17 and RI.8 bllion In 1991. The Industry acs a finacial assistance; the brief desiptions of serious deterioradon of its equpme ad plant, such assistance In Table S.2 summaize lenoier and production iS near to stopping for lack of discussions in the body of the report In geneal key inputs. terms, this asitce would have three aims: First, to modernize the systems tat mage 47. Drug shortages at hospitals have become programs offering cash benefits and soci common; barter among health care faciities was services; second, to achieve significant efficiency being used to obtain required drugs. Extensive gains in the systems of public finance and substitutio is common, and the subsdtied delivery of these benefits and services; and drugs are not considered an opdmal choice for third, to develop mechanisms that can assure that treautent. Urgent needs nclude insulin, oral those in greatest danger of povt and its ill anti-diabetics, hormones, syringes, needles, effects are protected to the exten possible. cold-chain equipment, medical and surgical supplies, inslin purification equipment, and 50. The Government of Ukraine reorgaized sterilization supplies and equipment. 'Mere is an some of its functions In 1992 giving overall immediate need to finance imports of essential responsibility for social programs to the office of drugs and supplies for pharmceutical the Vice Premier for Soc Rehabilitation. Ta production. Many of these steps were already office recendy formulated some priority areas underway early in 1993. Exteal technical and for international tecnical and financial inacial assistance could be useful in support of assistance that can be briefly presented here, by such a program, given the long period of area of concern and minity. experience of international agencies such as WHO and UNICEF, and the health agencies of 51. ESoymewSeilces, Minstry ofLabor. the OECD countries, in addressing similar issues. Table S.1, Table S.2 summarizes some Information and inquiky system for prior4y ares for such assise. There is development of the necessary considerable inerest in developing a health documenation; traing and on-the-job nsurance scheme as a means to inject more training, and purse of equipment and resources into the sector; technical assistance applied computer progams; should be provided by knowledgeable inteational experts on this topic, giventhat it Creation of training and retraining is extremely complex and can lead to problems centers for employees being released as in the effliciency and equity of services. a result of unemployment. EXT&MAL ASSJWrANCE 52. Sandards for Educaion, Miwty o 48. Table S.2 foUows the same categories of Educadon. action as Table S.1, indicating techial and financial assistance requiremntzs for social sector Definition of educational levels and their programs. Government can make effective use iegration into inteional standards; of assistance only if the move to sustinable social programs is part of an overall Curriculum development for restructg of the role and obligations of the professional training programs; public sector in the economy of Ukraine. Procement of foreign hardware, 49. Eah of the areas of expenditure and sofe and computer control systems; public action discussed in this report could benefit substa lly from extenal tecnical and Labor demand and training analyses, 18 EecJwve SwuMwy including study of internationa' Strengthen systnm of immun on and experience in specialist trainng under vaccination system, including scientific market-eoonomy conditions; research, purchase of teclnologies and germ cultures; Development of a certfication system for educadonal istudons, including 5S. bhe Government of Ukraine also seeks study of certifcation expeience in assistance in reform of education and worker selected OECD countries; training programs that would include, interf ala, merging some higher-education institutions, Creation of information-and-analysis iatng strcztural changes of some professional data bank on educational institutions. trainng to improve response to the market economy, reducing subsidies to evening and 53. Social Assistance, Mriy of Socia corespondence courses by fifty percent in 1993 Welfare. and eliminating them over five years, giving bigher-education institons greater control over Computer system for compilation and admissions and budgets, permitting them to analysis of information to define charge fees as appropriate. categories of citizens for whom social assistance is needed; development of the 56. The ministries of Economy, Education, system of state support for such citizens, and Labor propose to develop estimates of their including documentation development, staffing needs for technical specialists. They on-the-job training for staff, will also prepare proposals for the creation of pocuement of equipment and software; new regional scientific and educational complexes hat can complement the expected Adoption of new technologies for grw of the market economy. modern prosthetic de-ices and invid rebabilitation, including development 57. The ministries of Labor and Education and acquisition of new technologies, will revise qualification requirements of their implementation, and training of specialists and employees based on a new personnel for their use; muldtlevel system of specialists' preparation that can lead to attrition in the number of higher- Social program management, including education, subsidized students. The ministries creation and maintenace of a Cabinet- wold then upgrade capacity to meet the needs level administative office for strategic of regional employment centers with their management wita appropriate related fnancing provided from Employment Fund. units in oblast adminisratons, including development and implementation of the 58. Overall, these actions could reduce essential information systems, conduct spending for education and training by up to five of seminars, and symposia. percent and hence contribute to the efficiency objectives outlined above. Nonetheless, success 54. HealhImprovem, MnLity ofHealth. in these actions may well require effective technical and financial assistance in support of Implementaion of health insurance, the proposed ministries' improvements. including development of the documents needed for analysis of internaional 59. Insofar as government develops an experience, personnel training, settig effective response, by adopting a sustainable up private insurance companies and soci program, the international community will equipping them; seek means to provide such additional support as &ecuaa Swnmay 19 may be needed to amelorate ho effecs of the 61. To govenmet might consider periodic crdsis of resuctuing. Intested gvemnt meetings of intersted donors and agencies that and financing agencies wUI be anxious to guide wold reiw progress in social proction and their support to priority needs conistent with coMlaity of donor aistance. Such each of their own comparative advatages in rviws provd one mas of setting goals and aiding the transition. checkl on their achievtaent; they can inv4ra external asisnce by restatement of 60. SevraW govnents are already activdy prorties. Ibe meetns can also confirm the discussing areas where they can be of help, efficacy of donor assistance or point to ways in including labor-market analyses, health-care which new assistance may play a useful role. financing, effectv peosion and allowance schemes, and overal financial management and budgeting. Various modes of coordinaton need to be considered for social protction as a whole, and in each of the specific areas considered in thir reporL 20 Eecstw Swnawy Tabe 8.2: TechnIcal and Financial Assiswance Reqrements for Execudion of Social Sector Reforn Program, 1993-1995. Principal Internafonal Technical and Cateoory Financial Assistance Needed Principal Sources of Assistance Employment Machintry and equipment to strengthen Labor minisies, ILO and relaed UN and and Labor the Employment Service; development of regional agencies; agencies with Market Policies training programs and curricula experience in OECD countries; appropriate to market economy; advice international flnancal Institutions on handling mass layoffs; management of program to select and develop labor force concepts and definitions that are consistent with international standards: develop admistrative sources of Institutions Pensions Training for pension-fund management; Social securty agencies in OECD actuarial analyses of projected fund countries; inteational financial balances; planning and evaluation support institutions on benefits and allowances Famity Advice on resuwcturing benefits to fit Welfare ministries in OECD countries; Allowance needs of poverty and vulnerable groups Consumer _ Subsidies Education and Curiculum development for vocational Education ministries In OECD countries; Training and technical training and technicums to international financial institutions strengthen private-sector response; Health Assess capacity of local pharmaceuticals Health ministries in OECD countries; industry; intemational procurement of WHO. UNICEF. UNFPA. and UNDkP essential drugs; hospital management international financial institutions reform; strenthening of maternal and child care and reated outreach; health education and communications refo rn Overall Introduce budgeting by objective In International financial institutions selected ministries; analysis of the political economy of alterative responses to unemployment and spending cuts 1 SOaAL CONDMONS AND SOCAL PROTErON INTJODuCINON these indicators in the pas score of yeas, with adult mortality having risen perceptibly becawe 1. As part of the former USSR, Ukraine of the higher incidence of circlawry and pardcipated in a socialist society that tried to respiratory diseases, which were being brought guatee universal access to a minimum under control by modern preventve medicine in standard of livg. Two statistics often used to the West. Ukraine was pobably somwhat assess the stadard of living are life expectUacy better off in tms of schooling attainment, and int mortality: on these indicators, ranking nearer is European neighbors and Ukine stood, on the eve of its independence, performing well in nteaiona compettons. well below the West (and East) Europe An exten system of day care facilities may cuntries but somewhat above middle-income have assisted early learning, In addition to countries from other parts of the world (see permittig very high levels of women's Table 1.1). Some analyses show that the former participation in the labor force. socialist countries fel behind Western Europe on Table 1.1: IntwntIonal Comparison of Socal Indicators Infant Mortality Popuation GOP Per Capita Ufe Expectncy Per Thousand Tota Feriity County (Millions) (Dollars) at Bith Uve Births Rate Ukraine 52 n.a. 71 20 1.9 Turkey 56.1 1,630 67 60 3.5 Pland 38.2 1,690 71 16 1.8 Chile 13.2 1,940 72 17 2.5 Mexico 86.2 2,490 70 39 3.3 Hungary 10.8 2,780 71 15 1.8 CFSR 15.7 3,140 72 12 2.4 Austali 16.8 14,360 77 8 1.9 UK 57.2 14,610 76 9 1.8 Italy 57.5 15.120 76 9 1.3 Netherlands 14.8 15,920 77 7 1.5 Frane 56.2 17.820 77 7 1.8 Germa 80 20,440 75 8 1.4 USA 248.8 20,910 76 10 1.9 Sources WDR 91,92; 1W et al. 1991 report on USSR for Ukraine, 1989; and Poland soci sector study (World Bank). 22 apter 1 2. The system of soci p cton included S. The age sucture of Ukraine is very statrovided education and heath; penson dose to tht of Portugal with 21.4 percent of the benefts for the elderly, disabled, orphans and popultion less than 1S years of age, 66.4 widows; family allowance an student stipends pert between 1S-64 and 12.1 percent 65 or and subsidies for basic foods and sevice tt more years of age. Ihe population is somewhat lowered living costs for all consmers. Tho cos older ta Europe as a whole or the neighboring was about 25 pernt of GDP (S percent each for social services, Tabe 1.2: Intonal Compadeon of Public Spending pensions, and food subsidies, and I on the Soca Sectors. 1989-1990 percent for family allowances; see Table 1.2 and Figure S.l on page 1). Percent of GDP Spent on Social Sectors' About 40 percent of all Uainlas Education and were entitled to one or more cash COWnt" welfare' Health Total3 benefits at the time of independence. 9 8 25 Turkey 0.9 5.6 6.5 3. The colapseooutpu inthe - 116.1 8.3 24.4 se enterprises, combined with the Choe 11.1 5.2 16.3 urgency of maintainin the real value 2.4 2.9 5.3 of cash benefits and public salaies, Hungary 19.6 6.1 25.7 led to a crisis in 1992 in which CFSR 15.5 1.3 16.8 programmed spending for soca Ausa 7.9 4.8 12.5 protection reached an inordinately i 12 _ 6 large proportion of a shrunken GDP. t* 18.5 9.4 27.9 A major issue Is how to contiue to 1_zz 12.3 34.4 provide for social needs despite the 2-J- 17 192 - 4.2 extreme scrcity of resources. TO 11.9 29.2 help address that issue it is helpful to G 14.3 5.5 19.8 review the basic demographic USA 6.7 3.4 10.1 structure, how the labor force is Notes 1. Excludes state and local govemrnment deployed, what the safety net nOW sening for most counties, which provides, and what vulnerable distorts comparisons by making lage requiroes andi waty melntion. groups federal systems, like the US, appear require priority attention, smalO. 2. Includes housin, amerities, social Population SOe and St hcue secrty and welfare. 3. UkraIne indudes 8 percent of GDP in 4. Ukraine's popuation S 51.8 general consumer subsidies million, making it one of the lar Sources: WDR 91, 92; IMF at al. 1991 report on USSR countries of Europe and growing ovet for Ukne. 1989; and Polnd social sector the past decade by about 0.3 percent t W Bank). per year. Two thrds of the population iS urban, and one d is rural. Th three largest of Om 26 asts co is of Belarus and Poland, or North highly industrialized: Donetak (5.3 million), American countries like Canada, but younger Dnipropetvsk (3.9 million), and Khariv (3.2 tha the United Kigdom and Sweden5. This million). The smallest ar thewester oblasts of stucure has several implications for social Chermivtsi (0.9 million), Volyn (1.1 mion) nd progm. Fist, dhe demands of the elderly are Temopil (1.2 million). See Table 1.3. and growing, particularly because Socal Condions and Soca Protecdon 23 women receive pensions beginning at age 55 and Z a (12.6 percet), Kiev city (12.7 men at age 60, with some workers eligible for percent) and Crimea (15.0 percent). an even earlier pension entidtlement. (Continuing to work does not reduce pension rights.) Ile Rato of Females to Males pension-eligible population will grow from under It million in 1989 to over 12.2 million by the 6. Ukraine has a high fme-o-male ratio. year 2000; there were 37 redrees for each 100 There were 116.7 females per 100 males people of working age, and there wil be 42 per reported in the 1989 census, a markedly larger 100 at century's end. Ihe resource ratio than 105.2 in Poland in the same year, requirements for redrement benefts will grow reflecting losses during the second world war. accordingly, unless steps are taken to raise the lhis ratio is more pronounced with increasing age of rerement, now 55 for women and 60 for age and in certain oblasts. In Ukraine as a men, to the level of most OECD countries, whole 22.4 percent of women are 60 or more which is 65 for both sexes. Second, the years of age compared to 12.8 percent of men, requirements for heavy spending on child health wbile in oblasts like Chernlhiv, Poltava and and education so familiar in developing countries Sumy 28-31 percent of women are 60 or more should pose less of a burden. As evidence years of age compared to 15-17 perce of men. consider the high labor-force participation rate One in ten women in the country as a whole is of about 50 percen Only 40 percent of the 70 or more years old. One in seven is 70 or population in most countries, both richer and older in these three latter oblasts. The largest poorer, are working; women m Ukraine usuly number of women 60 or more is found in have but one birth or two (the total fertility rate Donetsk, Dimrpetrovsk and Kharidv, the largest is 1.9) and with materity leave and day care are oblasts. able to continue in their working careers. With relatively fewer children than most middle- 7. A World Health Organization (WHO) income countries, the requirements for education report esmates that 2 mifilon pensioners irD speing could also be less burdensome. Ukrine live alone. Many of these are likely to Fmailly, the mature demographic structure be elderly women living without spouses, alone implies a more mature labor force that should as and in mral areas. Of the 0.5 million a result be more productive than one dominated pensioners estimated to require daily social or by youthful and inexperienced workers. The medical asstace only a third receive such age structure differs by oblast; those with the care, much of it in hospitals and smaller health largest proportion of persons 60 or more years facilities. Health-service institutions care for the of age are Chernlhiv (24.7 percent), Poltava lonely elderly who canmot care for themselves. (22.7 percent) and Cherkasy (22.5 percent) Elderly women make up a vulnerable group that while those with the smallest proportion are is growing and deserves pdiority for social and Table 1.3: Populadon Growth Ukrine, 1981-1992 (in Thousands) 19811 1985 1990 19912 1992 Total 50,169.8 50,914.1 51,638.8 51, 745.8 51, 801.9 Male 22,954.3 23,402.9 23,884.1 nda nla Female 27,215.5 27,511.1 27,752.7 nla nda Source: 1. Years 1981-1990 WVHO/EURO-ESR Unrt May 19,1992 Mid Year Esimates 2. Years 1991-1992, MOH. Ukraine 1992 is as of 1st January 24 Chapter 1 bealth support progm. Dislocations expected age 65. From birth, females had a life during the taition to a market driven economy exectancy of 74.9 years and chances of survival will add to the difficulties faced by this group in to ages 45 and 65 are 95.2 percent and 81.7 the future. percent, respectively. Tbis survival pattern to ages 45 and 65 S marginally worse than in LifexEpectancy neighboring Belarus and Poland, and much worse than Portugal, the United Kingdom, 8. At birth, life expectancy in Ukraine was Sweden, and Canada (see Table 1.4). 70.5 years in 1990, up from 69.7 in 1981, but significandy below the target of 75 years set by Vital Events the European Regiona Office of WHO for its region (WHO/EURO) and actual experience in 9. Since 1983 the birth rate in Ukraine has Europe. The average life expectancy at birth for been falling more quickly than the death rate, twenty seven countries in Europe in 1989 was which showed a relatively sharp upswing in 74.0 years and for European Community 1990. Data for 1991 and first quart of 1992 countries in 1988 was 76.2 years. From birth, show a net natural decrease in the population, - 4males had a life expectancy in 1990 of 65.6 1.1 and -3.1 per hundred thousand popuation, years, an 87.9 percent chance of surviving to respectively. The total fertlity rate fell from age 45 and a 59.7 percen chance of reaching 2.1 in 198S546 to 1.9 in 1990; the net decrease Table 14: Life Expectancy and Survival by Gender, Ukraine and Selected Countries United Ukraine Belars Poland Portugal Kingdom Sweden Canada 1990 1990 1990 1990 1990 1988 1989 Males L S L S L S L S L S L S L S Age 0 65.8100.0 66.2100.0 66.5100.0 70.1 100.0 73.0100.0 74.2100.0 73.7 100.0 1 65.6 98.5 66.1 98.6 66.7 98.2 70.0 98.8 72.6 99.1 73.7 99.3 73.3 99.2 15 52.2 97.6 52.6 97.8 53.1 97.6 56.5 98.0 58.9 98.7 59.9 99.0 69.6 98.8 46 25.8 87.9 26.2 88.4 26.1 89.7 29.3 91.5 30.4 95.3 31.5 95.2 31.5 94.5 65 12.5 59.7 12.9 60.7 12.5 61.8 13.8 72.4 14.2 78.2 15.0 80.3 15.3 78.4 Females L S L S L S L S L S L S L S Age 0 74.9100.0 75.8100.0 75.6100.0 77.3100.0 78.7100.0 80.1100.0 80.6 100.0 1 74.8 98.9 75.5 99.0 75.6 98.6 77.0 99.0 78.2 99.3 79.5 99.5 80.1 99.4 15 61.2 98.3 62.0 98.5 61.9 98.2 63.4 98.5 64.4 99.0 65.7 99.3 66.3 99.1 45 32.6 95.2 33.2 96.6 33.1 95.6 34.6 96.0 36.3 97.2 36.6 97.3 37.3 97.1 65 15.8 81.7 16.5 82.8 16.2 82.8 17.0 86.6 18.1 86.3 18.8 88.9 19.8 87.9 Note: L L Ufe Expectancy at Age X. For example, a male age 0 has a life expectancy of 66.6 years in Ukraine; a male age 65 has a Ufe expectancy of 12.5 additional years. S: Percent of the Population Surviving to Age X. For example, 98.5 percent of males survive to age 1 in Ukraine; 59.7 percent survive to age 65. Source: 1991 World Health Statistics Annual, WHO Geneva 1992 Social Conditions wad Social Promeetion 25 in population is also linked to detrioration in MORTAInY AND HEALTH STATUS bealth stats of mothers and iat durig the economic crisis (see Health Annex Tables 5, 6 Mortality and Figure 3). The colla of outu and declining incomes in 1991 and 1992 undoubtedly 12. The leading causes of death in Ukraine led to deferral of marriages and births. are much the same as for the OECD countries. Ukrainian authorities fear that this demographic Over 75 percent of deaths are from diseases of reversal of normal conditions (births exceeding the circulatory system (44.9 percent M, 60.0 deaths) will have negative Implications in the percent F), malignant neoplasms (19.1 percent longer run. M, 13.5 percent F) and injury, adverse effects, homicide and other violence (14.4 percent M, IMPCATIONS oF DEMOGRAPHY Fo 3.8 percent F). Respiratory diseases are the HEALTH fourth leading cause of death. The crude mortality rate is 1,219 per 100,000 (1,246 for 10. The demographic picure of an aging males, 1196 for females). population with growth rates below natural replacement has important implications for the 13. The Standardized Death Rate (SDR) for health system. There is a critical need to Ukraine, 1142 per 100,000, is comparable to develop family planning policy that responds to Poland but 6 percent higher than Belarus, 20 the social and other factors contbutn to percent higher than Portugal, 30 perce higher demographic losses. A shorter term need is to than the European average, and 57 percn improve the care of mothers and infts. And, higher than Canada. The SDR for circulatory just as the industrialized countries, Ukraine must diseases is 45 percent greater than Portugal's redirect its health system to respond to present and two times the rate for Canada. The and new needs in the next decade arising from cerebrovascular SDR is particularly high, 29 an aging population and greater numbers of percent higher than Belarus's, 2.6 times the rate adults of working age. The redirection will in Poland and 3.7 times the rate in the United affect the training of health care workers, the Kingdom. Mortality from malignant neoplasms present structure of different levels of health was the third highest in the former Soviet Union facilities and their roles and locatons. Viewing including trachea, bronchus and lung cancers, health in its contemporary terms as a resource and has been increasing. Mortality rates from rather than object of daily living will be ischemic heart disease, injury and poisoning and fimdamental to resolving care problems as motor vehicle injury are relatively high and numbers of frail elderly persons grow and the increasing. burden of chronic conditions and diseases associated with age increases. 14. Infectious disease continues to cause avoidable deaths. Ihe SDR for Infectious 11. The relatively poor health status of diseases s5SpercenthigherthaninBelaru,33 people in Ukraine compared to other Europea percent higher than in Poland and three times as countries demonstraes the effects of age and high as in the United Kingdom. About 4500 chronic conditions. It also points to the need to people died from tuberculosis in 1990. Except deal with communicable disease, to assure safe for persons 75 and older, age-specific SDRs for food water and air quality, to provie for uberculosis in Ukraine are greater by two to ongoing acute care needs and to meet needs nine times than in Poland which is generally unique to the ecological conditions of the acknowledged as having one of the significant country. tuberculosis problems in Europe (see Health Annex Tables 7, 8, 9). The World Bans World Dewlopment Report 1993, wInvesting in 26 Ozapter I Health," gives special emphasis to tu losis Portlgal, the Unite Kingdom, Sweden or control as one of the highest priority and most Canada. The SDRs for the United Kingdom for cost-effective, public health interventions. congenital birth deformations, for example, are 173.9 for males and 139.8 for females, per HwLTH oF MoTHRS AND CUDI 100,000. Infant Mortality Maternal Mortalty 15. Infant mortality has been gradually 17. The maternal mortality ratio was 32 decreasing over the past decade and reached a deaths per 100,000 live births in 1990, the same low of 13.0 per thousand live births in 1990 but as Belarus and an Improvement from 44.5 ten then began a sharp upward swing reaching 15.0 years previous, in 1980. The rate is well above in the first quarter of 1992. This high rate is the WHOlEURO target of 10 and is triple the sdll well within the WHO/EURO Region target rate in Poland, four times the rate in the United of 20 per thousand live births and is 25 percent Kingdom and eight times the rate in Canada. less than Poland, but it is 25 percent higher than Approximately 45 percent of maternal mortality Belarus and Portugal and more than twice as is caused by obstetical conditions and abortions. high as Canada and Sweden. Some local Age- specific abortion mortality rates are studies, e.g., in Ivanofrakinusk, have shown comparable to Belarus but higher than Poland, rates well above 20. four ttmes as high as Portugal and the United Kingdom, and significantly higher than Sweden 16. Infectious and parasitic diseases, and Canada (see Heath Annex Figures 5,6,7). respiratory infections and birth defects are the main causes of infant mortality in Ukraine. The 18. Maternal and infant health remain poor SDR for infants (less than one year old) from despite the fact that all births occur in hospitals, infectious and parasitic diseases was 82.5 per and primary and secondary care services are 100,000 for males and 64.6 per 100,000 for widely available. Improvements are necessary females in 1990. This was better than Poland, in laboratory and tehnical equipment for worse than Belarus and worse by a factor of 8-9 diagnosis of prenatal and perinata conditions. ta Canada, where the 1989 rates were 8.9 for males and 6.3 for females per 100,000. The Abortion and Contaception SDRs for diseases of the respiratory system are twice the level of infectious diseases, 162.3 per 19. Abortion is the principal form of hundred thousand for males and 136.4 for contraception due to lack of information and females. Two-thirds of the rate is due to access to modern contraceptives. Estimates pneumonia. Canadian rates for respiratory indicate up to two thirds of the population is diseases were 15.5 for males and 12.5 for uninformed about modern contrceptives and females, per hundred thousand. Most infant their use. The incidence of contraception for deaths, however, were from congenital women of fertle age (1549) including abortion, malformations, birth trauma and conditions oral contraceptives and intrauterine devices originating in the perinal period. These birth (IUDs) is 17.9 percent and varies among oblasts defects account for two-thirds of all infiant from a high in Zhytomyr of 31.0 percent to a mortality on a standardized basis. One quarter low in Lviv of 4.9 percent. The incidence of of all mortality is from congenital birth aborfions as the sole means of contaeption for malformations (414.4 M and 355.5 F per Ukraine is 8.3 percent and ranges from 14.2 100,000). Mortality from birdi defects in percent in Zaporirhza to 3.7 percent in Lviv. Ukraine is generally comparable to Belarus, Ukraine does not produce its own contemporary beter than Poland but much worse than contraceptive products. Access to contraceptives Social Condons and Socia Prection 27 will deteriorate with increases in prices and TabO 1.5: Ministry of Health Etmnated curtailment of imports in the tasition to a Demand for Contraceptves for 1991 market driven economy. The abortion r was 155 per 100 live births in 1990, among the highest of former Soviet Union counties. lbe Value in rate has been increasing since 1987 when it was Million JUS 145. This is equivalent to 82.6 abortions per Denomination Number Rubles (Millon) thousand women in the fertle age and compae Condoms 468 million 702 14.04 to 55.7 live births per thousand women in the items same age. The total nmber of abortion has Hormonal 9.9 million 114 18.05 decreased from 1.66 million In 1986 to 1.02 Contraceptives packs million in 1990, but the number of live births lintra-uterne 2.4 million 39.8 40.32 and females of fertle age has also decreased. Contraceptives items Many women have multiple abortions. TOTAL 72.41 20. The impact of abortion on the health of Source: Minis" of Heatth women and on health system costs Is significant In UJkraine 30 percent of women who had an abortion suffer from subsequent inlammatory diseases of internal genital organs, 50 60percent advice on family planning methods. Only 30 from secondary sterility, 50 percent from percent of contraceptive needs are being met. complication of pregnancy, 22 percent from The Ministry of Health esfimated the cost of miscawiages and 13-15 percent from uteine meeting the contraceptive needs of the bleeding during deliveries. Becamse of these population at 846 million rubles in 1991, complications of abortion, the health system significantly less than the 34 billIon rubles must provide added numbers of gynecological estmated as the cost of hospital care for treating beds and resources for treatment that would be post-abortion complications. A decrease of 14 unnecary with fewer abortions. Hospital costs percent in total number of abortions between of treatment for complications of abortion have 1986 and 1990 is attributed to the greater been estimated at 3-4 billion rubles in 1991(see availability of contraceptives. This trend needs Box 1.1). to be supported by further increaing the availability of contraceptives and family planning Famly Planning services (see Table 1.5). Extenal tecwnical and financia assistance could play a critically 21. The combination of poor Infat and Importan role in providing such services until matenal health, the high rate of abortions, and the availability of foreign exchange eases with demographic pattens of net natual decrease in the expansion of export eanings. the population indicate a need to make family planning policy an important social priority. MORBmnM Progress towards a national program is slow, indicating insufficient govement suppor. A 22. More than for mortity, interpretation priority within the new policy must be to ense of data on morbidity is difficult in Ukraine, as in access to modern contraceptives as an alternative other former Soviet Union countries. An all- to abortions. Family planning services need to union Insitute in Moscow developed norms for be stengthened. They are availale in theory in supply and utilization of facilites and services. marriage counseling centers and from health Expectaions were clear tat the norms should be workers, but their focus is on diagnosis and meL Poitically safe utilization data often treatment of inftility rather than on providing followed, resulting in information that now 28 C/uqer I Box 1.1: Indicators of Hospital Resource Alocated to Abortion 1991 1. Supply of gynecolgical beds Oincluding abortion cases) 37,055 * rate per 10,000 total population 7.2 * estimated rate per 10,000 females 13.4 2. Excess average days occupancy of gynecological beds over average 6 days occupancy of total beds 3. Number of women undergoing abortion 957,000 4. Abortion cost of an abortions In Kiev 650 rubles 5. Percent and number subsequently treated for complications of inflammation disease as a resul of abortion 30 percent 6. Proportion and number that can expect to be cured with one half treatment 7. Proportion and number requiing treatment for resulting chronic half condition 143,550 8. Average number of courses of treatment for chronic condition 5-6 9. Average courses of treatment 21 days 10. Average 1991 cost per treatment 3,505 rubles 11. Number of women undergoing treatment for infertility (largely 52,161 associated with complications of abortion) Source: Khodorovsky, G., 1992 presens an ambiguous picture of the use of morbidity accun for 21 percent of all adult health services. Based on the wnmber of morbidity, the highest in the former Soviet outpatient consultations and admissions to Union, similar to Belarus. Respiratory hospital the es ed rates for morbidity morbidity in children accounb for 60 percent of reported in Ukraine are among the highest of childhood disease and 25 percent of adult former Soviet Union republics. Incident and diseases. Since the accident at Chernobyl the prevalent cases of respiratory disease account for Incidence of certain respiratory diseases, the largest proportion of reported morbidity, partcularly pneumonia and ahma, is reportedly 53.5 percent and 33.9 percent, respectively. ineasing. Children suffer at the highest rate of Incidence of diees of the nervous system and cogenit anomalies among the former Soviet sense organ Is next highest (B.1 percent) republics. There is particular attetion paid to followed by diseases of skin and subcutaneous the diagnosis, monitring and treatment of tissues (5.5 percent). For prevalence, increasing thyroid related pathologies, cancers, circulatory system diseases are next (16.3 related hemabological diseases and genetic percent) foUowed by diseases of the nervous defects in neborn of parents at risk. Repots system and sense organs (9.3 percent). indicate 60 percent of children have some degree of thyroid modular hyperplasda, particularly in 23. WHO reports that circiatoy disee hihly irradiated are of the county. Socda Condios and Social Potecdon 29 Infecdious Dlse and Immuaon advWs and other measures to convince the young not to start smoking. If successful, 24. Motlity from Iectious and puasic thousands of lives oud be saved and unhealthy diseases is about twice the European Communty dependence on a diease-causing product (EC) average. Dirheal disease are reported awided. on the nere partally due to decreasng quality of water supplies. According to WHO, 27. Food-consumption patt in IJukraine diarrheal diseaes caused by bacterial infections traditonally relied on satisfactory levels of are rarely diagnosed. A UNICEF/WHO mission cereals, potatoes and meat; diets were relatively in early 199 emated the real coverage fr high in dairy products and sugar. Price infas in 1991 by vaccination for DPT is 75-79 increaes and shortuges are disorng these percent rather than the much highe reported patterns. In 1991 reports indicate people ate 5-8 levels. Coverage was 89 percent for measle in percent less meat, milk and eggs tha In the children under 2, and 81 percent for previos year and the consumption of fruits and poliomyelitis for infants. BCG, measles, and vegetables dropped by 20-30 percent. Health DPr vaccines were found to be in short supply; promotion requires an effective nutrition, food, WHO standards on cold chain maintenance were and health policy. Changing to a heathier diet not always met. with less fat and cholesterol but more fiber, fruits and vegetables could solve the current high 25. An increase of 29 pet in reported levels of adult mortality caused by stroke, heart Hepatitis A is one indicator of poor saniation attack, and cancer. and hygiene conditions. There is a risk that Hepat B may be transmitted tlhough OCCUPATONAL INJURY ArD POUMON inadequately sterilized syringes that are reused. As of the end of 1991, 257 HIV positive cases 28. High rates of occupational injury are were reported and idenfied; 8 cases of AIDS documented most notably among miners in have been documented, which resulted in 6 Donetsk oblast. Occupationaldiseases are under- recorded deaths. Authorities believe there are reported, but pneumoconiosis, chronic dust some 500 HIV infed individuals in the bronchids, and other occupational diseases are Country. domented, mainly in coal mines. A large secondary lead smelter in Konstantinovka Selected Risk Factors accouns for the very high exposure of its 1600 workers, and many of the city's residents, to 26. Incidence of alcoholism was the second lead poisoning. Other heavy-metal and highest in former Soviet UJnion republics, 136.4 chemical- exposure-lated incidents and illness per hundred thousand in 1990. Incidence of have been reported in industriized areas. drug abuse wa also the second highest at 7.1 per hundred thousand. There is concern at the 29. High concerions of pollutas in Ministry of Health about levels of tobacco use ambient air, including dust, oxides of nitrogen, but apparenty no survey data. Interest is and carbon monoxide, are documented in emerging among the intenational tobacco concentrations considerably higher than industry frms in markelt tobacco products In guiddines of the former Soviet Union and of the the country and exploiting Ukrainian-produced Uried Stes would permit. Metallurgical leaf and produc. These developments could pit plants in a nmber of cities account for most of the health of the population against immediate their tot air pollutants. Resultat illness, such economic gain for a few. lhe government as exacerbation of chronic lung disease or should develop public health policy to limit ocacurence of lung cancer, cannot be readily tobacco use by means of educaion, limits on documented with public health statstics. The 30 cerI Miisy of Health reports, however, that to the labor force equal the number exiting into morbidity from oncological, skin, blood and rerment. le potential labor force includes urinary-system diseases is higher than average In all pesons aged 15 to 65 years; each year, about certain cities, suggesting that illness may be two percent nter as youts and two percent exit attributable to elevated levels of Industrial as elderly reirees. Thus in 1993, for example, pollutants. The rate of spontaneous abortions about alf a million new entrants will seek Jobs, (miscarriages) in two industrial cities with high many of them in the nascent private secor, air pollution bas been found to be twice the rate especially in service activities. Of the balf- of a clean contol city. e tate of congenital million retirees, many of them will leave anomalies was found to be three times the farming occtations and perhaps even more will control rate in the same study. be leaving declining defense-related industries. Thus a substantial part of the ransfomaon of 30. Apart from reported increases in thyroid the labor force can occur with no one losing a cancers, and an indication of increased mortality job or being unemployed. The movement into and morbidity of congenital effects over the past service-sector employment of one-third of the few years, data from the Ministry of Chernobyl labor force could occur in 17.5 years, I.e., by has not yet revealed clear-cut evidence of health the year 2010, with no one changing jobs, but effects from the Chernobyl disaster. More time just as the result of natural labor-force turnover. will be required before there is sufficient These considerations may help demonstrate that statistical data to relate leukaemia and various structual change need not be a socially- cancer incidents to the release of radioactive disruptive process. On the other hand, materials. A recent Lancet editorial of 3 government must take care not to block these October 1992 revie d 30 scientific studies of natural processes with inhibiting regulations. mortality and concluded that environmental For eample, the system of propiska, which pollution is untikely to rest in gross excess severely limits internal migration, may already mortality and therefore cannot be responsible for be blocking the transformation of the labor force variations in death rates between populations.'6 by keeping potenta movers out of major cities. LABOR FlORCE 32. In virtually all countries, most working- age males are in the labor force; Ukraine is 31. About half of the population of 52 distinctive because of the high participation rates million work, a fifth In agriculture, over half in of working-age females. The benefits from maufaturing and a quarter ii services (see wage incomes are probaly offset in some Figure S.4). This structure differs considerably measure by lost leisure time and less parental from other countries and may be expected to attetionto child raising, butthere are no studies change along lines suggested in chapter 2 below, that analyze this feature of work. Many with serious implications for problems of labor enterprises are begining to abandon their past productivity and unemployment. If consumer support of day care facilities for minor children. demand, in contrast to state orders and spending This change may have significant negative on the security forces, is permitted to manifest effects on women's option to work. Itself, about a third of all workers might shift out of agriciuture and manufacturing into THE SOCIAL SAPy NEr services, with many complications and costs of disruption if the process occurs quickly. 33. At the same time the Soviet economy was beginning to fray at the seams in the 1980s, 32. A mature population, one in which the was a growing awareness that social births are roughly eqW to deaths, also protection under socialism fell short on approximates a situation in which new eants objectives of fainess and equity. The Soviets Socil CondiWon and Socdal Protecdon 31 divided casb tsfer payments (oensya in IE T, DISAtA, AND SURVIORS Russian) into two kinds: labor penions, which BENEFrrS are either directly or loosely related to labor or labor service; and social pensions, which are 35. In 1990, there were 9.7 million old-age paid to disabled individuals with no labor pensioners In Ukraine, receiving an average service. The basic legislation regulating cash monthly pension of 109.69 rubles. The transfers includes the 1956 all-union law on minim pension was 70 rubles, and 3.6 million pensions for workers and employees, the 1965 elderly pensioners, 37 percent of all old-age all-union law on pensions for collective farmers, pensioners, received only the minimum benefit. and the 1990 pension law, wbich provided that For each full year of work beyond 25 years for cash transfer payments, at a base rate of 55 men and 20 years for women, the pension was percent of pre-retirement wages, are not taxable increased by one percent of earnings, thus and are paid regardless of other income. raising the maximum replacement rate from 55 percent to 75 percent of highest-ever earnings. 34. This legislation increased the cost of About a quarter of both disability and elderly benefits, and the numbers receiving them, pensioners contnued to work with no reduction considerably. By the beginning of 1993, about of benefits. There were 1.3 million disabled two-thirds of all persons in Ukraine were receiving benefits, ranging from 47 to 127 receiving one or more cash benefits: A quarter rubles per month in 1990 (for background on the of the population receive disability, retirement, USSR cash-benefit system see chaptar 5).7 or survivors" benefits; twenty percent receive students stipends and related free board and 36. The number of pensioners had grown to room; twenty-five percent receive family 13.5 million by the middle of 1992, including allowances for children under age sixteen and 362,000 people in the security sector (see special allorances from the Chernobyl Fund; Table 1.6). The average of pensions was 22 and a small percentage receive short-term percent above the minimum, but Pension Fund assistance from the sickness fund to pay for lost payments to military pensioners exceed the work time or from the Employment Fund in the minimum by 144 percent, and pensions issued case of unemployment. The state also finances by the Ministry of Defense averaged 5.2 times massive subsidies that wax and wane with the minimum. administratively-determined prices for food, trportation, and shelter, and reached 8 ALLowANcEs AND BENEPm percent of GDP in 1992. Education and health care are provided to all at no cost at the point of 37. This paragraph describes the allowances service; enterprises are required to provide day- that prevailed in the middle of 1992. Family care services for children under age six and paid assistance programs were substantially revised maternity leave for three years, but they are early in 1993 with the objective or focusing cash increasingy falling to meet this obligation. The benefits on fewer and needier groups. In 1992, social safety net was stretched to cover a Ukraine offered a large number of cash majority of the population as 1993 began, but it allowances and assistance programs, some aimed was, as a result, failing to provide adequate at low-income and vulnerable groups; others assistance for the minority of the poor and designed for family assistance to assist child- vulnerable most in need. rearing among the general population; and those targeted to Chernobyl victims. Allowances accounted for 20 percent of social sector spending in 1992 and about 8.8 percent of GDP. About 47 percent of total allowance funding was derived from general government revenues, 38 32 Chapter I percent from the Chernobyl payroll tax, 11 orphanages, 4 pcent. percent from the socW insurance fund and 4 percent from the pension fund. Benefits targeted * Coasumr Subsidies. Assistance to the to Chernobyl victms accounted for 39 percent general population and specific non- of social assistance spending; aid to vulnerable vulnerable gr-rnps includes stipends to groups, 37 percet8; allowanmces available to the all families with children under age 3, population as a whole, 23 percent. 41 percent of this category; sick leave and short-term disability pay, 27 * Chernobyl. About two-thirds of percent; benefts for the disabled, 11 Chernobyl allowance spending goes to percent; It recreation benefits, 8 wage bonuses to workers in areas of radiation contmination. Housing and Table 1.6: Penuionere and Their Benefits, January 1, relocation benefits account 1992 for about 9 percent of Chernobyl-related allowance Average spending; disability and death Pension as a compensation, 9 percent; Percent of the supplemental family ~~Ntumber In Percent of Minimum supapllIem ental family Pensioners Thousands Total Pension' allowances, 4 percent; food PeinFI provision, 4 percent; and Pension Fd 12,997 97 122 other allowances, 6 percent.9 Supported Retirees 10,318 77 125 Disabled 1,224 9 123 * FFood Allowances. Depenrdnt 693 5 96 Allowances to low-income teP2500 4 75 families for the purchase of Military 262 2 144 food products accounted for Miitarw Paidf 362 3 522f 48 percent of spending on Ministry of Defe 32e low-income and vulnerable Total 13.359 100 133 groups. This benefit was Notes: 1. Figures do not reflect July and October 1992 paid monthly for each child increases. 18 and pensionable 2. People who never worked including those under rand feroma304 disabled from childhood and hobos. adult and ranged from 3 Source: Ministry of Social Welfare percent of te minmu wage. Allowances to compensate for increases in children's clothing prices accounted for 24 percent of vulnerable peren, maternity benefits, 6 percent; groups' allowances, and were also and other benefts, 7 percent. The introduced to protect families from price Social Insurance Fund pays for 42.5 decontrol; non-cash benefits to the percent of non-targeted benefits; state infirm elderly accounted for 10 percent and local general revenues, 40 percent; of funding; stipends to low-income and the Pension Fund, 17.5 percent (for families with children from age 3 to age details see chapter 7). 6, 6 percent; 10 additional allowances to low-income families and sile There were over 60 allowances and benefits, rtothers, 8 percent; and maitenc of many of which did not differ substantively from Soda( Cdons and Sodal Protecton 33 one another.'2 Many allowanes wer funded, 38. OffcW esmates of thfe Former Soviet administered and diributed by several agencies; Union placed the share of Ukrainian population others were fanded by one Agency, administered living in poverty at about 8 percent in 1988, by a second and distributed by a third.' 'There which was above the Soviet averae. Assming are special benefits for sevicemenes families, the poverty level in 1990 was 100 rubles, then cars (or the cash equivalent) for some disabled poverty increased to 11.3 percent of the persons, telephone service for veterans, and free Ukrainian population. The true poverty line for access to vacation camps. Early in 1993, 1990 is an unknown, but there are data on the government oficials were in the midst of a distribution of income, 1988-90 (see ?). There serious effort to redefine and limit benefits to are no data on the characteristics of households those in greatest need. The results of their living in poverty, but they would include aged efforts remain to be determined in the future. rural people living alone, orphans, the seriously disabled, families with three or more children, PovERTY GROUPS single parents and pensioners receiving less than 1.5 times the minimum pension. ltese groups I NO .. .;..~~OW ~~~~ir =nr*1JkAn ____$Wgt nertdpora fpblcSCasedn I.swa sae=( i) a.__ ...=len .dn4e~et s~a o? Tr1 Wsa15wl o comdt olreaaaeo D s4 *etRdcint ehp 34 Otapter I constitute frm 10 to 20 percedt of the crisishas led many enterprises to cut back on population. The numbers living In poverty have day-care services essentia to women. Finally, undoubtedly risen In the past two years of mateny leave and other benefits have the effect economic crisis. An unpublished study based on of raising the relative cost of hiring women thus a special survey in the Russian Fedeaion found potenially aggrvatng their employment that 36.7 percent of popuation are below a problems during periods of labor shedding. poverty line. Chardaes of hoeholds that appear to be associated with poverty are the MA ISSIn3S FOR SOCIAL PROGRAM presence of children under age six in the household and presence of an unemployed or 40. This review of social conditions and handicapped person (Popkin, Mazhina and social protection raises a number of issues that Baturin 1993, Table 1). As Russia and Ukraine will be addressed in succeeding chapters. The have both suffered from the decline of trade most general issue Is that resources available to within the former union, the Incidence of government during this period of crisis seem poverty and related problems may be similar. totally inadequate to meet the vast responsibilities bestowed on the state by its predecessor. The productive economy has Table 1.7: Income Distribudon, 1988-1990 shrunk due to the shock of dislocation for the integd system of the Former Soviet Union, and available resources of social Income Class Percent of the Population protection shrnk as well. In the (Rubles Per Capita Per competition for program survival, Month) 1988 1989 1990 government is trying to spend more than it Under 75 8.1 6.0 2.7 has available thus generatng the basis for 75-100 16.8 14.2 8.6 inflation. Unless managers set priorities for 100-150 38.5 37.2 31.2 the distribution of benefits, there will surely 150-200 22.4 24.5 28.0 be considerable waste, inefficiency, and over 200 14.2 18.1 29.5 payment to many who may not be absolutely Source: Braithwaite (1992). dependent on assistance for their well-being (see Box 1.2). Setting priorities, which is the subject of much of the rest of this report, can help to assure more effective use 39. Women may constite a vulnerable of limited esources. group that is susceptible, under various circumstances, to faill into povety. Even at 41. There is a risk that open unemployment current low rates of unemployment, the number wiJl rise, and it is probable that there is already of women unemployed is nearly double that of considerable hidden unemployment in many state men. Single women heading households are enterprises as shown in chapter 2, which likely to be poor (see bwacound papers by folHows. What actions should government take Pirozkhov and Lakiza-Sachuk; Libanova; and to address the problem of unemployment? The Khodorovsky, all prepared in 1992). next three chapters of this report offer a number Unavailability of family planning and frequent of suggestions. complicatons of abortions frequendy endanger the reproductive health of women of 42. The government has more obligations to childbearing age. Although earlier retirement is its citizens than it can serve: How then can an advantage women enjoy ove men, women's governmen trim back those obligations yet still longevity often leaves them as unsupported atcend to the most basic social-assistance needs widows with inadequate pensions. Tbe onset of of pensioners, families, students, and the poor? Socil Cndl*los and Soca Protcio 3S Chrs 4 through 7 address the many aspect process. The collas in ecoomic output of the match between needs and program imposes aiy impossible conditions on a asstanc to try to find the last pa way to goverment Intent on protecting its popuation; bring resources and obigaton back into nonetheess, sound priorities, especWily a balance. minadon to attend to the needs of those most vulne e during the next year or two, 43. Socia rvices, particuarly educatio couled with timly exera financial and and bealth, are essent componens of socal techical assistae, sbould be adeqate. Ite well-being. Sustainale devopment wUl following chapters revw in more detail how a depend on providing adequate sodal sevices as bias for hope can buid a fraework for they promote productvity. Currently-available condnued dynamic economic growth whils programs are acknowledged by thei managers limiting the social costs of adjustment. There to be inefficient. Chapters 8 and 9 mmrize are ways to reduce public outays among those current issues in each area and summa areas curret beneficiaries who can get along without in which efficieny improvements, MoSt of subsidy, at least un the tasiton to a narket which are contemplated for itroductonw by economy is well along and the economy has manaers of public education and health been stabilized. At thosme time, there is space sevcs, could reduce spening yet maintin the witi the saft net to acmmodate those who quWity of services. Regrettably, rsurc did migt, troug no fault of their own, fall into not permit this study to include related soci unemployment and need social protection and sector ministries that support progrms of assistme in the shift to new lines of work. culte, youth and sport, and smaller component of the aggregate public efort to SOURCES AMN UsES OF FUNDS FKa TMe provide for the broad range of social needs. In SOCAL SnCroi, 199 reviewing a draft of this documnat, the authorities asked for followu studies that could 45. Ioday, the state is trg to protect include this broa range of progm. Certaily peion beneft of 13.5 million recipients, these areas of responsibility thata adjacent to family allowances for a broad spectrum of education and health are at considerable risk of recipients, stipends and in-kind assistance for budget reductions and some analysis of highest 11.4 milion studets, and real salaries amo priority services needs to be made In conjunction th neatly 6 million employees paid from state with an overview of sector needs. and oblast budgets, over half of whom deliver education and health services as part of the socW safety net. If to these are added a A BAS FOR HoPE potentil ree million unemployed, then 34 milion persons, or 65 percent of the population, 44. Recent surveys in Russis, Bulgaria and will be benficiaries or workers in the system of Czechodovakia indicate that a mood of socia protection. It seems unlikely that the pessm is more deeply embedded In the rt productive economy can readiy support such a of these countries than In the seod two (Rose large burden; thus this report seeks to identify a 19). Ukrine may se Russa mood of basic safety net that might stretch to uncertainty about the economic and social accommoda tat smaller share of the futumre. A major objecive of social protection populadon that is most in need (see Box 1.2 on must be to protect vulnerable groups and bring key Issues for the social sectors). the country out of a process of transition into a better conditon than prevailed befre the commitment to independence and retwturing. No one should suffer unnecessarily in tis Soure of Funds 36 Chwperl 46. Funding of the social sector reached govent. Other programs depend on general abov R1.2 trllion In 1992. According to revenues; these include most spending for budgets made In May and June 1992, general education and health. Some programs, areu from state and local governm especially preschool and some health sevices, woud account for from 53-57 percent of ttal have been financed on a voluntary basi by sources of funds; eamaked payroll taxes 40-43 enterprises out of their profits. Becauwe this percent; and eonteprises and individuals for 3 complex system of finance has no central focus, percent (se Figure 1.1.). there may be considerable inefficiency that emerges from the lack of centrl control. 47. General revnes are derived primarily Allocations for the social fends may have been fom a value-added tax (VAT) and an enterprise correct in the past, but they may now need to be income tax. The VAT could account for about increased (as with employment services) or 45 percent of general government revenues in decreased (as with resources for the sickness 1992; the enterprise income tax, 29 percent; the fund) depending upon changing national peonal income tax, 10 percent; and excise and priorities. trade txes and non-tax revenues, 16 percent. 51. Succeeding chapters discuss curent and 48. Payroll taxes, at 53 percent of rs emerging Issues that could lead the government wages, even though reduced from the 84 percent to set new priorities for its social programs. For hat prmiled in the first quarter of 1992, example, the hardening of budget constraints for remai among the highest in the world. The state enspris may lead to labor redundancy pension and social insurance taxes, 37 percent of and unemployment, which will require an active wages, feed into the Social Insurance Funds. A response of job matching and training, as well as 1 percent tax is levied on employee earnings and resources to pay unemployment benefits (see accrues to the Pension Fund. The Chernobyl tax chaptees 2, 3, and 4). The resources to support s 12 percent of the wage bill, down from 19 such new programs may have to come from percent in spring, 1992. ITe Employment Fund scaling back somewhere else. Pensions and tax is 3 percent of wages. Moreover, the family allowances (chapters 5, 6, and 7) offer entepris profts tax parilly includes salary some oppornities for selected spending eses as income. reductions that do not reduce effective socil proteion. The pricipal public socal services Use of Funds offered in the areas of education, training, and health require contnued support, but they may 49. In July 1992, social spending was also offer some opportunities to achieve forecast pto reach 44 percent of GDP; by efficiencies while expanding some key areas February 1993, most analysts thought such (h cals availability, retaining for spening had indeed exceeded 40 pernt of redundat workers, and education for nation- GDP in 1992. building) demed essential by government and society (chapter 8 and 9). Seto Budgeting ses 52. One means to assure that programs 50. The preceding description shows thatte improve social conditions and provide social meas to finance and provide social protect Is ection is to introduce a systematic budgeting exmey complex. Ceitainlegislationearmaks arrangement for all social spending. Budgetng funds for specific purposes, such as the wage by objective is one approach to consider. Such taxes paid into several finds that in turn pay for a technique requires that all users of public pensions, allowances, sickness, and employment social fends present their program goals and senrices, according to specified rates set by intended approaches for central budget review, Soca Condiins and Socl Protecon _ 37 usually by the Miistry of Finane. Allocations then depend on the importance of the goals and the cost-effeciveness of the approaches offered. A periodic publication by the Brookings Insftidon in Wadhingon PDC, Seaing nadonad pridoies, a review of the USA federa budget, offers an interesing example of how a budget can be reviewed against national objectives. Given the importance of social protecdon in Ukraine, and the substantial public resources Allownces Other 032%1 4 17g; ;t%E mployment Payroll 43% 2% General Health Revenue 53% 17 Pnson Consumer Subsidies 11% Sources Uses Sourosa Mission estimates based on Information from government sources In July 1992. Figure 1.1: Percentage Distbution, Sources and Uses of Funds In the SocIal Sectors allocated tO achieving impovements in social well-beig, the goverment might wisb to consider this approah as a means to bring social spending under conrol yet assure t socia protecdon is mainined. It could help assure that limited resources contribute as well as they can to meetng diverse, importa objecdves of socia protection. 38 Cwpter I 2 THE CHANGING LABOR MARK THm LABOR MAN= IN A COMMAND arrged prior to graduation and there has been ECONOMY no visible unemployment in these economies. 1. Several features distngupshthe command 3. Certa additional disions of the labor economy with centra planning from a market market of the USSR derive from the Marxian economy; a number of those features iffect the labor theory of value, from differential treatment labor market. First, the command economy of productive and nonproductive labor, and from operates the entire economic system as if it were systematic undevaluation of services dircted at a single firm. Coase (1988) has shown that the the management of capital assets. The labor size of firms in a market economy is determied theory of value, in contrast to classical and by the relatve costliness of acWiring each n oclassical economics, aempted to identify the particular commodity or service needed by the - Sue of all production as a direct or indirect firm through internal, non-price acquisition, or result of labor Inputs. No productive value was through purchase in the market. In a command associated with capital except insofar as it is economy, however, thee is no market discipline 'congealed labor.' As a result, the price of and the various branches of the single firm walting goes unpaid and the productivity of acquire inputs from each other at centrally- capital as waitng goes unrerded. Prices of detmined rates in physical, not necessarily in the factors of production do not reflect their true price, terms. Similarly, the firm acquires labor scarcity and produtidvity values, and there is as in an evironment without market discipline so a result chronic underinvestment in capital that the price paid is set overall by the single goods, such as housing, that were inconsisten fim that is the state. with the aims of centra planners. The Marxian theory of value came over time to undervalue 2. Because the goals of each enterprise are so-called nonproductive work; the measurement set in physical terms as outputs (of tons of steel of net materW product, for example, excludes or coal, for example), and becuse over time many services, notably those provided by state soft budget constrains came to c baterize the employees i the provision of education and operatg environment of enterpises, there was health services. no signaling mechanism that gave entapries incenives to use labor efficienty. Labor 4. The Marian system recognizes tbree hoarding is a term used to descnrbe the classesastheyrelatetothemeansofproduction: enprises' tendency to overuse labor."1 peasants, workers, and the intelligentsia. Ihese Because wages are set overall in the command groups are broadly consistent with the economy, individual enterprises offer extensive neoclassical division, usually attrbuted in this nonwage compeon(free housing, chld care, ceury to the empViical work of Colin Clark paid vacations, education and health services) to and Simon Kuznets, of primary, secondar, and attract and retain workers. Coexistence of labor terdary workers. The Marxian system, hoarding and labor scarcity is thus a conic however, has bad an ideological bias favoring condition in the command economies of Eastern workers, a tolerance for pesamnts, and a certain Europe and the Former Soviet Union ornal tradition of skepticism about the contribution of 1980). School leavers normally had jobs eintelligentsia. This bias was reflected in the 40 Chapter 2 relatively higb (as percentage of the average) structure Is similar to other Easter Europea wages of certain segments of the working class counrSies. A comparison of the dynamics of (miners, transport and construction workers). Ukrainian employment with Western European Nonetheless, the evolution of demand in any employment shows that the Ukrainian economy that experiences a rise in per capita employment structur changed much less than in output is toward a decreasing application of Western Europe in the 1970s, and almost did not resources in primary activities; growing change in the 1980s, when the Western efficiency in secondary activities that permits an European employment structure shifted eventual reduction of resources applied there, remarkably toward services. and the growth of tertiary or support services. 7. The division of labor between 5. This evolution created a tension in the agriculture, manuing, and services broke Soviet economy because the system emphasized down to some extent in response to demand for secondary (mining and manufacturing) work yet service work asociated with the growing many nonpecuniary rewards derived for many complexity of the Soviet economy. Many labor force participants from becoming part of workers in Ukrainian agriculture and the intelligentsia and the service sector. In Ukraine, for example, the Table 2.1: Employment by Sector In Intemational education and health sectors have Perspective absorbed a far larger share of the Ukraine United United France Japan labor force than is typical of OECD States Kingdom counries, let alone the middle-income Agiculture 19.8 2.9 2.3 6.8 7.9 coutries around the wotld that apply (Primary) even fewer of their labor-force Manufacturing 53.8 26.9 29.6 30.3 34.1 participants to these activities. The (Secondary) lack of alternative lines of work, Services (Tertiary) 26.4 70.2 68.1 62.9 58.0 particularly in the management of the Source: For Ukraine, CEM data. For other countries, economy's capital assets, has led to OECD, Labor Force Statistics. 1990. an overuse of service-secor workers in the provision of social services. manufaring do service work, such as LABOR MALrKSTRUCTURE equipment repair, cleaning, and materials supply. Differences of labor-force structure 6. Ukraine is characterized by a between Ukaine and developed OECD countries comparatively high level of economic activity are real, notjust a statistical artifact, for several within its population, a typial feature of Eastern interrelated reasons. First, the structure reflects Europe. More than 50 percent of the population the priorities of the Soviet system. Investment is employed somewhere, whereas in Western decisions in the USSR were biased towards Europe the number is about 40 percent. As far investment goods. Ihere was a self-reinforcing as the structure of employment is concerned, by process in that the production of investment Westem Europea standards, and by standrds goods was raised so as to have more fixed of other middle income counies, Ukraine has a capital, which had to produce investment goods high share of employment in agriculture (19.8 that contrbuted in tUrn to the growth of fixed percet) and m a (53.8 percent), and capital. This spiral advanced, resulting in more a very low share in services (26.4 percent), in investment and more fixed capital. particular in the baing and insurance sector (0.5 percent). Comparaive evidence is shown 8. Second, the manufacture of tangible in ?. However, the Ukrainian employment materia goods was viewed as the productive lhe awangng Labor Market 41 sphere, and the provision of most services as a nonproductive sphere of economic acedvity. The nonproductive sphere was neglected because of lack of private producers where the sovereignty Table 2.2: An Intemational Comparlson of consumers prevails in Westem countries of Car and Telephone Donsity through market reflection of cosmer demand. Number of Cars Moreover, a lack of democratic procedures per 1,QOf Mainlinesper made impossible the existence of political pties inhabitants, 100 inhabitants that otherwise would have been willing to vote 1987 1986 the sums to developing public services. West Germany 462 Switzerland 418 9. Third, defense policies favored big, new Italy 392 installations and the arms industry; it was easier Norway 387 to build a new factory than to mantain properly Spain 251 25.2 the existing one. The phenomenon was not Greece 33.0 confined to material production, and 24.7 diseconomies of scale are also visible in the Irus 21.2 service sector. The authorities atempted also to Sui 1.1 create better wage and labor conditions in the Culoa kia 127 15.1 defense industry. T-1.a decades ago wages of Czechoslovalia 174 12.5 scientific personnel in the defense industry in the East Germany 209 9.8 USSR were higher than those of their civiian Poland 111 7.0 counterparts by up to 50 percent, but over time Soviet Union 44 9.0 this advantage has been decreasing (see Source: Komal (1990, pp. 304-305) Oxenstierna 1990, pp. 146-147). 10. Fourth, productivity in agriculture was sacrifice present consumption to investments tat very low and hence an unusually large share of suWport military policy. Table 2.2 presents the labor force had to be retained in the primary differences in density of cars and telephones sector of production to supply basic consumer between the Soviet Union and other counies; demand for foodstuffs. Related agricultural these differences demonstrate how completely processing industies a lso low in productivity the demand for private consumption has been compared to European or even middle-income suppressed. Once effecdve consumer demand countries, so these areas of manuture require becomes the main detminant of what Is more workers than woud be the case If normal produced, employment will shift to a pattern levels of productivity were to be obtainable in more like that of other market economies. these activities. ON AND HIDDEN UNBIffYMEml 11. Despitehigh demand, queuing, shortages and waiting lists, levels of consumption by 12. The rate of unemployment in Ukrie individuals in Ukraine (as in the whole Soviet was negligible, around 0.15 percent, in July Union) lag behind consumption by those living 1992 and continues to be low, though rising under capitalism. The lag is greaer in slowly, early in 1993. 'he number unemployed consumption goods than in production goods, a has more than tripled since the first quarter of result of the strategy of acmulation for 1991. Of this munber almost 70 percent are production and weaponry, in which Investment whie-collar workers, and more than 70 percent in military hardware was given prioity over are women. The unempltrment rat in July consumption. The population was compelled to 1992 varied from 0.01 percent in Vminyta 42 Owpter 2 oblast to 0.56 percent in Ivano-Frankivsk oblast. There has been a sharp increase in the incidence About one-third of the unemployed lost their of extended administrative leave without pay, jobs due to liquidation or reorganization of state transfor to jobs with shorter working hours, enterprises. Tbere are reports of a widespread disontiua of shift work, and related practice of cutting working houts in the changes that reduce hours worked while enterprises and keeping idle labor. Credits from disguising the reality of unemployment. Tbis the state budget enable the enterprises to go on process has become prevalent in all branches of paying wages without producing, thus avoiding the economy, as the following evidence based layoffs. The resultant public deficit and inflation pardy on surveys, and pardy anecdotal, will lead to the conclusion that this arragement must indicate. eventually collapse. Unemployment may accelerate in an unmanageable way, and the 15. Based On a sample survey conducted by steps undertaken to prepare for it may prove local employment centers in 333 enterprises in insufficient. Ukraine, the incidence of leave without pay has affected 26.3 percent of the average monthly 13. Historically, since the late 1950s, labor employment; 29.5 percent of leave takers were hoarding has prevented any major manifestation on leaves up to two weeks, 27.7 percent of open unemployment in Ukraine. As in other between 2 and 4 weeks, and 42.8 percent over countries in Eastern Europe, labor hoarding was a month (see Figure S.4 in the Executive accompanied by labor shortages. Labor summary and the statistical annex). Some were shortages prevented firms from firing on indefinte leaves. Casual observation and unnecessary workers, yet numerous workers on occasional surveys provide various examples of the payroll were underemployed. In the period temporary layoffs associated with lack of raw 1970-1989, when employment growth slightly materials. Gorlovska knitted textile factory, exceeded labor force growth, the number of with 2,420 staff, worked but one day in 1992 vacancies was consisteny much higher than the until March 1, 1992; Kiev 'Ukrkabelr plant had small number of registered unemployed. This 1,350 people working a 32-hour week. For the pattem was typical of East Europe, indicating same reasons, in February, 1992 Zaporozbska an excessive demand for labor, which even textile/garment factory went through a 17-day accelerated in the late 1980s due to relaxation in stoppage, with 645 workers affected, and the monetary and iscal policy. A majority of Mukachevska textile/garment factory with its vacancies have been for blue-collar male 723 employees stopped for almost a month. workers. In July 1992 the number of vacancies Both the Uzhgorodskoe Footwear company, with was still higher than the number of unemployed 2,000 workers, and 'Eektrodvigatel" with its (see Annex A: Employment and Labor Force, 1,004 employees had stoppages of 2 weeks. Tables 40 and 41). Rbarkov Malsbieva' factory worked a shorter hour week, with its 3,000 employees; Rovno 14. As a result of the disruption of the radio plant with its 7,165 workers, and economy, price liberalization, imbalance textile/garment factory, with its 1,400 workers. between orders and available raw and technical Following the disrupion of economic ties, pardy materials, the breakdown in trade with Eastern with Russia, 'Tos factory in Yvano- Europe and the Baltics, and a decline in state Frakovskoi oblasti expects a R7-8 million orders for various types of production, Ukraine decline in its outut, and a 130 people lay off. is experiencing a collapse in output Most 463 workers in the Troskianeykom factory managers believe the drop in the volume of Elektrobitpribor" and 270 workers at production will be temporary. Anticipaig a Bdelopolski tool-machine factoy (Sumskala renewal of economic ties and increase of Oblast) were given a leave of 2 months. demand, managers contie to hoard labor. Ternopol baking plant closed for almost 2 lhe Oaangng Labor Market 43 months. In the Donetak oblas, due to shortage epcted in the fit. Te Odessa Region (in of power and raw materis, lost working thu parlar its south-west part) suffes from increased by 2.3 tmes in la y 1992 In digu agricultural unemploymen The comparison to Januy 1991. uadon is better in the Western Region, where the mnmber of now openings In the privat sector 16. A survey of 13 stat p 1 teb highest, and where excess labor travels employng 65,000 workers in iev fud tha ifmaly to neighbori counties. they cut employment by 13 percen In 1992, much more among producers of ciin goods 19. An additonal strain on the Uk ainin (25 pecent) than mIlitlry (10 percent, with tWO labor naket may come from ternational large frms hag no layoffs). Interviews with migrants. Ukrie has experienced net in- 350 of the laid-off workers showedta most got migration since 1985, mainly from Crimean new jobs, the exceptions being workers over 50 ats Wbo are rehtuMing to Crimea, and years of age. Over half the redundant wores refgees from Armenia, Azereaijan and under age 35 got jobs in the privae sector Moldova. lhis immigionw may adverely (Simon and Ustenko 1993, rePoted inEFinan affet local labor markes, as the migrants -me, 14 Februay 1993). These fdings duster i some regions with few job suggest that the labor market can absorb oppotunis. The isbegining to younger, male (women fared less well than men develop inenaional e on migradon In the search for new jobs), big-city wodrers in with neigboring countries. the burgeoning private sector of major cities. But for older workers in single-Industry tows WAGE AMD JNVOMS far from cities, the prpects will rema bleaL 20. Jn the Ukrainin Soviet Socialist 17. As there has been no unemloyment in Republic, wages and employment were strictly the past, there are no statisdcal systems tha contlled. Wage setting was based on a tariff study it. In the future Ukraine wi need to system. In addkion to tariff wages set cenaly, develop a systemadc approach to gatheing most employees were earing bonuses, which unemployment data so that effectiv policies can were detemined and allocated at the enterprise address employment problems as, when, and level. Tariff wages were based on skil scales where they arise. For tIe pwent, policy data reectng differeals relative to the least are far from adequate to design effecdve skilled. ITere were basic rates for the least responses as problems emerge. skilled, and additional coefficients for arduous !ADO MODLF M MATImO 21. Thrughout 1991 the old systm of wage 18. Labor mobilit is constrained by the seting was stll in place, although beginning in system of residence pemit, Upropk, - the lack Mardb, eneprises could set their own tariffs, of affordable housing, and the rigid and subject to minisW approval. All wageswere ovepeciized education system. The dtgtns adjusted for throuh changes of the minimum of the Ukrinin labor market varies acros wag when the monthly price rise exceeded 5 regions. Opportuities for work are weakest In perent Wages lower than twice the minimum the Eatern Region, in particuar In the cies of wage have been fully hinexed, wages of two to Donetsk, Krloy Rog, Dnrpetovsk and threetimes the minim have bee increasd by Kharkiv where a huge concentration of mining, 50 percen, and those higher were not indexed at mnalurgyandmachinebuildinginiusesexi, all. Up to the end of 1991 indexoin was the bulk of them being a part of the defs m yfor both Govenent and entrpries. comlex, and where mas layoffs can be 44 iaper 2 22. Earnings by sector used to be urelated union representation does not seem appropriate; to the worke' educational ainmet by swe , agrents at the entrprise level could suit the perhaps indicating that monetary returns to ountry better. Such a system would contain education are low. For instance, the th wage pressure and involve trade unions in ant- lowest paid sectors were education, culture, arA unemplnyment actions consistent with the market health sectors in which the number of university economy, allowing for a more serious graduates is the highest. The two highest-paid Invlvement of trade unions in supplementary sectors were construction and indty where the unemployment compensation, industrial relations majority of the workforce had no secondary inprovement, and labor productivity Issues. education. Thi anomalous situation is changing with banking and insurance enings ovaking UNzMpOYMorr FOEcAST all others. Wage differentials between managers, speciists, and workers vary by 24. Projections of high unemployment at the sector, but are low as well. In the goverment end of 1992, which were made In March and sector, according to salary schedules, specialists April of that year, were not confirmed. This earn 25-30 percent more than workers; experience suggests the need for a different managers, 80-100 percent more. The rules for esdmtming procedure. A simple unemployment indexatdon of government workers' salaries have forecast for Ukraine can be done on the basis of compressed salary schedules; uniess the rles the assumption that Ukraine is going to follow change, the compression is going to deepen with the Eastem European path of adjustment. inflation. Early in 1993, the Government's Plan Table 2.3 shows proportions between the GDP of Action provided for significant changes in drop and unemploymeat rise in Eastern wage policy. With fltion near 30 percent per European countries and compares those data to month, wage adjustments were seen to be Ukraines situation. essential. At the same time, It was clear that across-the-board increases eacerbate inflation. 25. Across Eastern European counries, the Some enterprises were raising real wages. elasticity of unemployment to GDP in the third Glovermnt policy sought to cap enterp year of recession varied between -0.33 and wage bills to keep real wages from rising -0.58, and, excluding Germany, between -0.46 beyond productivity increases and hence begin to and -0.58. In Ukraine unemployment has not suppress inflaion. The effectiveness of these responded to the drop in output, raising two policies remains uncin. important questions: (1) Why does labor boarding persist in Ukraine?, and (2) How long COLCrIVE BARGAN AMD UNISNs will it persist? For the first question note hat in Ukie the first year of output decline was 23. In the long rn, in an open Europa 1991. Easter European experience of 1989 and economy, the collecdve bargaining scheme may 1990 shows that labor shedding does not start enhance or impede productivity owth and together with any recession but only when development. The current Ukrainian system recession is caused by a denand shoc For impedes wage setting in the enprises by instace, Poland had zero unemployment until making wages subject to collective agreements at December 1989, although industrial output in the industry level. ltere are 33 such 1989 was already falling and GDP stagnated. agreements in the country, some of them very But the drop in 1989 was, similarly to Ukraine detiled, specifyig various obligations of in 1991, influenced primarily by the supply employers not mentioned elsewhere. Since shock resulting from a break-up of economic ties Ukraine is a large country, the Swedish-type with the other Comecon countries. In January setting of collective baganing, based on 1990, when a huge demand shock occurred, centralized relations between govemment and labor shedding began. Therefore, it is lhe 7aagng Labor Market 45 reasonable to expec acceleration In Older, displad workers In single-Industry town unemployment In Ukaine as awon as the demand pose a much more serious adjustmen problem. shock comes Into Ithe picture." Succeeding chapters covnsider what policies can most effectively addresis the chalenge of 26. For the second question the relevant unemployment and economic revival to find new observation is that expected GDP for 1992 jobs for all workers. stabilized in some countries (Hungary, Poland) or slightly dropped in others (Bulgaria, Czechoslovakia), indicating that reform-induced recession lasts 3-4 years. In astern Europe recession started in 1988 or 1989; one may expect Ukraine to reach the Easte Euopens' siuaion in 1994 or 1995. A GDP drop of one- quarter, coupled with an employment elasticity of -0.5, would yield an unemployment rate of Table 2.3: GDP Drop and Unemployment Rates In Selected Eastem European Counties and Ukraine. 1988-92 GDP Drop Proportion compared with Unemployment Unemployment 1988 (Percent) Rate (Percent Rate: GOP Drop Bulgaria 32 13 0.46 Czechoslovakia 15 7 0.47 E. Germany 42 14 0.33 Hungary 13 7 0.54 Poland 19 11 0.58 Ukraine 9 0 0 Source: For Eastern Europe, National Official Statistics. For kIcrane, IMF Economic Review, April 1992. 12.5 percent in 1994-95, about 3 million people. The Eastern Europen experience shows hat the higher open or repressed inflation at the outset of a stabilization program, the larger will be the following GDP drop (compare Poland and Bulgaria on one hand and Czechoslovaia and Hungary on the other hand). In Ukraine inflation in 1993 is already runnig above 20 percent monthly, which may indicate that GDP could decline even more than onequater from its late-1980s peak before risiDg again. Therefore, the working assumption of 3 milion unemployed for 1995 may be justffed. For younger, big-city workers, the transition to new, private-seactor jobs may be realtively painless. 3 PoLIcY RESPONSES To EMPLOYMENT PROBLEMS INCOMES Poucv Indexation is supposed to be enacted only in those months when the minimum wage remains 1. In Jamnary 1992, government liberalized unchanged. These policies were overtaken by wages and wagesetting in stateowned the reality of virtual hyperinflation. Special enterprises but imposed a new salary scale for compensation for children and pensioners was budget employees, those employed and fnded tried for several months then abandoned as from government revenues. Periodic minimum inflationary and too costly early in 1993. wage adjustment, with less-than-equivalent percentage changes for all wages above the 3. Incomes policies are in flux: Parliament minimum, was the main tool to adjust wages to introduced requirements that teacher and health hiflion. The level and distribution of income workers' average wages must equal the average changed in 1992; the minimum wage fell behind wage in industry; average wages in the Culture price increases in the early months of the year, sector must equal the average wage in the but wage increases in most state enterprises, and economy. A tax-based incomes policy was even for budget employees, overtook price intoduced on July 1, 1992, that allowed for tax- increases. In May 1992, the average wage in free wage increases in proportion to output the economy was R3,052.4, 88.4 percent more growth at the enterprise level. Increases above tham in Jamuary, when it had been R1655.9. this threshold resulted in an increase in the rate- Prices of the mhinmum basket of goods, the only of-profit tax by 2-5 times depending on the level proxy for a true consumer price index, rose by of excessive wage-bill growth. Provisions for an 59 percent. The minimum wage was increased excess-wage tax were strengthened early in by a factor of 2.25, from R400 on January 1, to 1993. These measures may be inconsistent with R900 on May 1,1992. the objective of balancing the supply and demand for labor in the various sectors of the 2. In principle, according to the economy. government's law of October 1991, indexation of wages and social benefits should be a second AcnvE LABOR MAREr POUCS instrument of adjutng incomes. The law provided for a sliding scale of index 4. Active labor market policies can increase compensation that varied according to the the productivity of workers, enhance their relationship of income to the minimum wage. employability, and improve the operation of Automatic indexzeon would be 100 percent for labor markets. These policies facilitate labor that part of wages up to twice the minimum mobility in a market economy as workers wage, and 50 percent for the amount between respond to changing economic opportunities. two and three times the minimum wage. There Examples of active labor market policies that would be no automatic indexation for that part increase productivity include retaining and of wages above three times the mininmm wage. small enterprise development; policies that Such adjustments would be obligatory for wages improve the operation of labor markets include in the government sector and for social benefits, the delivery of employment services, the but would be indicative for the enterprise sector, development and dissemination of labor market where wage determination has been freed. information, and mobility assistance. Active 48 Ciwer 3 labor market policies work In combination with workers, however, may not possess the skills passive labor market policies that protect the needed for employment in growing sectors of the incomes of workers displaced from their jobs by economy. A policy of equipping displaced economic adjustment, while encouraging their workers with new skills can increase their movemeat to new employment. Unemployment employability and facilitate their movement into benefits and separation payments play this new jobs. The pace at which this job shift passive role. occurs determines the cost of the transition in lost income for workers and their families and 5. Industrial countries differ in how they foregone production and potential social combine active and passive labor market disruption. policies. Sweden, which has had one of the lowest unemployment rates in Western Europe, 7. Resources for retraining displaced relies on active labor market policies; the United workers are located in the Ministry of Labor in States favors passive incomes support, and most the Employment Service (ES). The ES controls other countries blend these approaches (See expenditures of the Employment Fund which can Figure S.6, page 7, which shows the share of be used to procure skills training for displaced GDP spent on active and passive labor market workers. lbis Fund was created by the policies in Ukraine and selected OECD Ukrainian Law on Employment of 1991. countries). Evaluaions of various active labor During its fist year of operation, the Fund was market policies show these policies can produce used to retrain 2,500 workers (1 in 12 of the savings in passive incomes support that exceed unemployed) nationally at an average cost of their cost by reducing the time required to move 10,000 rubles. The ES used the Fund to displaced workers to new employment. Stated purchase training from vocational schools in the somewhat differently, active labor market Ministry of Education, from other m rial policies, though partial, can pay for themselves tining programs, including city training and could be a cost-effective, though partial, centers, and from special training instituts solution to rising unemployment."' Ukraine attached to enterprises or sectors of the has both types of labor market policies, but economy. The Fund gives the ES flexibility in spends a smaller share of GDP on them than the choice of training provider and the type of OECD ouintries, but for the obvious reason that skills training purchased. the command economy leaves almost no one unemployed. 8. The Ministry of Labor is considering to establish its own retraining centers. Four or five RERAINIG regional administrative centers would be established, each with a cluster of local training 6. The transition to a market economy will centers. Approximately 600 to 700 training mean a decline of employment in some centers would be established with some existing economic sectors and growth in others as centers taken over by the Ministry of Labor. A employers adjust to market-driven demand second option under consideration would istead of the system of state orders that drove continue the present procurement of skills the command economy. New technologies and training from existing schools and training methods of production will be introduced that centers and create a smaller number of Ministry change skdll requirements. Wages will rise or of Labor training centers for areas of specW fall for specific skills in proportion to the need."' The best choice will depend on which balance of their demand and supply. These option can meet the needs of displaced workers features of a market economy will mean a flexibly. Internationa experience shows that displacement of workers in some jobs and a displaced workers have different training needs subsequent expansion in others. Displaced than youth seeking training for their frst job. Polky Repow to Employmat Problm 49 Older workers may lack basic cotational and cra. A market economy will quicldy increse communications skills and requi upgrading. the number of producers, domaetc and foreign, Displaced workers may be at different stages of and the technlologies in place. Training in such job readiness and need training that allows them cees wil need to become more general, to ent at different levels of proficiency. The leavig specific skills to be learned on the job tlmi., of displacements, which cat be with particular equipment or In supplier taining expected to fit adional sciool opeg and program. Although theoretically possible with closings, requires training that is flexible with simulators, competency-based training was not regard to entry and exit. lTe opporunity cost employed, nor was training packaged in modules of time spent intrining for displaced workes In for fleible entry and exit. lost icomes creates a need for training that allows trainees to accept jobs when competency 11. Ibis was not the only mode of training goals are reached rather than when a fixed offered, however. The center offers training in amount of time is spent in training. more that 300 speciatizations with some of the taning delivered in enterprises outside the 9. A city-owned traing center in Kharldv classroom and laboratory. Curricula were taken offers skllls training of very high quality for a from Moscow. The large number of broad spectrum of occupational speciaizatons in occupational specWties is an indicator of its job- the command economy. Simuators were in use specific nature.'s lTis degree of specialization where trainees practice their theoreical skills in is perhaps appropriate for an economy where such trades as elevator repair, crame operation, expected labor mobility is low and the need for and building engineering. Repairs and operaing workers to adapt to different jobs and conditions could be simulated and trainees tested technologies is limited. In tis envirnment, for situations that would not be easy to replicate general skills are less important. Ukraine's on the job, except at considerable expense. The transition to a market economy, however, will leaing environment is attractive. aassrooms increase the demand for general skills. are clean and well lighted, and libraies are -stocked with current trade publications. 12. Training is closely linked to employers. Recurrent budgets showed 80 percent of Some cters are tied to pardcular sectors, such expendtures for salaries and the balance as the Aviation Institute, while others are available for supplies and other teaching connected with State enterprises. Most tring materis. Over 90 percent of graduates were is paid for by entprises, thus directly immediately placed in employment. The annual regulatingthe balance of demand and supply. In capacity of the training center is about 12,000 other case, as mentioned above, traning is paid trainees. for by the ES from the Employment Fund with the training theoretically tied to act job 10. This training cener may be above listings. Trainees in a small number of cases average; it serves the needs of the command may pay for their own training. These economy very well witi its predictable flow of arrangements appear to be both eflTective now trainees and demand for skills but may do less and promising for the future. well in sevng a new market economy and displaced workers. The center lacks fleibility 13. Ukraine is approaching a period of in adjusting to market demands for skills. Its adjustment and mass layoffs with limited heavy investment in simula in the short run capacity to offer training that is suitable to the locks it ino training for certain slcills. The needs of a market economy and displaced simnuators were designed for a specific workers. Solutions could include reforming technology as monopolistic State enterprises components of the existing training system or produce only one eevator system or type of establishing a new system withinthe Ministry of 50 CJu~r 3 Labor. For the near term, with projected find work In tie reglated sector of the closings and restrucig of State entprises economy, the so-called modem or formal and their attendant labor displacement, tre is sector. Faced with regulation and taxation, a threat to the State's ability to financ this enterprises remain small and hidden under the training. Reform issues will have to address the surface of the economy, thereby limiting their inflexibility of the current system, its focus on epansion and contribution to employment and job-specific rather tm genera skills, and its public revenue. A survey of 223 enterprises in ability to meet the speci needs of older April 992fud that high taxes and regulatory workers displaced from jobs in the command instability are the principal obstacles perceived economy. by entrepreneurs. GCwrs Fat TM UNEMPLonYD 16. In most industWized countries, small enterprise development programs are suitable for 14. Retraining displaced workers is one type less than 5 percent of displaced workers. The of active labor market policy to increase the ES role is best limited to that of screening productivity and employability of workers. displaced workers for their suitability for this Another is the granting of credit to the service. In other countries, non-governmental unemployed to create small enterprises by organizations, representig private or not-for- capitalization and prepayment of unemployment profit entepries, are more effective in benefits. The ability to purchase raw materials, delivering a package of small enterprise production tools, and other productive resowces development services. The ES role is usually can increase the productivity of the displaced that of procuring thwes services and screening worker who is willing to become self-employed. displaced workers as clients. It is premature to The start-up of small enterprises can create new consider such programs in Ukraine. jobs for odter displaced workers and provide important goods and services to consumers. WAGE SUDSDIES Although the new employment law permits the ES to provide unemployed workers with grants 17. Wage subsidies should be avoided as for this purpose, such grants have not yet been they can slow the pace of the transition in the made. economy. Officially, the Employment Fund can pay wage subsidies, but the ES is not doing so. 15. Experience in a wide range of However, anecdotal evidence based on field industialized and developing countries indicates visits in Ukraine indicates that some employment that grants or loans often resutt In fraud and offices use Employment Fund resources to pay abuse. The failure rate of small business start- wage subsidies to selected state enterprises to ups is very high. Few of the unemployed have induce them to keep redundant workers. In the aptiude for self-employment and ability to general, wage subsidies paid to enterprises to produce a marketable producL The availability retain workers is a potential impediment to and cost of space is a major constraint to private adjustment by slowing the pace at which workers employment expansion. Excessive regulation are encouraged to look for alternative productive and taxation constrain small-enterprise employment. International experience with wage development still further. Libaova (1992) subsidies suggests their costs far outweigh any reports an acive black market for labor benefits. When given to specific groups of providing services in construction, trade, food workers, such as unemployed youth, the products, health care, and even private tutoring. subsidies tend to substitute the unemployment of In other economies this is recognized as the one group for another, encouraging the hiring of informal sector. ft is a vibrant, active source of youths in preference to adults who are ineligible employment absorbing many of those unable to for the subsidy. The net job-creation potential Poly Resos to Enploymet Probkms 51 Is modest; subsidies go mostly t labor-Intesve unemployed, occupational testing, sad enterprises that hire unskilled woers even assessment The local offices receive wtices of without subsidy. vacancies from enterprises; the Employmert Law requires they be noified two months in advance of any dismissal of employees and that PUDUC WOW vacancies be listd with the office. 'the mandatry listng of vacmcies and the absence 18. The ES is authorized to use the of privaWte employment agencies makes the local Employment Fund to create public works and offices the sole labor exchange; still, 80 percent jobs for the unemployed. Like grnts for the of hiring is done by enterprises themselves at the unemployed and wage subsidies, public works factory gate, through referral of their own have been used only on a small scale and should workers and in other informal manners. continue to be avoided. Public works projects Nevertheless, the State Employment Service are a counter-yclical employment tool and a gives priority to its labor-exchange function: source of employment-of-last-resort for Job matching is its primary mission. Before disadvantaged workers. The share of the passage of the March 1991 employment law, unemployed provided with jobs, however, has staff worked mostly with the "5 percent quota" been small. Wages are set below market wages groups - special categories of hardto-place for unskiled workers to encourage self- workes, such as alcoholics or ex-convicts, for targeting. That is, workers who elect whom enterprises are required to reserve 5 emloyment in public works are those unable to percent of vacancies. Since the command find jobs for higher wages elsewhere. Potential economy was charcterized by labor shortages, public works projects include flood control, care most other job seekers found work by aWd mntenance of public grounds and fcilities, themselves. Only a small percentage of workers communt public health projects which would who had left their previous job voluntarily used not compete with privae market provision of the system. these goods. The ES in Kiev has used public works on a small scale for unskilled workers. It 20. The Employment Service system has has contracted with a firm that places expanded Its offices and staff to meet current unemployed workers in jobs doing grounds and conditons and handle the expected influx of job matenance worL To use the program seekers. ES has 11 staff for each 100,000 successfully, the ES wil need to work closely population pefrming both the Employment with local commnity govemments that are best Service and unemployment benefits functions, equipped to identify public wors projects. and can increase to 16 staff per 100,000 Delivery of these works may be contracted out population in the near future. Local offices to non-governmental organizations or local authorize retraining programs through the governments. It is unlikely public works can be regional retaining centers; a laid-off worker used as an active labor market policy because seeking a job, retraining, or benefits visits the their labor intensive natre rareily offers same location for assistance. extensive opportunities for skills traiing. UNEMPWLYMEr rENES EMPLOYMr SERVIcES 21. Most industrialized nations have a 19. Ukraine's employment centers deliver a system of income support for the unemployed; wide array of services to job seekers through a Ukraines system was enacted in the March 1991 netmork of 636 loca offices at city or local Employment Law, which provides eanings- (ralyon) level that report to 27 regional offices. based benefts that differ according to separation Regional centers provide retraining for the reason or labor status. The most generous 52 Owper 3 beneft are reserved for so-called "Category average salary for six months (with the Onei unemployed: Persons dismissed from previously described minimum and maximum employment due to layofls, bakkruptcy, or applied). They will also be eligible for another closure of the entprise. They receive one period of three months in year 2 and 3 months month's severance pay in advance for the first in year three, so that they also get 12 months of month of unemployment and then receive two assistance, but not in one year. New entran additional months of 100 percent pay, paid for receive 75 percent of minimum wage for 6 by the enterprise. Thus the enterprise is months. Higher-education graduates and responsible for the first 3 months of assistance. servicemen (non-officers) receive 100 percent of During these months, the dismissed employee minim wage. An additional benefit of 50 has not achieved the status of unemployed and percent of the minimum wage for each does not count in the unemployment statistics. dependent is available upon application up to twice each year. This provision is not widely 22. At the end of three months, the used as yet, as illustrated by the fact that for the dismissed worker must report to the local first 6 months of 992, 44,000 persons reeived employment office to register for benefits by benefits but only 2,058 applied for and received making a joint application for benefits and for this benefit job-matching assistace. the local office has ten days to match the applicant with a suitable 25. Unemployment benefits e administered vacancy before benefits start. Applicants must by the Ministry of Labor, which uses the follow the instructions of the offlce staff as to regional and local offices of the Employment job referrals and can reject a job offer if the Service described above. Of 700 offices in the wage level is below the prior wage or the job is system, the 636 city and local-level offices beyond traveling distance. Two refisals of work actually work with clients. Payment is by check trigger sanctions or disqualification. and is given in-person and cashed at a bank. There is a choice to the claimant of payment 23. Unemployment begins officially if the weeldy, bi-monthly or once a month. worker is not employed prior to the end of the Regardless of frequency of payment, claimants ten-ay, job-matching period, that is, 100 days must see their inspector once a week at his or after the last day of actual work in the former her discretion, based on local labor market employer's enteprise. As long as job search conditions. Only 400 of the 700 offices of the requirements are met, they will receive 75 Employment Service have computers; some do percent of their average wage for the next three not even have one computer on which to months and 50 percent of their average wage for calculate benefits, maintain case records and the following six months but in no case less than vacancy lists, match recipients and other job- the minimum wage nor more than the average seekers with available vacancies, or to collect wage, between 900 and 2010 rubles in July aggregate data for statistical reportng and 1992. The upper eiling is lifted in the case of magement m on. Where computers do unemployed persons entering professional exist, the ES has developed the capability to retraining programs as an incentive to enter re- calculate benefits based on the category of training. unemployment, the application date and the average wage, as certified by enterprises in each 24. The law provides for somewhat lower worker's employment book. Written benefits for other categories of unemployed, applications are filled out by the claimant, since while the 10-day waiting period and job search Ukraine courts require written documentation of requirements remain the same. Voluntary legal transactions. Claimants must sign an quits, and those who have only worked in 9 out acknowledgement of rights and responsibilities of the last 12 months, receive 50 percent of and must sign for each check and each refusa of Poliy Responses to Empoymnt Probems 53 an offer of employment total fuinds; active labor market policies, 62 percent; and administration and overhead FINACING LAIO MARI r PoUCMSu expenses, 10 percent (see Table 3.2). While cash benefits are available to a number of 26. Forecasts for benefits and services to different groups, including first ime job seekers unemployed people call for this category to and people who voluntarily left their account for about 2 percent of social sector employment, 84 percent of cash benefits will go spending and slightly less than 1 percent of GDP to workers who lost their place due to in 1992. According to Ukrainian law, restructuing or bankruptcy of their employer. unemployment benefits are to be fimded by Active labor market policies spending i divided enterprises directly, with a 3 percent payroll tax almost equally between job creation and and government contributions of 3 percent of training/retraining see Cable 3.2). state and local revenues. Nevertheless, due to the eoonomic crisis and the slower-than 29. Local offlces receive an allowance from anticipated growth in explicit unemployment, the the state office to cover their admistve government did not contribute to the fund in costs. Their active and passive labor market 1992. Final fgures were not avallablein time policies are funded from the revenues they for this report; the projected sources appear in receive from the 3 percent payroll tax levied on Table 3.1. These numbers have been made entepise in their area and local government obsolete by infiadn and the switch from the payments. The state office also may use its 20 ruble to the coupon. percent share of collections as a reserve to subsidize local offices in areas of paticularly 27. The payroll taxes from enterprises are high unemployment. While all local collected at the local level and 80 percent of employment offices must pay benefits based on funds are retained for local use. The remaining norms established at the national level, spending 20 percent are sent to the Employment Service, where Table 3.1: Sources of Funds for UnemploymentRelated they are used to fimd Actlvities, May 1992 Projecdon for Full Year administrative costs TotalinMillon PercentofTotal Percentof (including the purchase of Rubles GDP computer equipment for the Empoymen Fund 20.322 93.5 0.7 local offices) and for use as a Enterprise 18.870 86.8 reserve to subsidize offices in Payroll Tax areas of particularly high State 1,000 4.6 unemployment. This reserve Govemment will be crucial as Surplus from 452 2.1 unemployment grows, since 1991 areas that experience the Est. Enterprise Direct 1,407 6.5 0.1 greatest number of enterprise Total 21.729 100 0.8 failures will have lower Notes * Payments to workers for the first three months of heir Employment Fund revenues Joblessness at a O00 percent replacement rate wou st to retain at the local level. approximately 1.4 billion rubles In 1992. This estimb.. Is based on the pension fund's May 1992 estimate of the total nunber of 28. In lul 19, the ES lid off workers in 1992 and their average wage. An adjustment Juy * was made for the assumption that some workers would find esmated ttcas benefits to employment before their ee monfs of benefits had expired. unemployed workers (passive Source: Employment Fund 1992 Budget (May Draft) and mission labor market policies) would estimates. requir about 28 percent of 54 Capwer 3 on active labor market policies is at the reduced aggregate demand and falling outut, it discretion of the local office. will be all the more difficult to raise the enterprise tax rate to produce additional 30. The combination of financing for active revenues. Cash benefits will draw down the and passive labor market policies in the resources of the Employment Fund at the Employment Fund could pose a potentially expense of retaining. Interational experience serious problem when mass layoffs begin in the suggea's that a third of displaced workers may Ukrainian economy. Unemployment benefits qualify for existing jobs and that two-thirds will will consume the funding ailable for active need retaing and assistance for self- labor market policies. Enterprise contributions employment. In some instances, this training to the fund will fall once hard budget constrain may be as simple as on-the-job or job-search are imposed and supplier credits disappear. The raining, but in other cases it may require a failure of some enterprises and the downsizing more cosdy investment. To control this cost, of others will lower the tax base. In a period of the ES will need to develop its diagnostic Table 3.2: Uses of Funds for Unemployment-Related Acivtes Total 1992 In Million Rubles Percent of Percent of GDP Total BENEFIT PAYMENTS 6,142 28.5 0.2 Restructuring/Bankruptcy" 5,152 23.9 Labor Force Returnees 405 1.9 First Time Job Seekers 223 1.0 Voluntarily Left Job 211 1.0 Fired from Job 41 0.2 Other" 49 0.2 Additional Benefits for Needy 62 0.3 ACTIVE LABOR MARKET POUCIES 13,3r fl 61.9 0.5 Job CreationJ 5,921 27.5 Training and Retraining 6,919 32.1 Job Information System 274 1.3 Public Works 234 1.1 Labor Market Mobility/Other 5 0.0 ADMINISTRATION/OVERHEAD 2.068 9.6 0.1 Maintenance of Centers 993 4.6 Building Acquisition 797 3.7 Fund for Local Centers 505 2.3 Research and Staff Training 53 0.2 Deduction by MOF -281 -1.3 TOTAL 21,564 100 0.8 SURPLUS 165 0.8 Notes: 1. Includes mission estimates of direct employer payments. 2. Includes wives of rebrning military personnel, refugees and people newly released from prison or institutions. 3. Includes reduction required by Ministry of Finance. Source: Employment Fund and Ministry of Finance May and June 1992 draft budgets for the Employment Fund and mission estimates. Policy Responses to EnLoVoymewnt Problems 55 capacity for skldls assem and buid an orga onal strucwre, the Ministry of effective job bank to matc skill needs with Statistics (MOS) is better equipped for data exist jobs. Other countries have addressed collecion and processing than MOL but this problem by separating the funding for active nonetheless lacks the equipment and staff skills and passive labot market policies. usually found in OECD countries. The 1989 Census provides fundamental information on SrATISSlCAL INFORM ON employment structure, labor force participation, and labor-force supply by oblast. Labor 31. The currendy available statistical resource balances, with employment coefficients, information on unemployment in Ukraine comes are prepared twice a year, by oblast and branch. from administrative records based on the Computation and data processing are done by employment offices register of the unemployed. the intemal computing center equipped with Other labor market data, such as the number, slow Russian computes, while much routine educational level, or age status of the jobless, work is done by hand, and typed. The low are collected from adminstrative sources. The capacity of the statistics print shop is a monitoring and evaluation of labor market trends bottleneck in data dissemiaton. and developments rests primaily with the Ministry of Labor (MOL), and the Employment 34. The MOS is considering steps to reform Service. To the ett hat labor-market issues its organizon, switch to innovative methods of touch on the overall socio-demographic and daa collection, such as sample surveys, and economic structure of the country, the improve the speed and quality of its work. Employment Service depends on supplementary Contacts with Eurostat, the United States Census data from the Ministry of Statistics, such as the Bureau Center for International Research, and population census, or sector information, the International Labor Organization will included in the MinisWs routine analytical contrbute t the retbrm program. work and reporting. 35. Administave records, though less 32. The MOL receives infbrmation in a cosdy than other forms of data collection, are summary form from its 25 oblast and 2 city insufficient for the purpose of labor market employment offices, based on the primary information. More detaild information is information coming from eprises through needed on the incidence of joblessness and local employment ceners. Any discrepancies unemployment than is available from the detected in the reporting are resolved over the employment registers. Those who have not filed phone, which occasionally results in furher with the employment services and undertake a distordons due to the poor communication job search on their own are uncounted. There system. There is no quick and reliable may also be some doublecounting, when a communication system for da transmission registant finds himself a private-sector job and between the MOL and the oblasts. While this fails to report this outcome to the Employment information channel has remained unchanged Service. Private-sector reporting, though since the past, the data requiements have mandated by the law, will be increasingly recenty grown ubs ly and changed difficult to maintain as employment there qualitatively. Computer equipment in the oblasts expands. The monthy and quarterly labor is used more on an expeimeal than routine market reports sent to the Employment Service basis, since many offices have only one from regional offices need several computer (there are 400 computers sad 700 Imprvements. Ihey lack information on the centers) and few staff are trained to use them. length of the unemployment spell, charteritics on the unemployed, such as age, educational 33. In terms of its experience and level, skilisoftheaffected workers. Leftoutas .56 CJwpter 3 well are pensioners seekig employment. Those without a job for over a year are grouped together with those who, for personal reasons, did not hold a job. No information is given on hidden unemployment, such as leaves without pay, shorter working week, and incidence of voluntary shorter hours, e.g., by women with small children. Labor-resource balances, with employment coefficients, though prepared twice a year, are not done on the branch/town level, which would be more helpfid operationally. It is expected that incidence of unemployment will be disproportionately high in the single-industry towns once the main employer closes down. A clarification as to the composition of various subgroups, such as homemakers or private agriculture, is needed. 4 RESHAG LABOR MARKT POLICES 1. This chapter considers policies to however, It is not clear-cut. World experience address employment problems associated with with incomes policies is mosdy negative, mixed converting a command economy to a market at best; the lessons, however, are instuctive for economy. It suggests some necessary changes in Ukraine (see Box 4.2). incomes policies; active labor market policies that could pay for themselves by speeding the AcnvE LABOR MALtR PoUCIES conversion of workers to market4aed production; effective approaches to ma layoff; 3. Activelabormarketpoliciescannotsolve design of cash benefs tat can minimize the the problem of unemployment produced by degree to which they inhibit or slow the isuficiet aggregate demand for goods and conversion process; and means to strengthen the services. Ihe only solution to that problem is capacity of labor markets to adjust and keep on sound macroeconomic management of the adjuting to the chges that re characistic of economy. In the near term, unemployment will market economies. It presenrecommendations come ftom insufficient aggregate demand when for improving labor statistics and discusses public expenditur are cut to conform to policies that inhibit labor mobility and revenues and to stabilize the economy. As exacerbate the problems likely to arise in private investnent begins to emerge and replace smaller, single-industry towns that may be faced the public sector, active labor market policies with mass layofs and nowhere for the work will play a cridcal role in encouraging human force to go. It ends with suggested investments capital formation and the mobility of labor to in labor market policies expenditures and how new employment produced by this spending. these can be complemented with extern Ipwing labor mobility with policies that technical and financial assistance. increase the productivity of labor and improve the operation of labor markets wiU reduce the INCOMS Poucws socia cost of economic adjustment in foregone production, income, inflation, and social 2. The type of indexation the Govemment turmoil. introduced in July 1991 was infationay and inefficient; it was abanoned in 1993 in favor of INTRxDx FLuXIuTY IN I1 GRAPmG ad hoc adjustments to protect excessive fal in POGRAMS earnings in the budgetary sector, rather than to fuel inflationary inerta Incomes policy now 4. The Ministry of Labor should use the caps wage growth to block overcharging by market procurement model and the financial monopoly enterprises. A maximum rate ofwage leverage of the Employment Fund to increase increase is now linked to a price ndex; the flexibility of reaining progams. As a enterpses that exceed this rate are subject to a national training authority, MOL can introduce substan financi penalty. A case for an procmement policies that require the delivery of incomes policy can be made for sociist modular, flexible, competency-basedW training for countries on a prlo grounds (see Box 4. 11); displaced workers. IThis recommendation places 58 chapter 4 the Ministry in a policy role rathei than a training cetrs to compete for the delivery of delivery role for training. Instead of producing skills training and encourage greater efficiency its own captive capacity for retraining, the MOL In the delivery of these services. With would rely on the supply response of existing competition, training costs can be reduced and and new trng capacity that would emerge In quality improved. lbis approach would efsure response to the market it creates through the that training is linked to actual jobs, that it is resources of the Employment Fund. demand driven. Cbang in market needs for skills tiing identified by the Employment 5. This approach has numerous advantages. Service can be quickly addressed through the Ukraine can draw on the experience of more procurement process. than 50 industrialized and developing countries that have created training funds to encourage HANLG G MASS IAYOFFS skills training. By opening competition to Include training offered by private employers 6. Ukraine has no specific law governing and training centers, MOL can induce State massive layoffs by state (or private) entetprises, Box 4.1: The Theory of Incomes Policies The traditional case for an incomes policy is as an instrument to break inflationary expectations and a persistent wage-price spiral, thus reducing the dependence on deflationary fiscal and monetary policies. Various forms of incomes policies have been used for this purpose, but with mixed or no success. However, there may be a stronger case for incomes policies in reforming socialist economies. The potential pressures for wage inflation are especially strong In such economies, given: A lack of an effective advocate for the Interests of owners of capital as long as there is pervasive state ownership of enterprises. * The fact that, at least initially, unemployment is low and cannot act as an Intrinsic moderating force on wages. Yet the links between wage inflation and problem with macroeconomic adjustment are particularly strong in reforming socialist countries for several -easons: * As enterprise taxes account for a large share of revenues and public sector wages for a large share of expenditures, higher wages have a strong distorting Impact on the budgetary balance. * With domestic market structures frequently still nonopolzed, domestic price competition Is a fairdy ineffective brake on price increases. * Import competition is typically low and only gradually growing, providing little counterweight to conventional mark-up pricing that accommodates wage Increases. * In the run-up to privatization, managers and workers could easily be tempted to decapitalize enterprises by payin themselves high wages and deferring necessary investments and adjustment measures. All of these problems suggest that an Incomes policy may be an Important eWment of macroeconomic measures taken during the transition. Implementing an incomes policy may be difficut, however (see Box 4.2). Reshaping L4bor Makt Policies 59 although the Employment Law does anticipate under the employment law, labor-market this eventuity in several ways. The conditions, and opportuities for Employment Service has the authority to contact retaining. Some dislocated-worker an enterprise that has announced a layoff to offer programs open offices or worker- partial wage subsiies from the Employment asistance centers on or adjacent to the Fund for up to six months where this grounds of the enterprise (on property intervention would provide the time or resources or with funds donated by the enterprise) for the enterprise to achieve stabflity. Another to prvide ongoing support and state fund provides similar subsidies and assistance to affected workers. These incentives in the case of new enterprises. centers operate best when staffed jointly by agency staff and staff trained from 7. Other industrial countries have among local workers, since trSt is an established comprehensive programs to deal with importnt element when dealing with a mass layoffs; Ukamine could consider some of crisis. the tools in dislocaed-worker statutes in the West 8. The Employment Service needs a mass lay-off unit to plan programs of on-site, locally- Advance Not&atlo The cut delivered services in instances of mass layoffs, requirement of two months notice of a whicb will ease the burden of the existing local pending dismal or layoff is definitey office. Special legislation could provide for on the short end of the practice of additional notice in mass-layoff situations and a OECD countries. Too long a period package of irnerventions from among the options (e.g. 24 months in Yugoslavia) is above. counterproductive, but more than two months is Justifiable when more thin 50 DEzGN oF Th UMM EnTA BENEr pecent of an e apris workfbrce, or 20 percent of the labor force of a labor 9. The Govment should consider market area, is affected by the layoff or temporay use of a flat-rate benefit scheme to closure. is extra planning time would cope wih the financial burden of rapidly allow for other interventions to ease the escalating unemployment likely during the shift transition of workers into new jobs. to a market economy and until it is able to fully automate local employment offices. The benefit * Rapid Response and Local Area structure as it now stands is certainly well within Involvement. One successful model of the range of practice in industrialized countries, this approach is Canda's JndustrW but the complexity of benefits and the fnancial Adjustment Service (IAS). Tbe lAS cost in a time of rapid growth in unemployment -involves the worers, employers and would argue for a more simplified system. local officials in the design and delivery of services. The IAS and some state 10. Labor Ministry officis have expressed dislocated-worker progrm in the concer about the effect of a flat rate system on United States are organzed to move their strong desire to differeatiate benefits rapidly into a community and armge between category one (dislocated workers) and for donated resources from the affected other unemployed persons. R would be possible enterprise, employee trade unions or to meet this commitment to maintain higher other employee organ ons and the benefits for employees who lose their jobs local community. Affected workes are through no fault of their own (buptcies, coumeled to minimize misinformation mass lhffs) through either a two-tier benefit and panic, informed about their benefits system, or by eliminating lower-priority 60 chapter 4 caegories, such as high school and university receny implemented, shows that there are leavers and other new entrants. The eligibility overall benefit savings as well as adminisraive of such persons for unemployment benefits is savings. In Poland, in paticular, an earlier inconsistent with practice elsewhere that new eanings-based system proved to be too entrants not receive benefits. expensive and complex for the period of adjustment from a command to a market 11. Flat-rate benefits would ease economy. After a period of stabilization, it administration, since calculation of earnings- would be possible for Ukraine to return to the based benefits can be very cumbersome In earnings-based system. offices that are not computerized. Experience in Estonia and Poland, where such schemes were 12. Many industrialized nations disqualify Box 4.2: The Practice of Incomes Poicies Various forms of incomes policies were used by Westem industrialized countries during the 1960s and 1970s, and they have also been used by several developing countries as a .art of so-called *heterodox, stabilization programs. The experience of both groups of countries has been at best mixed. The two main lessons generally drawn from these country experiences are (a) that incomes policies can be effective only as a complement to, not as a substitute for, deflationary fiscal and monetary policies; and (b) the policies tend to fail, given the numerous Incentives for non-compliance and the enforcement difficuities that accompany them. Most Eastem European economies in transition have adopted incomes policies as part of their stabilization programs. Bulgaria Imposed ceilings on individual wages, while the Czech and Slov.ek Republic and Hungary imposed ceilings on the total wage bill. Poland first introduced a ceiling on the wage bill and after one year changed to ceilings on the average wage. Apart from Bulgaria, which used administrative controls, countries have implemented their incomes policies through the imposition of an excess wage tax (wage increases above the ceiling are subject to a certain penalty tax). Poland has set the ceiling on wage growth as a percentage of the current rate of inflation, while the other counties have linked wage ceilings to target rates for inflation. In most cases the private sector has been exempted. An important argument for oeilngs on the average rather than the total wage bil is that ceilings on the average bill avoid taxatioh of employment Firms that have growth potential can expand. However, because of the overstaffing of most state enterprises, ftere Is a case for applying the ceiling initially to the total wage bill and switching iater to ceilings on average wages (as Poand has done). Tax-based incomes policies offer several advantages over a direct regulatory approach. Tax-based policies tend to infringe less on free bargaining between employers and unions. They add some flexibility by providing enterprises with the option of exceeding the general wage growth target as long as they are willing to pay the tax. Tax-based approaches cut administrative costs, as they can be enforced through the existing tax system rather than through separate Institutional arrangements. These additiorral tax revenues can offset the negative impact of excessive wage growth profit tax revenues. However, the effectiveness of taxes, as that of fnes or any other financial enforcement mechanism, is greatly reduced if firns can simply Incur arrears on these or other taxes or borrow to pay the taxes. The Polish experience has shown that meny firms choose to pay the tax. The experience of Westem marcet economies suggests that, even more than any particular formal enforcement mechanism, the support of governmental incomes policies by employers and unions, preferably in the form of a tripartite social consensus, can increase the probability of broad-based compliance substantially. Austria and Sweden are examples of countries where Incomes policies have been implemented successfully through social contracts. Reshaping Labor Market PoWles 61 voluntary quits; the Employment Fund could model of Sweden mentioned earlier. save some money by following such a policy. The elimination of first-time job seekers, lahor- 16. The MOL Is considering a social- force returnees without recent work experience Insurance concept for financing unemployment and voluntary quis, -ould result in a 16 percent benefits that would require an employee reductlon In current costs for unemployment cordribution to the system, as in Germany, benefits. This percentage would decline with whore eloyer and employee contributions are mass layoffs where Category-One claimants split 50/50, Canada, where employee would predominate. contributions cover 42 percent of benefits, and Japan, where employee contributions cover 37.5 13. The recont reconciliation of an percent of beneflts (see Table 3.1 on page 52). inconsistency between the Employment Law and Establishing an employee contribution would the Labor Code in favor of the Laor Code's increase revenues, but contributions by automatic entidement to three months of 100 employees are not necessary to establish an percent pay without registtation with the insurance concept, which bases benefit Employment Service is also unfortunate. entlements on previous work experience and Experience worldwide shows that eariler amounts on past wages. Payments are financed intervention significandy reduces the duration of out of wage-linked contributions; Ukraine's unemployment and wUi result in savings. Even curmnt system Is based on the insurance though the benefit for these first three months is principle. Some countries use asistance-type paid by the enterprise, the government would schemes characterized by such features as save enforcing the earlier provision that the general revenue funding and mean-testing, unemployed register with the ES within 10 days rther than wage-based benefits. Most OECD of dismissal in order to recive benefits. countries have a mix of Insurance-based and assistance-schemes where payroll taxes cover a FINANCING LABO MARIW POulEs fixed duration of unemployment after which an assitance scheme, funded from general 14. The Government of Ukraine should revenues, extnds benefits when general guarantee funding for active lbor market macreconomic condiions are adverse. The use policies (see Box 4.3), and fund any additional of an employee contribution would be more unemployment benefits from general revenues. appropriate in a system where the economy has Eventually, the unemployment compmenon stabilized and where unemployment is more of program should be funded by a payroll tax on a shared risk between employer and employee. enterprises modeled after options to be found in The economic traition in Ukraine Is not one OECD cv.-untrles. where It would be expected that the Individual share some degree of responsibility for the risk 15. The Employment Fund resoures should of unemployment. In such a case of widespread be committed prerentially to active labor structural unemployment, an employee market policies. The support of this Fund contribution would be premature. should come frm terprises and the State Budget contributions that are already part of the b M ENr PROGRAM ADMmNISTrATION annual Fund revenues. Training resources could be found by shifting portions of the recurrent 17. The governm.nt's stffing pattern seems budgets of existing State tralning centers to the adequate to handle 1992 estimates of as many as Fund, which would then commission training 400,000 unemployed persons. However, the linked to jobs identifled by the ES. These maximum curret authority for Employment training centers would then be expected to Services staff increases Is approximately 8300. compete for training contracts, much like the If, for instance, unemployment rises above 10 62 Jauq*er 4 Box 4.3: Finandng Labor Market Polides All OECD countries combine, In different measure, active and passve labor market policies. Sweden, which has one of the lowest unemployment rates In Western Europe. favors active labor market polices in the absolute share of GOP spent on these poliies 1.8 percent. Passive polcies dominate spending in countries like Denmark, Ireland and Belgium, partly in response to higher unemployment (see Figure S.6. on page 7). Ukralne, which had not yet experienced mass layoffs and unemployment, spends only one- quarter of a percent of its depressed GOP on passive policies providing incomes support for the unempled. The demand for this spending will increase as unemployment begins to rise with economic reforns, placing pressure on Ukrainre's low level of spending on active labor market policies. Research in OECD countries shows that effective employment programs combine active and passive measures (U.S. Department of Labor, 1986). Although active programs are more expensive per participant per month than passive. they can effectively shorten the duation of an unemployment spell enough to make them cost effective (Scherer, 1990). Passive policies can actually increase the duration of unemployment without leading to higher wages through extended job search (Hamermesh. 1992:18- 19). Active employment programs are normally publicly financed from general tax revenues (Ffretw' II. 1992, p. 39). Some countries rely on the private sector to help their redundant workers directly. T; e US and Japan rely heavily on the private sector and non-financial means of public action. In contras., unemployment benefits are customanly funded through a payroll tax. Ordy Italy and the United States (except for three States) do not tax employees. Japan taxes all covered waes, the United Kingdom applies its employer tax to all wages, and Italy taxes all wages above an exempt amount. The others have ceilings on taxable wages. All six nations tax more of their wages than does the United States. In Ukraine, both active and passive labor market policies are financed from the same source, the Employment Fund. Because unemployment benefits are not financed independentiy from active labor market policies, Ukraine faces the danger that as unemployment grows, active labor market policies would be crowded out by unemployment benefits. percent in the following year, each worker and wants to insall 5,000 computers. There is would be responsible for handling the cases of also a need to standardize the computer 300 unemployed persons, which compares with programs in use, as some oblasts are working 100 in Portugal or Greece and about 50 in other with different programs than others, where local OECD ountries (see Table 4.1). This poten staff developed their own. MOL has made an staff shortage is made more acute by the lack of impressive start with scarce resources, but this adequate automation equipment. The ES has is an area where they need help and an area developed and installed some impressive where inte uational agencies may offer computer programs for the handling of benefit sgnifcant assistance, beginning with an administration. The system contains case asseme of needs in the ompzonfield. records, calculates benefits accrding to priority Assistance would include consultant services on category, average wage and date of application, the desig of a rational, standardized system; tracks disbursement of benefts, and matches job evaluation hardware nfeds to determine the specialties to computerized lists of vacancies. proper array of equipment for service delivery; Yet the agency has only 400 computers for 700 use of local area nethwks, promising savings offices. Given the need for computers for when compared to current plans to buy statistical reporting and management information individual units; assistance with the purchase of at the Republic and Oblast levels, most smaller equipment, set-up training, and support; and offices do not yet have computers. MOL advise on mannance and ongoing support of estimates a minimum need for 1500 computers the equipment Reshaping Labor Mw*et Poldes 63 Table 4.1: Rado of Labor Staff to amIston. Unemployed Workes In Selected Countris, 1988 MorUromRING LABOR MART ADJUlME Country Staff/Unemployed 19. MOL should improve the collection and Sweden 1:9 reporg of unemployment statisic from _A3 . nistie sources, and in the medium term, Germany 1:37 begin development of establishmt, household, Italy 1:88 an labor-force surveys. lhis effort will require United Kingdom 1:98 technical assistance in mapping labor force Porual 1:120 concepts and definitions to international Poland 1:225 standards and improvement of collection and Turkey 1:375b reporting procedures for registered M-xico 1:400unemployment. It will also require technical Notes: a. 1990 assistance and computers for data management b. Stafflapplicant mio, no and analysis, capacity for conducting a new unemployment benefit system, household labor force survey; and appropriate limited core servces and active staff trining in each of these areas. programs. Source: Fretwell 1992, p. 42) 20. A market's efficiency is heavily dependent on the information avlable to market participants and policy makers; labor markets ae no exception. Neither industialized nor 18. Since labor exchange and jobcounseling developing economies depend solely on are done at the same offices as payment of admin ve data sources such as the regsred benefits, a period of high unemployment will unemployed. Countries like the United undoubtedly overwhelm the offices. The Kingdom or Gemany make effective use of concept of a unified benefit/labor exchange these data but also rely on establishment and office is a good one and the government has household surveys. Canada and the United moved to specity wrkers for each function. States have particularly effectve systems of Officials must be prepared to increase staff as labor force statistics and information that should unemployment rises or tho *employment office" be studied for applicability to Ukraine, along will quicldy be urned in the 'unemployment with those of Eurostat as part of the European office" and the proactive mesu may fall to Economic Community. the pressing demand of purely react:ve benefit Table 4.2: Current and Suggested Program for Employment-Related Activities Percent of GDP under Alternative Approaches Suggested Program Sustainable Program Spending Category Current Policy for 1993 Beyond 1993 Benefits 0.2 0.7 2.0 Active Labor Market Poli¢es 0.5 1.5 1.5 Admiristrtion Overhead an Ote 0.1 0.2 0.2 Total 0.8 2.4 3.7 64 Owpter 4 ToFAL SWmNG ON LAOR NARKT expectations and acDons connced with rouc~ th 21. Under a scenario based on Eastern Managing labor-market policies, and keeping European stabilization- program experience, spending under control, depend on effective unemwloyment may reach 3 million (about 11.5 macoeconmic, regional, and industra perce) In 1995, preceded by a lineatrend with policies. Ihis issue is not covered in this 1 million (about 4 percent) in December 1993 volume; however, the current prority and 2 million (about 8 percent) in December development areas determined by the 1994. Assuming the introduction of changes Government according to industrial branches or described earlier in this chapter, one may expect high participation rate of women, will probably the following developments: have to be replaced by more precise targeing of regions with very high unemployment. Unemployment Benefits. In 1993, 0.6 to 0.8 million unemployed (from the expected proportion between unemployment benefits recipients and all unemployed) would receive benefits costing the Employment Fund more than 3 percent of GDP under present rles. With a fiat-rate benefit of six-months iurationat the level close to the minimum wage, unemployment benefits might cost but 0.7 percent of G1)P. After 1993, when the miber of recipients may rise to over 2 million, it would be still possible to keep benefit payments below 2 percent of GDP with the ft rate. * Increased Spending. Keeping the proportion of unemployed receiving benefits at 50 percent would be possible if active labor market policies work well, so that workers move quickly into new jobs. Even with efficient training, grant, and wage subsidies, strengthened with exteral technical assistance, an increase in spending to 1.5 percent of GDP, triple the 1992 level, would be required. Together with administrtive overheads at the level of 0.2 percent of GDP, this would mean overall labor- market pendingin 993 at the level of 2.4 percent of GDP, and 3.7 percent of GDP after 1993, which is well within pmportions of Western countries. Table 4.2 summarizes the above s CAsu TRANSFERS, USSR To Ul=NE 1. Ukraine derives its principal social individuals with no labor servic, Since the welfare policies from Its Soviet experience; cab term 'labor pension" covers almost every kind transfer policy builds on but extends the of transfer payment(including disability benefits coverage of the Soviet system, which was not when the beneficiary has some labor service), it based on means-testing, as in some western is probably more useful to divide cash transfers welfare states, but was class-oriented and into three distinct groups: work-related unived within categories. Lack of means pensions, social Insurance transfers, and other tes had two perv effects: Costs and grants (McAuley 1979). coverage of those who are not really needy was substanial, yet many indiget or needy persons 4. The basic legislation regulating cash went unended. Mhis chapter shows how transfers consisted of two all-union 'laws on policies have evolved in such mamer as to pensions"; the 1956 all-union law on pensions exacerbato rather dtan solve the problems fr workers and employees and the 1965 all- inherent in welfare policy under the Former union law on pensions for collective farmers. Soviet Union. With various additions and amendments, these two laws were In force until the adoption of a 2. The Soviet socW welfare system new all-union pension law in 1990. The 1990 addressed the needs of three classes: Peasants, law did not make a distinction between workers workers, and the intelligentsia. (A stae-farm and peasans, but included pesat under the employee was a worker, not a peasant.) There regular pension prwvisions, provided that their was a marked disparity between wages and collective farm made socW insurance payments benefits available to workers and peas, with into the all-union pension fimd ("USSR Law on peasants receiving very short shrift, especialy in Pensions Published,' 1990). The 1990 law was tms of cash welfare payments. Up through the made retroactive, unlike previous legislation, Khrushchev years, peasants were ineligible for provided that the beneficiary re-fle for the cash transfer payments from the state. increased benefits within a year of the law's However, thFr inequity was parly ameliorated passage. The lack of retroactive provisions in by the adoption of an all-union law in 1965 that previous legislation, especially as peaining to gurnteed some payments to collective farmers. collective farmers, can be viewed as the state's These cash transfers represented a significant attempt to minimize the cost of 'providing for improvement over the pre-1965 situation of no the backlog of incapacitated peasants, the pensions at all. Collective farms were stil consequence of almost forty years of liable, however, to meet the needs of collective discrimination and neglect" (McAuley 1979, farm retirees and disabled which exceeded all- 273). The 1990 law provided that cash transfer union norms. payments are not taxable and are paid regardless of other income. 3. ITe Soviets divided cash transfer payments (pesya in Russian) into two kinds: 5. Ukraine began restrcuring the social labor pensions, which are either directly or safety net, as an independent state in 1992, loosely related to labor or labor service; and making it more generous and, therefbre, a social pensions, which are paid to disabled heavier burden for the state budget. The 66 Chapter 5 expenditures proposed by the Government for -workers and received benfits accordingly. the social sectors in 1992 far exceed most The 1990 all-union law raised collecve farmefs' estimates of gverm capacity to finance benefits to the base rate of 55 percent of wages. public social services out of the proceeds of gener economic capacit, as measured by 8. The basic structure of cash transfer GDP. In the late 1980s, the USSR offered a payments for old age under the Soviet system is more limited menu of socW transfers than did presented in Box S.1. In 1990, there were 9.7 its East Eurpean neighbors (see Table 5.1), million old-age pensioners in Ukraine, receiving amounting tO about 15 percent of goss income, an average monthly pension of 109.69 rubles. less than two thirds of the share of gross income lhe minimum pension was 70 rubles, and 3.6 allocated to social transfers in several Eastern milion elderly pensioners, 37 percent of all old- European countries. age pensioners, received only the minimum benefit (Nargos Uk I91), 77-78). Retirement 6. The share of gross income spent on benefits were paid automatically, without any pensions and fimily allowances by the USSR reduction for other income, at the basic government was less half that of its neighbors to rem e ages of 60 for men and 55 for the East. Pressure to expand benefits was women, and 55 and 50, respectively, for miners coupled with the declining apacity of the central or others iolved in hazardous occupations.Y government in Moscow to resist the demands for The base-rate provision of 55 percent of wages highet consumption. Inflation was beginning to was complemented by specil rates for undaermine the real value of social transfers at hadous occupations, dwarfs and midgets, the end of the 1980s. ITe new duties of an mothers with five or more children, women independent government in Ukraine, and the employed in certain occupations, as well as for manifest wish of its newly-empowered length of service and other considerations. For Parliament, combined to create pressures to each fuU year of work beyond 25 years for men respond positively to demand for expanded and 20 years for women, the pension was soci protcto The results of thesen amges, incrased by one percent of earings, thus in terms of increaing demands for public social raising the maximum replacement rate from 55 spending, show up in an enormous jump in percent to 75 percent of highest-ever nominal, projected oudays for social programs ear2ingsY in 1992 (see Tables S.1 in the executive summary and Tables 6.4 and 7.3 in succeeding 9. Old-age pensions were paid in full chapts). regardless of other income and were not taxable under the provisions of the 1990 law, or of How THE SYsM EVOLVED previous laws. According to a Soviet (Goskomstat) survey, 26 percent of worker and 7. Social insurance transfers for workers employee old-age pensioners continued to work and employees were paid out of the Soviet social (Vem k statild 9 1988, 69). Libanova (1992) insurance fund administered by the council of notes the -higb rate" of employment of trade unions. A parallel fund was set up for pensioners, paricuarly women, and points out collective farmers, which received subsidies that the 1990 labor force exceeded the working from the genera all-union budget as well as age population by 1.7 million. Assuming this receipts from collective farms. lhe 1965 law number is a minimum estimate of the number of included all colecive farmers into the old-age working old-age pensioners, the estimated benefits system, albeit at leves only 50 percent double-dipping rate is 17 percent, which is well of the benefit received by workers and below the Soviet all-union rate for workers and employees. Under the old Soviet systan, those employees. The many nonworking spouses and employed at state farms were considered to be mothers could readily provide the numbers that Cash TI ers, USSR to lUbw 67 would lead to a conclusion that in Ukraine, at 12. Disbiity benefits accrued not only as a least a quarter of elderly pension benefidaries result of a work-related injury or occupational are also crrent wage earners. disease but also from any genera illness or congenitl condition. A medical-labor 10. In 1991, many pensioners were not commission certified the condition giving receiving their promised compensation entitlement to benefits which were in turn tied to payments. In Russia, 12 percent of pensioners past eings and seniority. Disability issues did not receive their April competion; in were generally ignored in the Soviet Union, and Kazakhstax, 14 percent; in Lithuania, 16 those with visual or mobility impairments were percent; in Moldova, 15 percnt; and in confronted by urban and rural areas virtually Kirgizia, 21 percent. 'This was associated with without any sort of handicap-access a shortage of finds and weak information for infrastucture. In January 1991, the Gorbachev pensioners regarding their rights* (Yakovlev, government passed the law 'On the Foundation 1991). There were also long delays in the of Social Protection of Invalids in the USSR,' administrative process of qualifying for and which povided for handicapaccess designs and actually receiving pension benefits. facilities in public buildings to be implemented T-ble 5.1. Soda tanfes, deed cotuie, lt 19808. prcent of arm cowe Country Poland CSFR Hungary USSR Benefit _ Pensions 15.2 16.5 13.4 8.0 Family Allowance 5.5 5.6 6.0 2.6 Sickness Benefits 3.0 2.0 Scholarships ___ ___ 0.2 0.3 Others 1.4 0.2 0.8 3.8 Total Transfers 22.1 25.4 22.4 14.6 Source: B. Milanovic (1992), 11. beginning 1992 and 1995. This law did not Disability Benefits chnge the level of cash benefits, and its implemen taion was cut short by the August 11. The 1956 pension law recognized three 1991 coup. classes of disability. Class I Disabled need permanent care or supervision or can only work 13. The 1990 all-union law on pensions set in specially-equipped workshops. Class II the mininmum Class I and II Disability pensions Disabled do not need permanent care, but they as 100 percent of the miimum wage and the cannot work because working would lead to a nimum Class m benefit as 50 percent of the deterioration in their condidon. Additionally, minmm wage. In Ukraine in 1990, there were dwse with severe vis or mobility impairments 1.3 million disabled receiving benefits, ranging are classified as type II, even if they can work. from 47 to 127 rubles per month (Nargos Uk Class m Disabled have suffered a significant 1990, 77-78). For Ukainian militkay disabled, loss in capacity such that they must taser to benefits were significantly higher, averaging 145 work of a lower skill level and or they are not rubles per month. Full-time a_ttance in an able to acquire new work skills (see Box 5.2). educatonal institon is counted as work-tenure a8 Chapter 5 for do putposes of assIgning disability beneflts. system were paid to a large range of survivors, including minors, any non-workWg (dqpendent) Suivor Ua2idb family members, including pouse, paren (if disabled or under pension age), siblings 14. Survvor benefits under the Soviet [disabled or fAilim chid caretakers onlyl, Box 5.1: Old-Age Cash Transfer Payments under the Former Soviet Union, 1956- 1990 Type of Cash 1956-1989 1990 Transfer Old Age Established in 1956 Law on Pensions. Basic Kept essentiaily the same retirement Pensions for retirement age was 60 for men and 56 for age provisions, with similar exceptions Workers women. Those employed In mining or other for mining and other hazardous specified hazardous occupations could retire occupations, but increased the money 5 years earlier. Sliding scale of payment amount of the basic benefit to 55 depending on worc tenure & type, from 30 percent of earnings, with a mandatory rubles per month to a maximum of 120 minimum pension set equal to the rubles per month. Paid to all workers and minimum wage On 1990, 70 rubles per employees, except for certain white-collar month) and a maximum of 75 percent employees. Various supplements depending of earninas (this maximum could be on work type, number of dependents, etc. obtained by various adjustments to the basic amount, relating to work tenure or number of dependents). Separate legislation and provisions applied to military service personnel. Old Age Established prior to 1956 law on pensions, The 1990 law appears to apply to all Pensions for and recodified in 1959. Old age pensions workers and employees, regardless of Cewtain WhWe- for teachers, certain medical personnel, profession. Collar certain airline personnel, various agricultural Employees speciaUsts, and for scientific research workers. Although the minimum and maximum pension payments were the same as for workers (30. 120). these long-service pensions were originally to be paid regardless of whether the Individual actually retired or continued working. The double- dipping provision was eliminated In 1965, but doubldipping in a different profession was still allowed. Old Age No old age pensions were paid to collective The 1990 law applies to collective farm Pensions for farmers until 1966, and then the minimum members, provided that their farm Collective pension benefit was set at 12 rubles per makes payments to the USSR Pension Farmers month and the maximum at 102. In 1971, fund or other social insurance the minimum pension was raised to 20 payments. This little-noticed provision rubles per month and a sliding scale based eliminated the historic difference on the same increments as workers between the money amounts of cash pensions but with the maximum still at 120 benefits to workers and peasants. rubles per month was adopted. Note: Old age pension benefits are not subject to taxation, nor are they to be reduced If the beneficiary earns additional income, under the provisions of the 1990 law. Cash Transfe, USSR to Ukraine 69 grandchildren, and grandpars acking other by general Wury were paid In prorated amouns support). Ste"parents and step-children bad the based on leth-of-service (followng the same rfhts as original parents or natural disability schedule). Families of students, children. The 1990 law set the survivor benefit grauate sudents, and Intern who did notwork at 30 percent of the wages of the deceased before entering the educational instition were breadwiner, if work-tenure requirements were assigned survivor benefits under the same rdes met. Benefits from a loss caused by as for disability payments. occupational injury bad no leng of service requiement, while benefits from a loss caused Box 5.2: USSR Disability Cash Transfer Payments, 1956-1990 Type of Cash Transfer 190561889 1990 Disability Clas 1: Disabld The regulatdon ear cornplex; MoAuley Dsablty peions w e now paid to al ind hduas who annot work (1879) sunmmaized them as a workers, empoyee. colectve tunwes. and need permnnt ae or minimum paywent of 30 rubles and a and to studnts/chldren, by a fo4mula upervWion. The extent of aximnwm of 120 per month for tWie designed to take Into acownt labor inoapaitt Is determined by a alass for workwrs. Peasants were service and number of dependents. The speoial oommIssIon. Until subject to a minimum of only 15 minimum disabilty pension for Clbsso 19865. oletive famers could rubles per month, but thid was lAli Is the mirnimu wage, ano the basio not receive any disaity changed In 1971 to the same vystwm benefit. Is caslulted as 55 peroent of paVmnts, anod sfter 196. they as used for woikers. In 173, the earnins. The dsabt pension Is paid In war subject to lower minrnurn oompliated ruess were replaed by ful regardiess of wages or other income. payrents. the fomuase used In calculating old For persons with incompoete work tenure. a8e pensions, the pension Is prorated. If the benefliiy has labor tenure equls to that for the od age pension, then the amount of the disbt pension I raised to the leve of the dM age pension. Diabii Cm ii: Disabled MoAuley (1979) summaized the Samo as above individuals who cannot work but reulations as a minimum pyment of who do not need permanent 23 ubles and a _nudmu pamewnt of (Instutiona) oe. Also covers 90 for workers. For colleotive those with sigificant motor farners, the mininum pension was defeots or seriously impaired set at only 12 rubies per month. As dght. above, thi system was ohanged in 1971 and 1973. Dissbity Cass IN: Disabod The minimun wes 16 and th The minimum pament for conss I s 60 indivWuas who can work, but nmdmum 45 rubes per month peroent of the mnimum wage, nd the only at lower skiA or reduced VIMoAuley, 1979) and until 1967, basic payment is 30 p4rernt of earnings. skill ooupatons. pesssnts could not receieh Classe Il pension. After 1967, Class Ill pensions were paid to colecdtive famrers gv Hf the disability resuled from an industtial Injury. In 1971, the system used for workers was adopted, and In 1973, the old age formnuas rplooced the previous disabiity formuiae for oalulati bonefts. Note: Dsability pa wments are made readless of whether the disabit resle from a work-related Ir*y, domestic traum, or congenital proble Disbilty pensions esutint frorm induta"l are pald in full regardless of work tenure, whil other payments are subject to a sliding sae based on years of labor service. Disbity payments are mnds In full regardless of wags or other incme. 70 O$er 5 Fmly Alowaces was a subsidy paid to low-income families (detaied below). Ukraine enacted a new 15. he basic Soviet legislation on maternity universal system of family allowances in March leave, maternity gras, and additional benefits 1991, which was not means-tested, as part of its for single mothers dates back to 1947, but the efforts to compensate the population for law was significanty expanded in 1981. Paid increased prices. Further changes occurred maternity leave (at the original salary) was early in 1993. limited to 56 days before birth and 56 days after the birth, but leave with full job retention (but Other Trnlsers reduced benefts; a flat 35 rubles/month) could be extended untfil the child's first birthday. In 18. There were three major kinds of Soviet 1987, paid maternity leave at the original salary cash transfers not classified above: student was increased to 70 days before birth, and leave stipends, low-income family allowances, and with fuil job retention and 35 rubles/month bur grants. Payment for sick and holiday benefit was extended to 18 months. leave was made out of the ocwial consumption fund (financed by enterprise payments and from 16. The original law also instituted a system the general budget), not out of the individual of one-ime matenity grant and contimous enteprIse wage funds. In 1992, student stipends maternity grants for four or more children; the were icluded in the Ministry of Education 1981 revision increased grant amounts and budget, and the other transfers are paid from the provided for continuous benefits for three or resources of the socW insurance fund. more children. The one-time maternity grant schedule in the 1981 law was 50 rubles for the Student Stpends fist birth (reduced to 30 rubles If the mother was not a full-time student or employed), and 19. Student stipends were paid to most 100 rubles for the second and subsequent birdis. sudents studying in higher education The continuous gns provided for small insttutions, and were scaled according to student monthly ruble payments until the child reached pefrn (grades, prizes, etc.) and level the age of 16 (18 for full-time students)" (undergraduate/graduate). There were two basic Single mothers were entitled to an extra 20 kinds of higher education institutions-the VUZ rubles per month per child until the child (basically, universities) and the SSUZ reached the age of 16 (or 18 for full-me (cotresponding to techn.cil colleges). Student students). Military families received additional stipends were paid to 76 percent of full-time day small family allowances. IThe state provided students in Soviet VUZy and to 74 percent of day-care facilities (cost approximately 10 rubles full-time day students in Soviet SSUZy (NAoz per child per month) and low-income families 1989, 82) during the 1989/90 academic year. In were to be provided with free day-care. Uhaine, 88 percent of ful-time day students in VUZy and 90 percent in SSUZy received 17. Other ta the small continuous stpends during the 1990/91 school year (Nargoz maternity grants for three or more children (and Uk 1990, 76). In 1990, the total of all stipends of course the one-me birth grants), there was paid mounted to 510 million rubles in Ukraine. no system of family allowacs under Soviet law Student stipends were revised three times in or general practice until the price compensation recent Soviet history and the last revision was in measures of April 1991. A national law adopted 1987. In 1987-1990, Soviet graduate students in 1985 enabled a parent to apply for temporary received monthly stipends of 130-150 rubles; assistance when the other parent refbsed to pay VUZ students received 100-120 rubles; and for child support The only Soviet family SSUZ students received 80-100 rubles. Full- allowance (aside from these materaW grants) time study is considered to be equivalent to full- C4sh Trwatrs, USSR to Ukraie 71 time work for the purposes of counting work- protection. Most of the projected state revenue tenure (length of service) and other benefts. from the incrs in prices (some 85 percent) Students on ending their audies are thus was to be given back to the populadon in one considered eligible for unemployment benefit if form of compensation or another: Increasing they do not find a job; most OECD counties do base wages by 60 nrbles per month; substantially not offer such benefits to graduates. increasing payments to families with children (see Box 5.3); increasing stipends to higher Low-Income Family AUowance education students by a maximum of 50 rubles per month depending on performance and type 20. In 1974, the USSR enacted its sole of study; increasing the minimum (base rate) mean-tested cash transfer, a pension for low- pension by 65 rubles per month; increasing income families. Originally, a subsidy of 12 military salaries by 60 rubles per month for rubles per month per child under 8 years old enlisted personnel and 80 rubles per month for was paid to families with family income of 50 officers; adding a minimum 50 rubles per month rubles per family member or less. Additionally, to unemployment benefits, which were tied to families with income under 60 rubles per month the ucompensated minimum monthly wage of were enitled to fee day-re. In 1987, limited 70 rubles; increasing norms for expenditures in additional benefits to low-income families with hospitals, schools, orphanages, nmrsing homes, three or more children (or to families headed by etc.; and, increasing salary paid to working a single parent) were adopted. Ihese benefits prisoners by 60 rubles per month (Prawla, 21 were free school unifom, free school lunches, March 1991). and free vacations for both parens (health resotts) and children (summer camps). TR ON To UKRtANIA INDEENDENcE Burial Grans 23. Ukraine had already been following an independent economic course before it declared 21. In 1955, a system of bural grs independence and had seized the initiative to ranging from 5-20 rubles was set up for expand the provision of socia welfare programs, workers, employees, and pensioners; this benefit especially cash transfers, even before the August was extended to collective famers at rral rates 1991 coup. This process has continued and in 1970 (McAuley 1979, 280). The 1990 law accelerated in 1992 to the point where two out incresed the burial allotment to two-months of very five Ukraid receive some cash pension for all pensioners. Anecdotal evidence benefit from the government. suggests that these grants are inadequate to finance burial costs, which have come to include 24. What happened to increase the share of significant side-payments to officis nd social welfre spending from an estimated 25 cemetery workers. percet of GDP (40 percent of government revenmes) in 1990 to 44 percent of GDP (75 PRICE COMPmasnoN percent of government revenue) in 1992? A gready-expanded mandate for social programs 22. The USSR goverment tried to reduce was enacted In 1991-1992 In response primaily across-the-boad food subsidies on several to Ukainim fears and misundedings about occasions in the late 1980s but failed to carry the Impact of inSation. through in the face of public redstace. On 18 February 1991 retl price necreas were 25. Seven steps taken In 1991 expanded mouiced and confirmed a month later in the subsidies and benefits (see Box 5.4), The cabinet resolution of 21 March 1991, which was March co_ on package antcipated the comprised mostly of measures to ensue socia April 1991 price inreases. Ihe Deember 72 zaypter 5 social protection package, Box 5.3: Now Transfer Payments for Familes "Resolution ... on Implementing with Chldren Urgent Measures to Guarantee Social Protection for the Population in One-tim wancw at dWblth-250 R Conditions of Price Liberalization," greatly increased the scope of cash Moly payim O-100 R pa chid transfer payments to protect the * for care of infants under 18 months of age to general population from the woddng mothers or full-time stuidents consequences of a transition to freer * for children of military personnel prices. That the government is * for wards of the state or former wards of the state responsible for Insulating everyone * for children infected with HIV o ill with AIDS from infladon is an odd notion to a market-ystem economist but was and , p is pervasive in Soviet and Ukainian . to single mothers of children aged 6 to 18 thinking about macroeconomic policy. * for chidren aged 6 to 18 lacking a source of child Ihe universal entitlement to cash support compensation from the government M|Ny payments-4O R per hi for increased prices underscores the SoviettUkrainian social welfare I for care of infants under 18 months of age to philosophy that benefits should be non-workino mothers provided regardless of need. . for care of chidren between 18 months and 6 years if the total income per family member Is less than 26. The March decree, *Social four times the minimum wage e* to single mothers of children under 6 epuection for the People of the * for children less than 6 lacking a source of child Republic hin Connecton witb the support Refrm of Retail Prices." incrased we rates and transfer payments and Monthly boss-of-breadn pension-65 R Increae crated a new cash benefit: payments to families with children under 16 (or Monh d pensons-6 R Inee stdnts under 19 lacwng stipends) M o p_40 R p3er who did not already receive cash transfers. (In 1990, there were 11.8 * for any children under 16 who do not receive other million children under 16.) Three pensions or social security allowances (continues to new or expanded cash transfers, for age 18 for students not receiving a stfpend) general family allowances, expanded Amwu payments for poor families (whwe totd Income per materity leave, and unemployment fam* number Is km tn fowr tms the mInimm wage) benefits, provided for monthly payments of 45 rubles to children * for chldren under 6 years-'no less- than 200 R under 16 who were not covered under * for ctdldren 6-1 3-'no lss than 240 R the existing meity grant system . for chidren 13-18-'no less' than 280 R and for additional annual supplements Source: kvestlya, 21 March 1991, p. 2. of 200 rubles for children under six, 240 rubles for children from six to thirteen, and 280 rubles for children aged tirteen to eiglen. monthly payments of 85 rubles until the child reached the age of 6. Additional monthly grants 27. The safety net was expanded for of 115 rubles were to be paid to children of matity leave and grants, providing for miltay personndel, under the care of guardian, CQsh TrWafers. USSR to Ukaine 73 in single-paent familes, and those with AIDS 2). The minimum old-age pension rose from or HIV-positive. A new one-time grant of 95 221 to 442 rubles by decree of President rubles (presumably per child) was to be paid to Kravchuk for payments in 1992. single mothers or to those with a spouse evading child support payments. 29. In January, 1992, Ukraine raised cash transfers for milituary pensions. 'he Ukiia 28. The law guaranteed unemployment Federation of Independent Trade Unions benefits of 55 rubles per month to those In etimated that the poverty level was 2400 rubles search of work and enrolled in retraining per month as compared to the official October programs. Cash transfers to single mothers, 1991 poverty level of 256 rubles low-income families, students, survivors, old- (POSTFACTUM, Jamny 1992). Since the age pensioners, and the disabled were increased minimum wage was raised to 400 rubles on then superseded by subsequent legislation January 3, the trade unions concluded that it increasing them firther. A December resolution could only account for 1/6th of the minimum extended maternity leave benefits unt the child consumption bundle. In February, artistic reached age three and provided for additional unions and enterprises (theaters, etc.) were child-care payments unti the child reached age exempted from paying income tax and dues to six for families faling under an income ceiling. special funds. In March, 1992 goverment Most cash transfers were doubled in December expenditures were projected at one trillion rubles 1991 from the July levels. However, old-age in the popular press. pensions were increased as much as 4.5 times, based on length of service and year of retirement 30. Also in March 1992, Ukraine adopted (Demokradclma Ulkalna, 28 December 1991, increased cash transfers for low-income disabled Box S.4: Ukrainian Social Welfare Legislation, 1991 March Decree of the Uk. SSR Council of Ministers On Social Protection for the People of the Republic In Connection with ths Reform of Retail Prices,* No. 72, issued 28 March 1991. April Compensation for miners for cost of special food reported to be increased from 65 rubles to 105 rubles. Moscow Radio Broadcast, 3 April 1991. July Decree of the Uk. SSR Council of Ministers wOn Additional Measures for Strengthening the Social Protection of the Population in Connection with the Reform of Retail Prces," No. 86, issued 11 July 1991. USSR-Republics joint action program on social protection. Moscow Central Television broadcast 18 July 1991. Ukraine was a participant; few details were released. Text otherwise unavailable. Decree of the Uk. SSR Council of Ministers "On Additional Compensation to Be Paid to Families With ChiWren for Expenses Arising From the Need to Purchase School Uniforms or Other Clothing for the Children," No. 101, issued 20 July 1991. August Law of the Ukrainian SSR On a Minimum Consumer Budget. A general document basically approving the existing consumption basket methodology. No poverty level figures were specidied. December Decree of the President of Ukraine On the Social Protection of the Popuiation in Conditions of Price Liberalization, issued 27 December 1991. Followed by 1 January 1992 decree of Uk. SSFI Council of Ministers on Implementing Urgent Measures to Guarantee Social Pmtection for the Population in Conditions of Price Liberalzation." 74 aClpter 5 persons and families (Prada ubabny, 21 March percent (Urya4dOYy kwyer, March 1992, p. 5). 1992, p. 1), adopted general indexation of The March cash transfers were Inte d to help Incomes for the first quarter of 1992 (Uryadoyy the disabled pay for the increased cost of living. kwyer, March 1992, p. 2) and President These supplemental payments to disabled Kravehuk decreed that all savings deposits in the persons * me set at about 800 rubles annually, Ukraine savings bank would be increased by 100 and each child under 12 was to receive 400 Box 5.5: Ukrainian Sodal Welfare Poiley Options Group or Transfer Soviet Baseline Ukrainian Additions Options (1956 to 1990) (1991 to mId-1992) (1992 and following) Elderly No means-test for pensions. All baseiine provisions Flat-rate odWage pension. Eliminate or Majority reolved more than retained. Above-minimum reduce early rtirementL Pfrorat or rmnimum. Early retirement pensions were greatly eliminate benefits for double-dippers. ages (60 for men. 55 for increased. Only 37 percent Incrsese retirement age to 65 for both women). Double-dipping of old-ago penslonera reoeive men end women. deowed with no reduotion in minImum pension. beneft. Benefits not taxed. Disability State was guarantor for di Benefits inoreased but stil As private firms appar, thought must disability. work-related or appwaently too low. be taken on shifting work-related general. disabliity to nsurers. Survivor Universal and for extended Benefits incresed. Although social sourity survivor family struoture. payments are not means-t'sted In the US, they are low and privete insuranoe Is evailable. This I one option to pursue. Low-Income Mean-tested benefts. enefits increased and Retain and review. Supplements may speciel one-time pavments be too low. edopted. General famly Enacted at the vary end of Enacted separately by Review and retain for low-Inoome dowanoes Soviet rie. Ukraine before Soviet low. feanlies. Universal subsiies to all children under 16 regardless of need. Students ApproxImately 75 peroent of Approximately 90 paroent of Stipends for poor and vulnerable (undergraduate full-time students received full-time students resolved goupre only. State should review univer and stipend In addition to free stipends In addition to free poiioy of fres tuition. graduate) tuition. tuition Maternity leave Job held open for 1 year Maternity leav extended to Mawrnity leave should be reduced and with modest monthl three years and benefit supplemental payments could be maternity benefit, raised. Possibe elirinated. supplemental paymonts for child oare until age six. One-time birth pro- Established In 1947. Anounts raised. State may wish to retain this pro-nate natal payment policy on symbolia grounds. Burial benefit Weii below cost of funera Increase but probably st iiminate In fever of low4noome but universa. below the osat of funedra. ^m.ans-'sted) oemeteries. Price Announced In April 1991 but Wages, transfers, nd Indexetion shoul be iimited to cash compensation Implemented by individual savings deposits inoreased transfers. Somehow the meseage that Repubios. Reflets idea end system of indexation price Inore_a should not be the everyone (regardless of implemented. responsblIty of the state should be need) for prioe inereases conveyed to the general publio. CAsh 7Tanfs, US to Ukralne 75 rubles per year. An additional one-im arizd In Box S.S. By early 1993, the payment of 200 rubles was to be made to non- governmnt had alredy tan some positive working pensioners, and to children of low- steps descibed in succeeding chapters. income families (per child under 12), while a one-time payment of 100 rubles was designated for nonworking mothers of children under 3, to the children of military personnel, and to the unemployed (provided an income ceiling was not exceeded). 31. Ukraine seized the Initiative in 1991 to rectify perceived shortoomings in the soci safety net inherited from Soviet practice. Unfortnately, Ukraine approached this task from a "univealw perspective, instead of a means-tested one. 'Me resfting explosion in transfer payments in 1992 can be at least partially attributed to the new system of universal family allowances and price compensation measures adopted in 1991. CONCUSION 32. In a sharp break with pre-1991 Soviet precedent, by the end of 1991 Ukine bad adopted a system of general famfly aUlowances in addition to the meanstested Soviet pension for low-income families,. The level of 1ll cash transfers was raised repeatedly during the year, leading to a large expansion in cost. Cash transers increased from 30 billion rubles in 1991 (for old-age pensions and maternity grants) to somewhere around 440 billion rubles in the proposed JIme 1992 budget. A large share was due to the new general system of family allowances and price compensation, but the real culprit seems to be an explosion in payments for old-age pensions. In 1990, old-age pensions amounted to 12.6 billion rubles; in 1992, civilian old-age pensions were projected at 253 billion rubles. This increase is pady due to increases in the minimum old-e pension, but the more significant fact ses to be the December 1991, July 1992, and October 1992 increases in length-of-service pensions (pension exceeding the minmm). 33. Past and prowpective policy opdons are 6 RgrRaDi, DlAunv, AND Suvvwoms' rBzNs seek to ideatify those pards of a social safety net 1. The growig evidenc of the falure of t are most crtaiy eial to pte the Soviet economy helped genere demands for vulnerable groups ageast the social cost of soal assistance during the 1980s that relted in poverty and adjustment. legislation in 1990 expanding the number of benefts and beneficiaries. The newly- s. A& this report was being prepared, independent Ukrainian Parliament tried ovem authorities were already beginning roughout 1992 to assure that social assisbace to take the steps necessay to adjust spending to was superior to that offered under the Soviet the severe limits of reduced revenues occasioned system, and that pensions and allowances were by the collapse of output. Some suggestions and no less than Russia. 'heresult troughout much recommendaions discussed below are already of 1992 was a *benefits race with acutely- uderview by goveranmen plemeation of damaging fiscal implications. reforms, particularly the seqencing of changes in social policy, must be futly integrated with 2. The introduction of coupons in 1992 overall economic policy. For example, pension freed Ukraine om extremely-imposed limits on and family-allowance policies must be developed moneary emission, easing the administrative in conjunction with employment, monetary, and problem of paying cash beneft. The resulting fisca policy. When the government hardens the inflation, however, undermined the real value of budget constraints on state enterprises, there will nominal pensions and allowances. By Mach be sbtanta implications that could include 1993, govemment uthoritie knew, and reduced payments to the Pension Fund and Parliament leaders were beginning to recognize, related deficits; layoffs among the elderly who that macroecowmic stability would only be have continued to work; job loss in two-earer feasible if government obligatione :or socia families that will probably fall most heavily on assistance could be reduced to a usinable level women; and high rates of unemployment and not much greater than what prevaied, as a share further collapse in demand in specific single- of GDP, in the 1980s. industry towns that face mass layoffs. Social policy must be prepared to confront such 3. Since public socia spending had risen possibilites; financial soundness of the several from under 20 peu ent of GDP at the startof the social funds will be a critical aspect of the Gorbachev yeas, to 25 percet of GDP at the cwkacity of social policy to respond to this end of the 1980s, and a programmed 44 perce schallenge. of GDP in 1992, the new goverment in office as 1993 began, faced a major adjustment PasONM AND BENITS challenge. i chaptr and the next, which covers alowances and rdated benefits, breaks S. In January, 1992, 13 million people down the aggregate spendirg packge for 1992 received benefits from the Pension Fund, and into some of its component parts with the the Ministry of Defense provided pensions for inention of finding areas for spending cuts that an addidonal 362,OO( people in the security will be least painful. Further, these aers sector. lbus, almost a quater of Ukhinians 78 Capter 6 receive a pension allowance (see Table 6.1). receIving beft befre Janay 1992. The Retirees who have notyet reachd psionable Penson Fund projected in July that by age account for about 7.6 pecn of total November vitually all pensioners would receive retirees.2' Tables In the Satistical Annex of the maximum benefit of re imes the tis report dewibes benefit to which each group mininm pension. The Miistry of Finance was entitled as of July 1, 1992. projected that the average pension for Pension Fund beneficiaries would be 2.4 times the Tabe 6.1: Pensioners end Ther Sefts. minimum. With inflation at over 20 percent per January 1.1992 month and no timetable for currency Avg. stabilton, it iS vitually impossible to Amouwt as eclculat he changing rea value of nowinal a Percent pensions or to predict the timing and amount of Percent of pension adjustments. Number of inimumn Pensioners (000) Totl Pensloni 8. Pensioners who continue to work after Pension Fund 12,997 97 122 age 60 (55 for women) and disability pensioners Supported who work and ean do so without reducing their Retirees 10,318 77 125 bnefits. As of January 1992, a quarter of Disabled 1.224 9 123 recipients in both groups wee earing a salary Dependent 693 5 98 and receiving a pension benefit payment. The Ofther 500 4 75 poportion of doubledippers will decline over Miar 262 2 144 the next yea as these groups are among those Milrtary Paid from most likely to be laid off. ministryof 362 3 622 Defence 9. Most disabled people who reach Total 13,359 100 133 reirement age can choose between continuing to Notes: 1. FIgures do not reflect July Vand receive a disability pension or receiving a October wo92 ncfever d rerment pension. Military reirees and 2- Ppludi those diebed rom Chernobyl vicims can receive both disability chldhood and hobos. and ement penions. Source: Ministry of Social Welfare Souac~ oF FUNDS 6. Most benfits exced the mimum 1. In 1992, funding for pensions account pension. Average pensions funded by the for 23 percent of total government revenues.27 Pension Fund were abou 22 prcen above the Ihe Pension Fund accounts for about 90 percent minimum in June 1992. Average mility of total pension resources, state and local pensions issued by the Pension Fund eceeded general revenues ermarked for seurity the minimum by 144 percent, whil peions personnel, 7 percent; and the Chernobyl Fund issued by the Ministry of Defens averaged 522 earmarked for pension supplements for percent of the minimumL Pension S were Chesnobyl victims, 3 percent3 greatly inraed for far worers2 In 1992. 11. The employer social Insurance payroll 7. Ihe rdationship of most people's tax iS the Pension Fund's primary source of benefits to th minimum pension underwet an fuing, and acounts for 97 percent of Pension upward revision In July 1992 and again In Fund resources.2 Additional revenue sources October 1992. The legiaure approwved a new include a 1 percent tax on wages received by law that raised pensIons for those who began employees; a 10 percent payroll contribution Ref f,ent. DLrbwWy, and Swv Svor' Beulu 79 from self-employed person; who do not have Ministy of Fiae placed total spending at employer payroll c-Ltributions but evertheless R354.9 billion. lhe discrepancy between the wish to be eligible for a disability or retirement two is primarily accounted for by the uncertay pension; rers from Pension Fund investments; over the effects of the July increase in pensions. and grnts from entepses chadties and other Both projections were overtaken by the sources (see Table 6.2). unexpected acceleation of inflation in the second half of 1992. USES OF FuRN PENSON IuND SuRpusS AD DEFCrs 12. Pensions in 1992 accounted for the largest share of social sector spending; 32 13. Pension Fund stimat indicate that percent of total spending and 14 percent of pension spending would exceed reveues by 5.5 GDP. Benefits to retirees and the military percent of total goveroment and state fund account for 75 of tota pension spending; work revenues and 3 percent of GDP. According to disabled, 8 percent; those disabled from Mistry of Finance calculations, pension childhood, dependents and other benefits, 8 spending would accrue a small surplus. 'he percent; additional benefits for Chernobyl disrepancy between the two estimates was workers and victims, 3 percent; delivery and atributable to different assumptions regarding dmimnistrative expess, 3 percent; expenses future employment and the effects of the July accrued by the Pension Fund in 1991 but not and October pension increases. Data closing the paid in that year, 3 percent (able 6.3). books on the Pension Fund in 1992 were not Pension Fund esmates made in July 1992 available for this report. indicated that pension spending would reach R403.9 billion in 1992 while estimates by the Box 6.1: The Pension System The pension system Is based on benefits indexed to the cost of a rmnimrmn conswu budget for pensioners. To be eligible for full retirement benefits recipients must havo worked for 25 years (20 for women). Pensions are calculated as a peroentege of previous salieMs. After 25 years of service (20 for women), workors reoive a pension of 55 percent of thir salary. For each additiona year beyond the rninimum that they work the replaosment rate of their ulinmat pension is inoreased by ons percentage point. The nauxmum pension cannot exceed 300 percent of the minimum benefit. Ealy retirement takes pboe before ae 60 (S5 for women), but ofter at least 26 (20 for women) years of service. Years of servie Inlude m spent In highe eduation; serving In the armed services; unemployed but seoking a job; and taking care of children under age 3 and disabled persons. Bnefits are proportional to yeasr worked but are below these rocsived by retirees who have reached age 60 (55). Benefits cennot be below onehalf the mninimum pension. DisabiUlty pensions are determined based on previous salry and seventy of disability. The replcement rate varies from 40 to 70 peroent depending on severity of disability. The local adrninistrative office of the Ministry of Social Welfare can also nake adjustents for Indiv;dusi oases. The minimum disability pension s 50 percent of the minimum wage, the mxidmum Is 400 percent. Minor childarn of workers who die reciv a pension based on tha Income of their deoeased parent and the length of time the parent worked. This pension cannot be below 50 percent of the minimum pension. People who did not work but reached retirement age can reaei a Osoeia pensionw set below the retirement pension. People disared from ohidhood are also eligibe for these pensions regdess of their age. This pension ranges from 30 to SO percent of the minknum pension for people who did not work; and from 50 to 200 percent for pople disabled fomm birth or childhood, depending on the severity of the disabiity. I~~~~~~~~~~~~~~~~~~~~~~~~~~ I 80 Ciapter 6 Adninlstioan Table 6.2: ProJected Sources of Funds for Pensions 1992 FY Percent Of 14. Payroll tax revenues for the (million Percent of Govemment Pension Fund are collected by Source rubles) Total Revenuel district-level adminsurton offices, Total Pension Fund 322,137 90.3 20.7 consolidated and forwarded to the Employer Payroll Tax 321,794 90.2 head offlce of the Pension Fund. Employee Payroll Tax 9,788 2.7 Cena Dertments of the Ministry omw 175 0.0 of Social Welfare (MSW)* on the NonPension Commiments (9.6201 district level collect pension-rolated State oeneral oevetuest 23,647 6.6 1.5 documents from applicants and State Chenebrl RVeue 10,918 3.1 0.7 calculate individuals benefits. Ibis tat 3nbFd09 1 0.7 information is passed to district Total 356,702 100 22.9 paymnt centers of the MSW that Notes: Figures are averages of Pension Fund and Ministry of instuct the head office of the Pension FIance forecasts. 1 . Includes state and local general revenues ankd Fund regarding its total obligation revenues from the Pension, Social Insurance, each month and send the Ministry of Employment and Chernobyl Funds. Communication a list of beneficiaries, 2. Other includes self employed income tax of 10 their addresses and the payment owed percent, investments and grants. to each. 'he Pension Fund sends its 3. Earmarked for military pensions total bligatott tothe Miis" of4. Earmarked for additional beneits to Chernobyl toiobligation to de Ministby of workers Communication which distributes the Sources: Pension Fund Draft Budget for 1992 (Ministry of pensions to district post offlces. mFiance and Pension Fund June 1992 versions), Beneficiaries claim their pensions at 1992 Draft Consolidate State Budget for Ukraine the post office. If a beneficiary is (June 1992 version), Draft of 1992 Chernobyl disabled the post office may deliver Fund Budget (June, 1992 version). the funds. Tle Ministry of Communication charges the Pension Fund 4.2 percent of pension volume for its payments have risen dramatically. the number services. of recipients rose by one third and average increased pensions by a factor of 20 (before 15. Ihe MSWVs central departments are adjusting for infation). Some eligible overburdened, and there is frequenty a delay of beneficiaries eturned to Ukraine from other one to nine months between the time a person pars of the Soviet Union afte its dissolution. retires and the first payments of pension Retirement benefits were extended to some benefits. This problem is expected to worsen as additional collective-farm workers. the departments must calculate new pension benefits for virtually all of the systm's 13 17. Changes in the real value of pensions are million clients. difficult to calculate; Table 6.4 offers one way to make ari estimate. The combined effects of a RECOMMDATIONS 25% decline in GDP, a 100 percent increase in the pension share in GDP, and a 35 percent 16. The estimates in Tables S.1 and S.1 increase in the number of pensioners was a l0 suggest that pension payments rose from around percent increase in average pensions between 5 percent of GDP in the Brezhne years, to 7 1990 and 1992. These crude estmaes, if percent of GDP in 1992. This level of spending confined by more detailed studies, show that isu able, but reductions wil not be easy. pensioners were more than protected; other Both the number of pensioners and averge sectors of the economy must have borne the Redrement, DlJbllty, and Swvivrs' &B ts 81 brnit of the massive collapse of Table 6.3: Uses of Pension Funds output. In 1993, ald uwtR the 1992 FY Share of Percent economy recovers its previous level (MIllion 1992 h Vol. of GOP of output, it may bs essential that Use rubles) pension beneficiaries reduce teir Total Pension Fund 344,828 90.9 12.6 share of GDP, perhaps by a mix of Cash Benefits, 319,576 84.2 three types of change: (1) reducing Retired 252,600 66.6 the number of beneficiaries, (2) Disabled 29,884 7.9 reducing average pensions, but (3) iDepenent 16,394 4.3 increasing the pension floor to assure Never Worked 11,551 3.0 protection against poverty and reducing the pension ceiling to Militar 6,547 1.7 promote social justice. Paragraphs Additional Befts 2600 07 that follow offer some suggestions for Depvent Costf 7,425 2.0 implemenfing such changes. Repayment of 1991 4,246 1.1 18. One suggestion isto introduce Add Benefits Owed3 11,582 3.1 a unitary pension rate for the duration Partial Administration 2,000 0.5 of the crisis and to adjust it C08t8 periodically to assure that all Chernobyl Victims Add. 10,918 2.9 0.4 recipients are proteced fWlly against oenef nse 23,647 8.2 0.9 significandy ease e pension Total Pensions 379,393 100.0 13.9 adminisrative burden. It would also Suwplus (Deficit) (22,691) -6.0 -0.8 be possible to assure that the benefit Notes: Figures are averages of pension fund and ministry of is fully refikective of the social- finnc forecasts protection objective. Many 1. Estmates for the breakdown of cash benefits protection objective. Many between types of beneficiary were made based on pensioners now receiving several the number of beneficiaries in each group and the multiples of the minimutm would lose average pension received. support as a result of such a unitay- 2. People who never worked including those disabled benefit system. An option would be in childhood and hobos. a dual level of benefits, thus 3. Benefits accrued but not paid in 1991 simplifwg biAlw,(mg4. Includes only Pension Fund administration costs. simplifying administration but leaving Sources: Pension Fund Draft Budget for 1992 (MinistrV of some difference between poverty- Finance and Pension Fund June 1992 versions), related and higher benefits. In either 1992 Draft Consolidate State Budget for Ukraine case, high monthly ilation will (June 1992 version) and mission estimates. require fequent adjustment of pension payments. pay-as-you go system of retirement benefts, will NORMAL RETIREMEWT AGE soon be too great for the economy to bear. lhe proposed increase amounts to an additional two 19. Normal retirement age for both men and (5) years of work for men and 7 (10) working women could be increased gradually over 10 years for women. Men have a life expectancy years to age 62 or age 65 for actuarial and of 72.4at age60, womenlifeexpectancy is79.5 demographic reasons. Life expectancy is at the same age. By the end of the ten-year growing, the birth rate is already low, and the adjusent period, totl pension spending would burden of the pensioner population on the be 20 percent lower than it would have been If working-age group, an inevitable feature of a the age limit had not been increased-a savings 82 ape 6 equivalent to about 3.5 percet of GDP.3' Erly Retiat Note, however, tilat thes spending reductions lie mostly in the futre and can havse viuay no 22. Ile opdon of early retiement for people effect on current budget difficulties of the who bave worked more than 25 years (20 for Govrnment These considerations suggest Ihat women) but have not yet reached the normal it may be unwise for Govenment to spend i re ag of 60 years (55 for women) scarce political capital to achieve this change should be discontinued. Less than 5.6 percent during the period of crisis, no matter how of pension spending goes to early retirees so essential such a change may be in the longer savin will be small. run. Adninistratn and Pesonal Secrty Acounts 23. The Penion Fund should separate its 20. A more attractive option beiog finding and administraion of allowances and of considered in the Ministry of Social Welfare is pension. An old-age, sivors' and dibsabdity to instue a system of personal-security insurance fund should not pay for or administer accounts that would pemit a more flexible benefs that are not insrable risks. Social approach to designation of the rerment age. sistce, a responsibflity of the stte, should With such a system it would be both feasible and be funded from general revenues. desirable to eliminate the provision of a mandatory reirement age. Able-bodied workers 24. The cental offices of the Pension Fund couldthen continueto be employed as long as and Ministy of Commnaication, and four they wish, with reed provisi for many separe district-level minon networks means to transfer pension rigbts to third parties undertakepension-relaed activities. Ileprocess or to use them for such purposes as flnLcing of collecting payroll tax revenues and calculating private annuities or other expenses that do not and distributing benefits shoud be simplified and interfere with the income-secudty provisions of rationalized. pension law. 25. The Fund did not pay indexing benefits Pension Bnits for Working People on Apri payments in 1992 because management knew that the minimum pension was to be 21. About 25 percent of old age and disabled increased in May. Indexing is also paid one to pensioners contne to work (Mhavlichenko, two months after the month in which the 1992). Given that the purpose of pensions is to obNigation is accrued without adjustng for the support people who are too old or disabled to payment's loss in value. In first quarter 1992, work, people who continue to earn income from the Pension FPid acroued a large surplus their labor should receive a reduced benefit. because the Social Insurance tax during that Savings from this policy modification could period was 61 percenL With some of this reach 10 percent of total pension spending surplus, the Fund made unplanned payments of (about 2.2 percent of GDP) asuming that R2.6 billion. Ihese ad hoc expenditures were employmen rates among retirees and the equivalent to about 10 percent of the Fund's disabled do not decline over the period.'2 total planned payments for the period. The Virtully all savings from this policy Pension Fund should sysematze its payment of modificadon would be derived from reducing indexing and other benefits, and retain surpluses benefits for working retirees as the total number for not spend them unnecessarily. of working disabled is very small. 26. The Pension Fund could benefit from technical assiance in investment management. Retreme, DisabUity, and Swvhvrs' Uew$t 83 Table 6.4 Changes in Penalon Spening 1990-1992 Factor 1990 1992 1. GOP, 1990=100 100 76 2. Pensions, %of GDO 7 14 3. (line 1 x line 2)/100 7 10.5 4. Pensioners, millions 10 13.6 5. tine 311ine4 0.70 0.77 Souce: Est8mted on th bas of offis dat Investments are a Insignficant share of tota Pension Fund revenues currendy but could become increasingly important over time. Macroeconomic intabilityposes enormous risks; Waining in risk manement could yield substantia benefits. Aggg Pte Won Spending 27. This discussion suggests a number of options open to Government for essentl reduction in pension spending. Even in 1993 it would be possible to introduce a unitary benefit and set it at a level consistenthwi the financil capacity of the Pendiou Fund. For the net 12 to 36 months, if it may be necessary to adopt a single, or two-tier, pension scheme to keep expenditres down while protecig the most vulnerable. It might also be possible to cut the benefits of those who continue to ear a salary (see Table 6.5). Given the predominance of regular reiee benefts, and payments to military retirees through the Ministry of Defence, these categories cannot escape reductions in any effort to bring pension spending back to the susinable levels observed in the 1980s. Beyond 1993, changes in retirement age and intoduction of personal security accounts could lead to somewhat lower pension spending. 84 Oakpter 6 Table 6.5: Currn. Suggexted. and Sustainable Policy for Pensions Percent of Gross Domestic Product Policy Actions Required Current Suggested Sustainable Spending Category Policy Program for Program 1993 Beyond 1993 l________ Suggested NonwWorcing 6.6 5.1 2.5 In 1993, begin raising retirement age Retirees and eliminate early etirement option. Raise age by 1 year per year until age is 62 for men and women.2 Alternatively, introduce individual security accounts. Retirees Who 2.7 1.7 0.7 In 1993 reduce beneflts by 50 Continue to work percent for people who continue to wor. Disabled 1.1 0.9 0.9 In 1993 reduce benefits by 50 percent for people who continue to work AN Other 2.6 2.6 2.6 Beneficdies Induding ay) _ __ Administration and 1.0 1.0 1.0 Other Costs Total' 14.0 11.3 7.7 Notes: 1. Does not sum exactly due to rounding. 2. Eventual savings from raising the retirement age could reach about 3.4 percent of GDP by 2003. 3. Upper bound estimates of savings since many pensioners might decide to stop workin. 7 ALWwANCES AND BENEFITS Chemobyl payroll tax, 11 percent from the 1. Family allowances and special cash social insurance fimd and 4 percent from the allowances grew over the past decade in paralel pension fund (Table 7.1). with, and for reasons similar to, the growth in pension spending. Events at Chernobyl,and the USES OF FUNS response to them, had a special role in expanding the demand for government 4. In 1992 benefits targeted to Chernobyl assistance, especially when independence left the victims account for 39 percent of social Govnment of Ukraine with a large assistce spending; aid to vulnerable groups, 37 responsibility tha had previously been shared percent3; allowances available to the across a population five times as large as Xt of population as a whole and specific, non- independent Ukraine. Chapters 1 and 5 vulnerale groups, 23 percent; and partal described some feaures of these allowances; administration costs, I percent (Fabe 7.2)." this chapter emphasizes the fact that costs have risen dramatically to 8.7 percent of GDP in 5. lhe food subsidy program is part of a 1992, posing a serio"e fiscal problem. Early in more general program of consumer subsidies. 1993, government authorities began ting steps In 1992, consumer subsiies reach 5.1 percent to reduce spending in this area yet concenmrate of GDP. Subsidies for udlities and residenti resources of those groups most at rik of bearing services accounted for about one-half of this the socidal costs of adjustment. The options spending. Food subsidies to reached 1.9 percent suestad here must balance great need against of GDP. In July 1992, the government limited government resources. eliminated all food subsidies except support for bread prices. Thus, dte food subsidy budget for 2. In 1992, Ukaine offered a large number 1992 priarily flecs spending beibre uat of cash allowances and assistance programs tits tme. In July, the subsidy was replaced by a citizens. Some transfers were direced to low- monthly cash allowamc equa to 30 percent to income and vulnerable groups; others went to 40 percent of the minimum wage for eacb child the genea population and non-vulnerable under 18, or pension-age adult if fmily income groups; and still others to Chernobyl vicdms. In is below two minimum wages per person. !993, the athorities were moving to reduce the These subsidies were again subject to review number of allowance recipients by as much as early in 1993. 90 percent; from 20 million to 2 million, conentoring more limited speding on poverty Chemobyl-Reated bdeneft groups. 6. Benefits to Chernobyl vicdms include SOURS OF FUNDS wage bonuses and other benefits to workers in areas of radiation contminaon. lhese benefts 3. Allowances accounted for 20 percent of increase with radiation levels in the work site, socW sectr speding in 1992 and about 8.8 and monetary bonus range up to 100 percent peret of projeted GDP. About 47 percent of of the worker's base wage. Housing and total allowance funding dernved from general relocation benefits account for about 9 peren of govenment revenues, 38 percent from the Chernobyl-related allowance spendg; disabiliy 86 C_pter 7 and death compeon,9 percent; supplemena spending; sick leave and short-term disability family allowances, 4 pert; food provisi, 4 pay, 27 percent; benefits for the disabled, 11 pecent; and other allowances, 6 percen. Tlese percent; recreation benefits, 8 percent, maternity outdays e finaced from the Chnobyl Fund benefits 6 percent; and other benefits, 7 percent. which also fuds medical ca. Tbe Social Insurance Fund pays for 42.5 percent of non-targetd benefits; state and local general Denefits to Lew-Income and Vulnrable rev , 40 percent; and the Pension Fund, Groups 17.5 percent. 7. Assstn to low-income and vulrable Potlferatlon of Benfits groups accounted for 37 percent of 1992 welfare spending, half of ittrough an allowance to low- 9. The system that prevailed in the middle income families for the puchs of food of 1992 offered over 60 allowances and benefits, products. This beneft was hitroduced as a many of which do not differ subsnively from means of protectig the poor fom the one another. For example, there were 12 cash consequences of dreguation of food prices. allowances that low-income or vulnerable The allowance is paid mohly for each cbhid families can qualify for. These include separate under 18 and pension-ag adult, and ranges fom stipends for childens food, children's clothing, 30 peret to 40 percet of the minimum wage. children's products, and general child Annual allowances tD compensa low-inome . Under the caegory of general families for inreas in chUdren's lothig and child main ce, fmilies may qualify for products prices account for 24 pecnt of different allowances, and different stipend levels vulnerable groupe allowances, and were also within an allowance, depending on the number itroduced to protct fmilies from price of children and age of children, whether the decontol; non-cash beneft to the infirm ederly mother worked before childbirh, the age of the account for 10 percent of funding; stipends to mother, whether the children are eligible for low-income families with children from age 3 to aeV 6, 6 percent;z addidonal allowances to low-income Table 7.1: Projcted Sources of Funds for Alowances famlies and single mothes, 8 and Boefits, 1992 percent; and maintenance of Total Percent of Percent of orphnages,4 perce. Assstance to million Total GDP low-income and vulnerable groups i rubles) funded from stat and local genera Geal Ste" ReveMues 112.446 46.9 4.1 revenu . Payro Taxes 127,099 53.1 4.7 Chemobyl Payrl Tax' 92,023 38.4 3.4 Uelts for theGenlpulaplon Social Isrance Payroll Tax 25,295 10.6 0.9 and Non-Vublerable Groups Fension Payroll Tax 9,781 4.1 0.4 TOTAL" 239,546 100.0 8.8 8. Ass0stance to the genera Note: 1. In practice incorporated into the state budget, but population and specific non- std separtely In this report. Chemobyl Fund vulneble groups accoun for 24 documents were ambiguous. Actual figure Is from pern of socia welfare spen. 31 to 92 billion rubles. Stipends to all fmiles with chldren 2. Does not sum exactly due to rounding. une age 3 (under age 2 i Iho Source Ukmine Consolidated State and Local June 1992 Draft mother dd not work pir to Budoet for 1992, June 1992 Drafts of 1992 Budgets for chldbh) acunt for 41 percent of the Pension Fund Social lnsxnce Fund, and Cheffiobyl non-vuXla l gro0up wb 41 pelW ofareaFund. non-vulnerable group welfare Allowancw and Beng*f 87 Tablo 7.2: Projeced Uses of Funds for Allowances and seneflts, 1992 Total Percent of Expenditure Item (ilon nbes) Total Perent of GDP Chemoby Related 93,073 38.0 3.4 Employmet 963,470 26.5 Housing nd Ralocaton 8,292 3.6 isabliy 7,901 3.3 Family Allowance 4,110 1.7 Food 4,038 1.7 Other 5,262 2.2 Low-Income and Vulnerable1 87.65S 36.6 3.2 Food Allowance 42.288 17.7 ChidrWens Clothes/Products 21.003 8.8 Allowances Benefts for Eldely Infonmed 9.58 3.0 Low-Inccme/SinglParent Allowanos 6,904 2.9 Allowans for Children Ages 3-4 5,219 2.2 Orphanaes 3.677 1.5 Not Income Targed 55.872 23.3 2.1 Children Under Age 34 22.633 9.4 Sick Lae/Short-Term Disability 15,274 6.4 Benefits for Dlsabled 6,297 2.6 Recreation 4.556 1.9 Matert Leave 3.174 1.3 Alowne for Families of Serndwen 2.700 1.1 Compenston to Exonerated Citns 800 0.3 Suport for Coal lAinws' Union 299 0.1 Othe 140 0.1 Patil AdmWnistraton Coea 2.941 1.2 0.1 TOTAL 239.548 100.0 8.8 Notes: 1. Target to fmile earning ls a two _inmum wage per peson and/r vuneale groups. According t the 1980 enowus, ap_ naeV 425 percent of the populton ble an Incom of 2 minimum wae or les. 2. Incudes dVy or and assstnce wth hushold chor. Isted under tho lino Item 'oter ilo in the natondl budget 3. Incldes a vadety of allowanoes for low income ftores nd single mote. In Ukraine, most famies headed by singlo women ae low4noome. 4. Alowances for al cldren beow g 0 are grouped toge In the naiona budget. Spening on allwane for hildren undrw a 3 (which we not ^moated an for idren og 3 to 6 (which are meao tested) were sepraed based on the number of children In eh ctegory and the s of the benfit each Is entled to. 5. Assumed to be 33 percent of combined nuring hon and orphoag epenses. Nursng home expense e captured In the heah sector. 6. Incudes telephone Instaaion for votennd funea alowacs. Fune aowance spendi ng Inudes only funerwal adowaen for tho enployed, which we funded by ho Soial Insun Fund. Funral alowane for retird people w funded by the Pnion Fund and for unemployed people by stoa gera reveus. Nith the Pension Fund nor the stato govemnmwt explct budges for this endiur. 7. Includes only administon of t Soid Insrane Fund and som sate purcae if equipm and supplios for socia welfare offes. Sources: Ukrain Consolidated State and Local June 1992 DOrt Budget for 1992. Jum 1902 Drafts of 1992 Budg for the Pesion Fund Socil In ce Fund, nd Chemobvl Fund. other alwaes, whelher the family is headed by a sIngle parent, whether the absent paret 88 ajapter 7 pays alimony, and whether the single parent a level that can be financed. The alternive is was raised in an otphanage. The annex tables simply to allow inflation and the chance include list of allowanmces and benefits, the adjustments of benefit levels to provide social requirements for qualifying for each, and the protection: Experience in OECD countries size of the award or the nature of the benefit as indicates that the result will be greater suffering of July 1992. The list was being modified for the poor than would be necessary if a filly- significantly in 1993. articulated policy would be adopted. Adndistration and Fuding PROrwriNG A PovEY INE 10. Administrative and funding 12. A principle that has guided analysis in responsibilities for benefits are set out in law, other countries of Eastern Europe and the but vary by allowance (and often by status of former Soviet Union is that those who are poor, beneficiary for the same allowance) and have or are likely to be made poor by the events little underlying logic. Many allowances are associated with the collapse of output, must be finded, admiered and distributed by several protected fidly agast eros:on of their levels of agencies; others are flmded by one agency, living. Ihe means of protection is provision of administered by a second and distributed by a adequate subsidies and social services. A first third. For example, all families are entided to step in turning principle to practice is an allowance for each child under the age of 3 establishment of a realistic poverty line, that is, (2 if the mother did not work or attend a higher a level of living below which no one should be education school and is over 18 prior to permitted to fall. The first of these specific and childbirth). The Pension Fund pays for these calculated poverty lines w3s applied in the allowances out of its own resources for children United States during the War on Poverty in the under age 1.5. Stipends for children ages 1.5 to 1960s. It defined as poor those families that 3 (2) are funded by state general rev.eues given must devote more than one-hird of their income to the Pension Fund but earmarked for this to the purchase of food. Many countries have Purpose. If the mother worked or attended a applied a similar standard but with a larger share higher education school prior to childbirth and of income allocable to food. In the poor was still employed or a stuident at the time the countries of South Asia and Sub-Saharan Africa, baby was delivered, the allowance is for example, only households that allocate two- administered by the mother's enterprise or thirds or more of their expenditure to food are school. If the mother did not work or study included among poverty groups. Such a prior to childbirth or was laid-off before the measure is difficult to apply in Ukraine because birth, the allowance is administered by a district- the prices of commodities that would constitute level social welfare office. a large share of food consumption are kept well below international prices. Most households RIATMMENDATIONS allocate a small share of income to food; by this measure, only a tiny percentage of the 11. Discussion in this chapter, and Chapter population lives in poverty. 5 which precedes it, indicates that the shre of public resources allocated to family assistance 13. Ihere is an urgent need for development rose from less than 3.percent of GDP in the late of the methodological and stistical basis for 1980s to over 8 percent as programmed for 1992 identifying those groups whose income (see Tables S. 1 and S.1). This much higher government must protect. The basket of goods level is probably unsustainable. Some principles currenly used to measure movements in the must be adduced to govem the means by which aggregate level of prices is weighted too much the obligations of the state are timmed back to toward commodities consumed among urban Allowances and Benejis 89 middle-income earners. A different basket of adjusted perlodically to assure respect for the goods reflecting consumption by rura and urban principle that those at risk be protected fully. lower-income earners is required. Development agencies are currently providing tachncal PREFENTAL TRETMENr FR TE POOR yassistance to other republics of the former Soviet Union that aims to improve capacity to 16. A second principle is that all benefits measure the impact on real incomes of variable above the poverty ine should be continued only price movements for farm and nonfairm to the extent that resources permit. The collapse products. This assistance could usefully be in output, should it continue into 1993 and extended to Ukraine. Early in 1993, the French beyond, will severely limit the capacity of the statistical agency was beginning a program for state to make transfer payments to retirees, the technical assistance in household and enterprise disabled, and other pensioners, as well as to survey design and analysis for the benefit of Chernobyl victims, workers on sick leave, Ukraine's Ministry of Sttistics. families with minor children, and, most notably, the unemployed, displaced workers. Available 14. Pending development of an income- resources may be driven down, for a time at measurement tool, near-to-medium-term safety least, to a level that would permit no payments, net policies could be built on available even those reprneseting clear and certain knowledge about demographic characteristics, obligations of government, beyond social such as family.size, structure, and composition, protection for the poor and vulnerable. At that and including features of residence, disability, poit, government must make hard choices that and dependency on friends or relatives outside distingish falling into poverty from mainennce the household, as well as economic means that of a reasonable standard of comfort. Inaction, include the ability to work and to earn from past or lack of a clear policy choice in favor of savings. Analysis of 1989 census data would protecting those at greatest risk, would probably reveal details about the numbers eligible for the result in acute misery for a signiScant share of food allowNance provided to low-income families the poorest, particularly the rural elderly living by oblast and sub-region. Experience in the alone and children in single-parent households. USA and UK sbows that one-third or more of all families and individuals eligible for various BEYoND TE CRIs benefits do not in fact collect them because of ignorance of their eligibility or the stigma that 17. In the longer run, the principles of risk may attach to welfare dependence. The costs of sharing, social insurance, and earnings-related social protection in Ukraine could be benefits should gradually be restored as the significantly affected by public attitudes toward economy strengthens and public obligations no assistance programs. longer constitute a threat to macroecononmi stability. The treatment of these insurable risks 15. The identification of those poor and varies widely from country to country, with vulnerable enough to require public assistance some countries, such as the USA giVing will change, perhaps dramatically, over time if preference to private markets, and others, unemployment strikes specific regions or single- especially among EC members dep&ding On the industry towns, so government must have the state to finance and provide insurance (Barr capacity to monitor continuously and reshape its 1992). Whatever mechanism is chosen, these policies to address new needs. The groups and markets confront the dual problems of moral their needs once identified, government must hazard, which is the risk that individuals will then establish benefit levels necessary to keep change their behavior because of the contractual those at risk out of poverty. As prices continue relationship provided by insurance, and adve to rise, benefits ould of course have to be 90 OCwpter 7 selecdon, which is the tendency of asymmetic Vulneabb Groups knowledge to lead to unsustainable outcomes. The best-known example and result of moral 19. Allowances (except sick pay, matenity hazrd is the savings-and-loan crisis in the USA, leave, short tem disability and benefits for in which government insured depositors against Chernobyl victims) should be offered only to loss but allowed savings banks to make risky failies in specific vuneable grups. 'he loans ending in their bankruptcy. An example govemens current policy of provlding some of adverse selection is the unwillingness of benefits to all families and others targeted to private insurers to write contracts with low-income groups is flawed in two respects. individuals that are in demographic groups, by The provision of gneal subsidies Is age, sex, and marital atus, that have a high inappropriate because allowances should be probability of contracting AIDS. Both made available only to families who cannot ph' .omena lead to unacceptable outcomes for obtain a basic level of subsistence without both public and private approaches to insurance government aid. The assignment of benefits to against social risk. Ukraine will want to recipients because of low income creates a consider its options carefilly before commitftig disincentive for the poor to work If they work to one approach to social insurance. more they are likely to raise their income and diqualify themselves for benefits. Also, 18. Unemployment insurance and workers' eligibility based on demographic characteristics compensaion are prepaid benefits with fee is easier to monitor than eligibility based on schedules that vary by industrial group according income. Therefore, beneft should be assigned to rink in many OECD countries. They are on the basis of demographic cha cs. financed from variable risk premiums by employers and thus have, over time, become 20. Savings from ftis program modification integrated into labor costs in the several would be at least 25 percent of total owance branches of trade and industry. Successful spending and 40 percent of non-Cernobyl- social insurmce schemes protect members of related allowamce spending in the first year it many societies from income loss associat wifth was implemented.m illness and aging and against the risks of high costs for health care where private medicine Unneessy Bendis prevails. Government can create a regulatory framework that encourages saving so that 21. SpecW benefits for servicemen's individuals and families self-insure for their old families, cars (or Xh cash equivalent) for some age and other financial needs and risks that disabled persons, telephone service for veterans, differ widely from person to person. AU these and free access to vacadon camps could be steps require. a broad legal framework that eliminated. Given the critical state ot the defines privatesector development and its economy, the state should provide only those responses to the demand for fcial semrices allowances required 6w families to meet basic that help reduce social risk. Experienceamong subsistence needs. Eastern European countries in recent years indicates that fase steps in these areas, 22. Savings from the elimination of the particulady in the design of unemployment and above-specified benefits would be about 5.5 health-insurance schemes, may prove to be perceat of the ttal allowance budget and 9 cosdy and thus must be carefully conceived prior percen of non-Chernobyl expenditures in the to implementation fist year. Allowances and BeneJZts 91 Entepis of Allwanc Aa'qat Speudhi 23. Enterprsesshould be insulated from the 27. Spending on allowances could be cut administration and distribution of ullowances. from 8.8 perent of GDP In 1992 and to a much These activities take resources away from small shar of GDP In 1993 and the yaus enterprises real mission-the producton and sale theraftr (see Table 7.3, the number in which of goods and services. Furermore, quiring ar idicative, sot presctiva, of the opioS firms to undertake allowance administrion fac the authorities). The main strategy Is to places an unfair burden on small rms that do tge beneafs on vunerable groups. Costs fir n -%ave a system in place for performing tbis Chernobyl-related allowances are aumed fuiotion. evetually to decline as problems are solved. admInAtive oosts included in programs 24 Eliminating entupses' responsibilities should also decline with consolidatdon. - tL3i 3rma will transfer a burden onto the distrct social welfare offices. The state should dewise a strateg to prepare these offices to &;conwdate their increased work load. The er . mPloyer responsibility for allowance adrulnistration should be deferred until state offices are adequately prepared. Chemobyl Allowans 25. More thanwothrds of the volume of Chernobyl allowances and over one-quartes of the volume of total allowances are accounted for by salary Lonuses to people working in the region affected by the Chernobyl accident, or working with contminaud materis. Rather than providing state-fended allowances to workers mandatorily and voluntarly tansfered tn the region, the in this area should attract workers via higher salaries and addiional benefits if necessary. The state government's only role should be to ensure that candidates for this work have full iformation cncernig the nature and degree of risk they are undertaking. 26. Most work in the area ilves state- funded clean-p operaions and social services. Thus, to the extent at workers' cumrt salaries and state subsidies represent a markdeteing wage, this policy modification wil not result in a net savings to the government. It will, however, provide a more flexible and efficient means of dtermining appropriate co for this work. 92 auper 7 Table 7.3: Curnnt. Sugested. and Sutainable Policy for Allowanegs Percent of Gross Domnetic Product Policy Actions Required Current Suggested Sustainable Spending Category PoUcy, Program for Program 1992 1993 Beyond 1993 Income Targeted 3.2 1.9 1.9 Target benefits to vuhnerable groups Not Income 2.0 0.9 0.9 Target benefits to vulnerable groups; Targeted eliminate unnecessary benefits Chemobyl-0-ated' 3.4 3.4 0.6 Replace allowance for Cheemobyl workers with higher salaries; eliminate housing and food subsidies as they become unnecessary Administration 0.1 0.1 0.1 Total 8.7 8.3 3.5 Notes: 1. Forecasts of 1992 Chernobyl spending on the social sector that were made in July varied between 1.1 percent end 3.4 percent of GDP. final data were not available for tiis report. 8 EDUCATION AND TRAIN G 1. Tbis chapter offes a brief description of emergence as a world leader in aeospace Ukraine's education and trining sy*em; technology. But now that Ukraine has achieved identifies some of its di3ortions and weakism nationhood, Its aspirations and objectives are in the light of the new chalenges facing the diffrt om ihose of the Soviet Union. nation; suggests some changes and recmmends Ukraine alms to move towards a democraic tal tecical and fiacial assistce the political system with a market economy that will Ukrainian authorities should consider to be integrated into the world economy. 'Me complement their own efforts. The analysis and government recognIes that its education system description is far less thorougb in this chapter will have to play a cucial role in promotng than the subject merts. The reason is that these objectives, and that it will have to undergo ducation is in better condition than some other major changes and adjustments in its areas of public so'ial spending so that reforms orgaization, structure, content and pedagogy. can be deferred. Moreover, basic change in Moreover, these reforms wIll have to be made education must occur with ifll regad for under austere and restrictive public expendite protection of the effective patts of the system. policies as the government strives to promote Vocational and tecical trning receive the macroeconomic stability as a condition for fullest discussion because reform there must economic recwvery and the transition towards a complement the shift of labor to a market market economy. economy. 4. The urgecy of educadon reform was 2. The education system's coverage is highligbted by the recent report, UkmIane of the etesivefrompreschoolthrough seolary, and 21st Centuy: National Progrm of Educational enrollment rates at post-seondary level compare Renaissance." presented in December 1992, to favorably with the rest of Europe. The dopou All-Ukrainian Congress of Educationists. rate is negligible and the repetiton rate is very low. Teacher qualificatons are high, with most THE EDUCATOIN S iEm: DIMNONS AND teachers in urban areas having several years of StRuCnnE post-secondary educadon. The peroma of the Soviet Union's secondary students in S. With a population of 52 million, Ukraine mathematics and the sciences has ranked high in has 10.9 million full-tme students enrolled in international surveys and contests. More 47,500 establishments. Of these, 2.4 milion recendy, Ukne has scored very well in children are preschoolers in 24,500 schools. competitions among the Soviet republics. The Ministry of Education overe 32,000 establishments with 9.3 million students and 3. As part of the Soviet Union, Ukraine preschoolers. These instions employ was well-served by an education system that 1,830,000 people of whom i,130,000 are produced well-trained, speciized graduates to teachers, making for an overall student/staff meet the needs of a command eonomy. The ratio of a little over 5:1. lTere are also success of Ukraine's education system hundreds of thousands of part-ime students at contributed significany to the Soviet Union's vocational and post-secondary nsdtition. In 94 apWer 8 additio, the larger also do a aion xperienced recenty In Ukraine, for consideable amount of education and training. nomnal salies to rise; (4) the inadequacy of lhe overall tudent-teacher rato in Ukains supplies and space, revealed by the fact tfiat over 8.2 compared with 15.3 in deveoped =untries one million children are in double-hift classes; and 24.3 in developing countries (see and, (5) the desire of political authorities to Table 8.1). Ukrainian educadon auhories, respond positively to the wage demands of the who argue that more teachers are needed, largest element of the public sector work force, dispute the comparability of the figures and which is the teachers, who, with the relaxation ratios shown in Table 8.1. Further study of the of centralized authority under the former Soviet staffing issue is essential. Union, seek to better their condition by threatening strikes and other labor actions that 6. In the 1980s, tie number of teachers democraticallyeletd offlcials cannot easily college graduates neady doubled, whie igoore. Tbis combination of factors preses the Goverment of Ukraine with a serious challenge as it tries to combine fiscal responsibility with Table 8.1: Student/Teacotw Ratos In attention to the legimate demands of some of Ukraine and Other Countries. 1989 its most important and nmerous public servants. Developed Moreover, teachers have become, as they are in Ukraie Countries Developin most countries, a political force of considerable Total strength. Enrolment 9.3 231.2 720.3 millons) S WroR ORGAN1ZATION Numnber of Teachers 1.13 15.1 29.7 7. The cuent Ministy of Education's (minions) __ trponsibilities resut from the merging of three Steent 1separate ministries on April 1, 1992. Other Teacher 8.2 15.3 24.3 , R ministries, notably Health, Agriculture, and Source: Ministry of Education and UNESCCul administer much of the education dnd Statistical Yearbook 1991. Data for haning in health, agriculture and the arts. developed and developing counties are Becase of this recent merger, the Ministry of for 1989. Ukraine data excludes part-time Education is still in the process of organizing students. itself. For example, it compiles data only on post-secondary education (niherited from the former Mhstry of Higher Education) while the education grautes at high-level institutions Ministy of Statistics is responsible for data on increased by 60 pea The deivery of the rest of the education sector. lTe ministry of sevices ws growing ineffcint as the eduagtion Education manages about 60 percent of the secor absorbed the aspirations of many to join country's post-secondary institutions, including the intelligentsia This demand for upward most of its research institutes, all of its mobility in turn contributed to serious curre universities, all technical secondary schools, and issues: (1) The large amount of funds dedicated about 20 percent of secondary vocation schools. to education, particularly the share (over 75 The Misty also oversees the curricula of percent in 1992) that must be allocated to Oblast (district) and regional as well as private salaries; (2) the ongoing complaints from schools. Other ministries are responsible for tachig staff that salaries are too low and the most of the secondary vocational schools and ill-conceived plan to raise them to the level of about 40 percent of specialized post-secondary industria wage without any peormce instituons. For example, the ministry of incentives; (3) the pressure, under condit of Heath funds and oversees the medical schools. Edua#on and TraInng 95 Presdhool Educatim and Day Carn mn ment of prescool progms for children of heir employees and others in rteir 8. Ukaine -ha one of the most extensive c s. The gradual transfer of ths networks of prec 3zool education and day care reponsibUlities to local governments wil be one centers in the world. 'h8 2.4 million children of the principal education Issues of 1993. that attend these institions compris 47 pecet of the country's preschool-age (under 6) Pmary and Low Seonday Education population (53 percen in urban areas and 34 perent in rura ar s). A third are funded and 9. Primay and secondary schools in administered by the Miistry of Education, and Ukraine are treated in combination and described oblast and local govenmes, twotirds by as general education schools. Enrollment in enterprises, and a few others are private primary through lower secondary (9th grade) is (Figure 8.1). Demand for these preschool and compulsory and almost universal, except for day care programs is on the decline. Recent isolated rural areas. There are nearly 7 million legislation gives mothers leave at fill-pay during students (of whom 180,000 attend evening or pregnancy and through the fir 6 months of the correspondence schools) enrolled in 20,900 childWs life and half-p for the subsequent 2-1l2 general education schools. TMese include 700 years. This incentive to increase maternal time boarding schools for child without parents, with infans and toddlers reduces the demand for the mentally retarded and physically day care. Another reason for the decline is that handicapped, and 12 speci schools for children primary schools are starting to accept children at and teenagers who are "socially dangerous." the age of 6 rather than 7, which was common The student/teacher ratio was in 12.8 1991-92 in the past. There is grwing resistance of many academic year (see Table 8.2). Between the state eneprises tD the financing and academic years 1990-91 and 1991-92, afi 0M* \sV" S Sd 8d t s~~~~~~~~~8do t~~~~~~OI e a FIgure~~ 8.1 eIga fEuainFnnig lw n raIaino h ScolSse =I - I IF 7.G1S P I-1119 Flgwe 8.1: Diagram of Educadon Finandng Rows n Organiation of Xt School Systm 96 Chter 8 enrolmt dropped by 16,000 while the number may of the ruralinfrastructure services, and of teachers rose by 6,000. sasfatory textbooks for multi-grade casses and other special needs. More than a third of the Table 8.2: Enrollment and Teachers In students in urban areas attend double-shift Primary and Secondary Schools, 1991-92 schools. About one-third of the rural schools Indicator Value have no water supply or central heating, and Total Enrollment (thousands) 6,918 more than half have no indoor plumbing. Many No. of Teachers (thousands) 638 of the ural shooLs, especially at the primary No. of Teachers Rousandso 128 level, serve small catchment areas that have Studentlreacher Ratio 12.8 produced high costs per student and offer Source: Ministry of Statistics, Ukraine. inferior education. Bussing of students that would enlarge the catchment areas and the size of the schools is not widely practiced, allegedly 10. Municipal and regional governmts because of the lack of or poor quality of roads operate and fimd the overwhelming majority of and the shortage of buses, and currently of the country's prmary, general secondary and gasoline. These small rural schools undoubtedly night schools. Oblast governments opate and contribute to the low student-teacher ratio in und some secondary vocational and night Ukraine's education system, when compared to schools and the counry's speciaized schools for other countries. orphans and handicapped children. Oblasts also subsidize education spending by poorer regions. Slear_n 11. The content and style of general 14. Upon completion of 9th grade, students education has reflected the political and go on to one of three streams, depending mostly economic system and doctrines of the Soviet on their academic performance and to a much regime. It has been centrally controlled, with a lesser extent on their choices. Some 60-70 uniform and rigid curriculum, a heavy emphasis percent continue their genera education for two on rote learning, and a pervasive ideological more years and complete their secondary orientation in the teaching of the humanities and education, another 20-25 percent enter the social sciences. Nevertheless, the vocational schools, and around 10 percent go to performance of secondary school students in technical schools. According to Ukrainian mathematics and the sciences has measred up to officials, the 'most talented' students go on to the standards of middle and high income complete their general secondary education. counries, despite the rote learning which is Students in vocaional and technical schools anathema to many educators in western receive monthly government stipends, while counties. general education students do not. 12. A growing number of Ukrainian Vocatonal and Technical Schools educators have become aware of the weaknesses in the above practices and have started to 15. There are 1,246 vocational and technical experiment with offering electives to secondary schools with an enrollment of 650,000 students, school students, adding new courses to the excluding on-the-job training in enterprises, for conventional curriculum and opening new which there are no centrally-collected data. schools for academically gifted children, but Ihese schools produced an estimated 380,000 much more remains to be done. graduates who entered the labor market last year. Students generally attend vocational 13. Geal education appears to be of higb schools for 3-1/2 years after completing 9th quality, but there are not enough classrooms, grade. They receive a certificate for the Eduadon and 7hinfg 97 specialty they have studied and enter the labor to urent and fture demand In the years ahead. market. Quite often, they are engaged by The Director had recently visted a number of enterprises before graduating and work part-time vocational schools in Gennmany and observed that for these enterprises while they are still in vocational trdning In Ukraine was much more school. theoretical than In Germany and that hie workshops in the German schoos were much 16. The amount of s;hooling that studes better equipped with st of the art teciology have when enterig vocational schools varies than hoe In Ukraine. Costs per student appear widely. About 20 percent enter after completing to be high, as evidenced by a brief review of the 9th grade, about half after 11th grade, and the school's budget for the Mrst quater of 1992, rest wfith less than 9 years of general education. which showed that the projected annual cost per All entering students take exams to determine student amount; to the staring annual salay of which specialty they should study. There is a school teacher. little doubt that vocational education is the most diverse, diffised, and least structured part of the 19. Ihe vocational school system does have education system; it is in transition to a program some capacity to retrain workers, but the size hat could better serve the nascent private sector. and content of this capacity has not been estimated. While the mission was in Ukraine, 17. The large numbrf of narrow specialties the government annonced a program for is a legacy of the Soviet Union's command retraining militay personnel who hwve been economy that required the education system to stationed in East Germany. The retraining will produce workers to fill specific jobs that were be carried out by vocational schools, called for by the national economic plan.There technicums, and Polytechnics. Strengthening are now 808 specialized crafts and occupations vocational and technical training is a major offered by vocational schools; this compares objeive that would reque significant eal with 1,200 that were available in the Soviet assistance. TheoMmistry of Education fimds and epoch. There is a general awareness that there manages all vocational schools. are too many specialtia, and that they are too narrow. The Mini.try of Education is Toecums considering a proposd to reduce the mber of specialties to around 300. 20. The Technicums are comparable to the fadisdwle of Germany. Most students enroll in 18. The mission visited a representative them after completing their general secondary vocational school in Kiev with 700-800 students, education (11 years), though about 20 percent 74 teachers, of whom 45 teach practical subjects entar after 9th grade. Each Technicum sets its and are called 'supervisors,' and 71 own entrance exam and each applicant can apply dministrat:ive and manenance pernnel. The to only one insitution and propose three school offered three crafts: constuction, auto alternative programs of study or specialties. mechanics, and painting and decorating. These Admisson is based on exam scores and crafts had formerly been offered in the form of academic performance in secondary school. If 9 more specialized ones. The construction and an applicant is denied admission, he or she can panting specialties were products of the school's reapply to the same Instition or apply to some history. The school was founded immediately other Technicum after waiting a year or after World War II and concentwt on training sometimes less. 12,000 construction workers to repair the war damage in Kiev. TheDirectoroftheschooltold 21. A proposal is being considered by the the mission that Kiev had 8 vocational schools Ministy of Education to modify the admissions specializing in construction, too many in relation process to allow students to apply to three 98 Aater 8 Tecicums and Indicat an ordar of prefeec. a bl, they wae using nots prpad by the Ihe entrance exam would be the same for every teachers of the various subJects. The ret Techicum. bis system would Impove tie cosw por student amount to ive months of the chances for admission of the better applicans statg salary for school teachers. and Improve the overal quaity of the students in Technicums, according to its pponents. It 24. The Mistry of Education funds and would also reduce the scope for using manages about 20 percent of technicum scools, connections and bribes to gain admission for vitly all of the rest ae funded and managed otherwise unqualified applicants. Theproposed by other minstries. A few are funded and system is similar to the one used in some managed by oblasts. Western Furoean countries for selecting applicants to colleges and universities. The Elghe EdAucatn admissions process for Technicums has aroused a certain amount of conrversy beca 25. Ukraine has many instiuions of higher competiton for admission to certsin programs learning. Table 8.3 shows a count of insdtutions has become very keen. For example, in Kiev by curricular categories. It is drawn firom a there have been 3 to 4 applican for each place recent atement by the Misty of Education in the program of radio-electronics and 8 for describing Ukraine's education system. each place in economics and mangment. 22. Most students, i.e. those who ente afe Tsbe 8.3: Types of Instttidons of Higher 11th grade, spend two years in a Technlcum Learni In Ukran before receiving diplomas as Junior Specialists; Type of Instuion Number others who enter at an earlier stage, put in 4 Ufe Scences, Humantes, and 104 years. Tehnicum graduates can enter the labor EoonomlcsALaw market or go on to university for another two or EnglneeingTecwical 309 three years befre receivin the eq aent of a Transportaton and Commuication 55 Bachelor's or first degree. Arcutre 123 Healfth Care 126 23. 'he mission visited a Technim in Kiev Physical Educaion and Sports 6 that specialized in radio-electronics. It has PedagogcaI Studies 78 1,136 full-tm stdent and 300 in evening Art and AIied Fields 89 couses. It has 54 teachers, 36 adminisrative and 52 maintenance personnel. The school's applicant/acceptance ratio was 10:1 in 1989, 5:1 Table 8.3 includes almost entirely Technicums in 1990 and 1991, and 2.3:1 in 1992. The and other postsecondary specialized institutions. Director of the Technicum explained the sbarp The overal student-faculty ratio, coundng only drop in the mnmber of applicant by saying thut full-time students, is less than 5:1, which is the word had gotten and about how diflcult bdow the rao In mt deveoped countries (see it was to gain admission to his Technicum. As Table 8.4). Ukraine has 11 universities with a in the lower levels of the education system, the wide variety of Faculties and Departments (see curriculum for each speciaty is fixed and there Table 8.5). are no electives. The school has started to introduce "commercial" subjects such as market 26. The system of post-secondary education economics, finace, markegand management. is extremely difflse and complex; teacher Ihey are not using regu teachers, but relying trang can be cited as an example: on part-ime teachers who are employed in Pedagogical educadon Is conducted by 29 enterprises. Since suiable textbooks are not pedagogical inites with one afflliate, 51 Educaon and TraWng 99 pedagogical schools, 6 industrial- Table 8.4: Enrgnwnt and Faculty In Ukraninin pedagogical colleges and hicums. UrdverIIes and In EquIvaent Inttons In Selected Specialists for various type of Countres. 1991-92. educational establishments are tUied Student Number of in 19 mjor specialization aream in the Enrollment Fculty StudentlFaculty pedagogical institutes, in 5 major Country (000) (000) Raftio professions in pedagogical wchools, Frame 1,124 48 24.4 and 12 professions in indutrial- Federal Republic of 1485 151 13.3 pedagogical colleges and Germany te"cums." tay 1,349 54 25.0 Korea 1,143 34 33.6 27. The distinction between Spain 978 51 19.2 undergraduate and postgraduate Unted Sttes 7,716 494 15.6 education is blurred. The Candidate Ukraine 67 14 4.8 of Science" degree is roughly Note: Dat for Ukraine are not stly comparable w-th those for equivalent to a Master's degree and other couwries because Yty cover orly tthe eleven the "Doctor of Sciences" degree to a universities in Ukraine and not *equivalent institutions." doctorate. Ukrainian officials are But this does not alter the fact that the student/faculty aware of the need to clarify, ratio is much lower than in the other cotries. Data for consolidate, and streamline the post- the latter are for 1989 and 1992 for Ukraine secondary institutional setup. Given Source: For Ukraine: Ministry of Education; for othe countfies: the plethora of institutions, it is not UNESCO Statistical Yearbook 1991. surprising that they are of uneven quality; the Ministry expects to ntroduce an accreditation system. here is also sdents. The number of faculty shown in an effbrt underway to internationaize post- Table 8.5 includes a large number of graduate education by having clearly defined researchers. The sdent/staff ratio of 2.5:1 bachelor's, master's and doctoral degrees simlar appears extraodinarily low, even if the research to what exists in North America and several person are subtracted. Its also surprising to Western European countries. find almost balf of the staff devotd to reserch, since most resch is done in specialized 28. Kiev State University was founded in instiues. 1836. Much of it was destroyed during World War II, but it has been fully restored. Its 17 30. TheKiev Instituteof Natnal Economy, faculties offer 42 specialized programs of study founded io 1908, of'ers a "national education to a student body of 20,000, including 2,000 certificateW in economics, banking, finance, and foreign stdens, mostly from Africa, Vietnam, statiscs to 12,000 students. The minimum and Afghanistan. As the most pestigi educaona requirement for admission is the university in Ukraine, it draws 70 percent of Its successfiul completion of llth grade; some students from outside Kiev. students enter after graduating from a techncum. lhe former take 5 years to receive 29. Its staff of 8,000 includes 2,000 faculty, a certficate and the latter 3 years.' The 2,000 scientific researchers, 1,000 scientfic Instte staff of 1,760 includes 600 faculty and administrators, 1,700 auxiliary personnel, and 160 auxiliary personnel. The curriculum of the 1,300 administative and maintenace personnel. Institute is chgig as Ukraine begins to move The number of students shown above is towards a market economy. The Rector attaches bantialy greater than what is shomn in high priority to training his faculty in market Table 8.5 because the former includes part-time economics and subjects appropriate to a market 100 aCpter 8 eOOmy. He has started to make some freign Education was enacted that called for a contact to got technW asist. he stitute mimum penditure on eduation amountng to receny established a Business School hat offers 10 peroct of GDP. This target would be courSes ranging from one month to a year. It e&xtry difficult to attain and uain. It is has began operating on a very limited scale and also highly questionable whether the education epects to epand rpidly. The Buines School sector shou!d absorb such a large share of the has the same problem as that facing the rest of ion's resources in vew of the preing needs the nstitute: how ttrainIts faculty to teh in the rest of the economy. courses appropriate for a business school in a market economy. They have bad a few visiting 33. About 28 pecent of total educadon professors from abroad who have come for a spending is fimded from general state revenues few days or weeks, but much more needs to be and managed by the Ministry of Education and done, especially in the production of suitable other ministries. About 57 percent is managed teaching maters. by oblast regional and village governments and funded from their general revenues. Enteprlses EDucATIoN FRANCJNG AD Ti UsE oF account for the remainig 15 percent of RESOURCES education expenditures. 31. Ukraine is spending 7.8 percent of GDP 34. Wbat accouns for the large amount of on education, own of the largest proportions in spending on education? The explanation has to the world and tie highest among couties at be found in the larg share of the budgetthatthe comparable !Weis of development (Fable 8.6). Ministry of Education and local governments Tis high percentage of GDP is party due to the spends on wages and salaries, utilities and sharp decline In Ukaines GDP since 1989. matenance (Fable 8.7). Wages are low, but there are so many personnel hat the aggregate 32. In tho euphoria at accompanied wage bill is high. Another factor that has Ukains polical indepnce, the Law on conbud to the mcent growhi of the education Tatle 8.5: Ukraine UniverWties, Students, Faculty, and Graduates. 1992 No. Holding No. Holding No. of No. of Full- No. of Equivalent of Equivalent of Unerty Departnents Time Studes Faculty Masts Doctorate Dneprperovsk State 12 8,835 1,277 559 83 University Donesk Stae Universty 11 5,593 1,062 524 64 Kiev State Unversy 19 12,200 3,612 1,079 293 Lviv State Univesity 13 7,230 1.911 529 96 Odessa Stae Universiy 9 6,306 807 473 83 Simferopol State University 8 3,962 538 267 38 UJgorof Stae University 10 4.340 916 329 75 Karldv State University 12 6.845 1.867 875 129 ZapoJie Stae University 10 3,893 553 193 25 Tchenovits State University 12 5.487 885 375 47 Karkiv Law Instit 4 3,188 371 184 40 Total 66,879 13,789 5,187 973 Source: Minisry of Education, Ukraine. Education wad 7)alnlng 101 Table 8.6: Internatonal Compaison of app of the Supreme Soviet of Ukraine. Spending on Public Educaton. 1990, and Sdhool pdncipals have vey ;ittle flexibility in Ukraine, 1992 spending their fuds, nearly all of which are Percent of GNP Spent on earmarked for salaries and wages, student Coyint or Region Public Education stipnds, utilities and food. Schools do not have Ukrarin, 1992 ~~ ~ ~ ~ ~- -~~~~7.8 bank accounts, but do recive a small amount of Europe, including former dcrtontay funds for materias ad quipm uSSRo that have to be bought in special!y designated Developed Countries 5.8 stores. Tley can also handle small emergencies Developing Coutries 3.8 such a repaing broken windows during winer. The World 5.5 It could be useful to begin progm budget in Source: UNESCO Siaiistical Yearbook, 1991, and fthe M sy of Educaton since it is in the Ukraine Ministnyof FiYaribce prc of reviewing education goals. cMaagement by objective could help the ministry reallocate rources to priority spending areas; extemal assistance and expers could be budget is the large increase in the cost of helpful in that process. utilities. 37. Oblast finae and/or education offices Budgeftig Prqcess help schools in the budgeti process by providing information about curret education ?5. The budgetary process is evolving. input costs and norms conceming staffling and From the mid-1970s to 1991, budgeig was equipment needs per student population at each done on a top-down basis. The Ukraine Ministry of Finance Table 8.7: Forecast 1992 Educaton Spending produced a budget for the Republic 1992 _u Ttd POomit Totd Percent that had to be approved by the siiboo Govt. Ed Ed f I DP Ministy of Fmance of the Soviet -- rb--d w"" Union. Ules Mi y of TOTAL STATE)LOCAL BUDGET 191.758 100.0 8a, 0.7 Finance then distributed funds to the TOtal Pere Cot 99,280 64.0 48.7 districts which in turn dhnelled wesSidW Bonus" 72648 40.0 34.2 them to the schools. in 1992, the PFar Tax (37 peSet 23.638 14.7 12.6 budgeting process was revered from 10.323 5.7 4.9 top-down to bottom-up, with CEa PAP* 5.443 3.0 2.6 individual schools preparing their E*'pme Puro-e 5.037 2.8 2.4 own budgets in accordance with cEta Ivat 1.739 1.0 0.9 stafflng and input norms based on Textbooks 980 0.5 0.5 enrollmenlh. School budgets are c 537 0.3 0.3 conolidated for each region and have 5, 58.411 32.1 27.5 to be approved by regional On e. da d ama_tnaicid governments. EWmwit 30.812 NA 14.5 1.1 governments. (¶5~~~~116.31 Pramehoolh)' 36 BudgefA t in 1992 w TOTAL -212.587 100.0 7.8 fraught with uncertainty and Ntd perpO instability. In prsent its first 1. Ml_ estkmate bed an day ow epeode_ by tho stae overnmet national budget to the legislature, the Souroe: June 1992 drft of the Minstry of 6duoation'. 1992 budgt the Mnisy government had to submit four June 1992 draft ersoldatad loeducatio budgs. nadlan succssive budgets befre gettig the 102 chaer 8 grade level. These norms are unifom for urban accounts, and cannct purchase items on the open and rural schools, and are suggestions rather market. Each is awarded funds earmarked for th mandatory targets. te s' and admitos' salaries, student stipends, utilities, and food based on the budget 38. In theory, regional and Oblast finance the school develops. In addition, the school offies carefly review and critique Individual receives an allowance of discredonary funds to schools' budgets. In practice, these offices are spend on matials, equipment, etc. Schools are not adequately std to undertake this function. roquired to purchase these items in specialized Its 1992 education budgets have been education-matials stores. 'Me size of these subsatially modified almost every month since discretionary budgets is determined by school November 1991 dun to the unstable economic requests, resourcs ailable to the funding situation, and face offices have time for litde govemment body, and personal relationships more than consolidation. Th. frequent mrisions between school and government admintators. to the 1992 school budgets were time-consuming Large discretionary items such as renovaaions for all partiec involved. While many schools nust receive special approval and funding is have computers, they are used for teaching deterined based on norms regarding size of rather th administrative puiposes. The Chief area to be remodeled. of the Finamce Office for Kiev Oblast was not aware of any bChools using computes for 42. Salaries for teachers and other education budgedng pumposes. peel were among the lowest in the economy. But, according to the recently enacted 39. The Ministry of Fiance (MOP) Law on Educaion, they were to be raised to the provides enrollment-based norms to Oblasts as average wage level in man. They recommendations, consolidates Oblasts' were more than doubled on May i, 1992, education budgets and advises them on their size thougb much of this increase only made up for and content. However, the MOF cannot reqire the rapid inflation since the previous salary an Oblast to modify its education spending. Ihe increase. An anomalous situation of relative State does not subsidize poorer Obats education wages late in 1992 was that a school principal's spedig directly, but Parliament, through the salary exceeded that of a cabinet minister by 50 Council of Ministers and the Ministry of percent. Finance, redistributes general revenues from richer to poorer Oblasts. Non-Educton Expendituwe in Education 40. The Ministry of Education derives its 43. In addition to tuition-free education at all funds from central government general evenues, levels, and fre books and materials, the and the MOE's budget is subject to apprv by government provides free lunches to all students the Ministry of Finance. According to from preschool to university, and monthly Ulaines Law on Educadon, the government is stipends to all students in vocational schools and required by law to devote 10 percent of GDP to post-secondaryinstitutions. Thestfipends amount education. Accordig to goverment forecasts, to about 40 percent of the basic salary for the state and local governments wfll devote teachers. lhe Ministry of Education also approximately 6.7 percent of GDP to education pvides meals and clothing for students in in 1992. vocational schools and housing and utilities for teachers in rural areas. These non-ducation Disb_usenents outlays account for a significant share of the Minsty of Education tpdget. 41. Schools undertake their own budget planning, but do not have their own bank EducdO and Tralning 103 Extenal Assstance reduce public expediku and to promote Individual and family self-reliance. These 44. Ukrans education sector s receivng r nons provide ftr reductions In remarkably little externa assistance; examples aggregate spenditng, but It should be possible to encountered by the mssion are few enough to be maintain quaity though effciency gains (See listed: 7 foreign professors are due to teach Table 8.8). economics at two universities in Kiev during the academic year 1992-93; Kiev Stato University 47. lTe government should rescind the has agreements with seeral foein universities prvision earmarking 10 percent of GDP for to exchange stdent and profesors but there Is education as embodied in the Law on Education, no financing to implement them; the Brtish and the 8 percent of GDP eamarked for culturr; Council is sponsoring a program to train 60 no country in the world approaches this level of Ukrainian professors In waountng and audidtg. spenig. Earmarking portions of th 3 nationa The most substa example of fDreign budget puts public authorities in a straitacket technical assistance was a Business School which that would Impose a paralyzing rigidity on is In the process of being established as a joint legislative and government action. It is a venture with the ternational M ement practice that is universally rejected by fiscal Institte of Lausane, Switzerland. experts throughout the world. 45. This technical assistance is piece, 48. The 1992 education budget used about sporadic, uanized and lls woefuly short of 7.8 percent of a declining GDP. The what is needed perhs because Ukraine governent shod aim to reduce the share to 7 developed few foreign contacts under the USSR percent in 1993 and 6 percen thereafter. government, especialy outide the former Soviet Table 8.8 spcifes several opportunities for bloc. There is strong and widespread itere reducing the size and scope of educaton in obtaining nancial assistance for computer spending that wod cause litde damage to hardware and softwa; teachin ais such as education objectives. Student/teacher ratios audio and video cassettes for foreign lue could be slgnificantdy insed; if Ukrie teacin, moder equipment for the workshops adopted the developed countries' aiu age, in vocational schools and technicums; governmevt personnel costs would have been 44 ommunications equipment; and paper for percent lower in 1992 and 4otal education printing textbooks and other materials In new spending would have been 24 percent lower. subjects such as market economics, fiance, Education speg would then have used 5.9 banking, matg. Technical assistance is pcet of GDP, which *wld be in line with needed to retrain professors and teachers, reform countr twouou the world. Of course, a vocational education use of computers and other change of this ide coud not be teaching aids; and reorganize post-secondary introduced in a sing'. year. education. 49. Oblast and local goverments now 46. Educaton is absorbing too large a shr finance about oneqaer of the cost of of what is likely to be a srnking aionl preschool education programs, with the rest paid budget in the years ahead. The educatfn budget for by e dp and paets. There is growing is also too big in relation to the other high financW ipressure on enterprises tD reduce their priority demands on teeconomy and compared share of this seding and the Ministry of with the relative size of education budgets of Finace plans to subdize these facilities. The developed and middle Incofe countries. The goverment should resist flling tis gap, leaving following recom have fincil it instead to families to fnce day care implicato that are intended to crrtail and servies. In fact, the Parliament recenty took a 104 awper 8 backwad step by enating legislation that calls 51. The Ministy spends about 5 percent of on the Ministry to provide free lunches for all its budget, to fnance dhe education and living preschool childi en at an estimated cost of R4 costs of about 20,000 foreign students attending billion a year, or more than 4 percent of the Ukrainian institutions. ITese students are Minury's 1992 budget. 'Tbis lgislation was mostly from Afghanistan, Angola, Mozambique, reversed In 1993. Ethiopia, and Vietnam, where the government of the Soviet Union had foreign policy interests. In 50. Ancillary costs unrelated to istruction view of the scarcity of resources, these have in recent years absorbed a growing share of expeaditres should be cut. Early in 1993, the the Ministry's budget. These costs include authorities decided to reduce to 2,000 the Table 8.8: Current. Suggested. and Sustainable Spending on Educatlon, 1993 and Beyond Percent of GDP under Alternative Approaches Spending Curent Suggeste Sustainble Policy Actions Required Catogoiy Policy d Program Program Beyond for 1993 1993 Personnel 3.6 3.4 2.8 Reduce staff by attrition Stipends 0.4 0.3 0.2 Restict to low-income families; reduce payments to foreign students Buildings 0.3 0.3 0.2 Equipment' 0.2 0.4 0.6 Increase purchases of essential software for training displaced workers. Other2 2.2 2.0 1.8 Improve energy efficiency Enterprises8 1.1 0.6 0.4 Shift costs to beneficiaries Total 1 7.8 7.0 6.0 Notes: 1. Includes computers, textbooks, and related teaching materials. 2. Includes utilities and maintenance. 3. Includes spending on day-care programs. textbo ks, dent stipends, food, cltig for mber of suppord foreign students. vocatial school studens, and housing and utilides for teachers in rural areas. Many of 52. The governmene's goal of shifting 4.om these oudtlys are legacies of the past These Russian to Ukrainian language instruction at the benefits could be reduced and targeted to appropriae levels of education should be sWtents from needy families, as was done with pursued with the full recognition of the heavy student stipends beore 1980. Targeing of costs of translating textbooks and retraining beefits would promote equit, fiscal efficiency, teachers. Untl the current economic and and self-reliance. financl crisis recedes, language conversion shoud proceed at a prudent pace, influenced by Educaton and lalng 105 the normal turnover of textbooks due to wear ntuctional confenws, and short visits by and tear. Intenational expes to Uraine. Te ministry of Education should create a uni to provide a 53. The country's 1,242 vocational schools, focal point for all tecnical assistance In the which far exceed the current and prospective education sector. lbis unit should become not needs, should consolidate, rationalize, only a repository of information on technical streamline, and modernize their vocational assisance, but also develop the necessary education programs against a dated set of expertise on the policies, practices, and objectives. A restructured program would procedures of donor agencies and organizations assign a substantal role to enterprises and the to assist Ukraine's education institutions in private sector for conducting vocational obtainingtechnical assistance. education and training. Implementation should begin during the academic year 1993-94. The 57. As unemployment rises as a consequence Miistry should initiate an accelerated program of the reduction and elimination of government for retraining teachers and producing materials subsidies to enterprises, the Ministry of Labor to introduce new subjects such as market and the enterprises themselves are expected to economics, finance, banking, marketing, etc. in play a major role in retaining the unemployed post-secondary institutions. At least some of for other jobs. But the formal education system these subjects should be taught as early as the also has an important role to play in this effort, 1993-94 academic year. particularly vocational schools and post- secondary instittions. The government should 54. The budgeting process is norm-based. undertake a survey of the reing capacity of The number of students forecast for each grade the formal education system and define Its level largely determines stafflng, facilities and national role in retraining. Foreign technical equipment levels. To enhance the system's assistance would be very helpfid in carrying out ability to address specific educational objectives, this survey. and to enable administraton to better measure the costs of achieving these goals, incresed aetion should be given to program budgeting. 55. Given the uncetain macroeconomic situation, schools have been forced to make monthly revisions to their budgets. This process is very time-consumin, . Many schools have computers that could be used for budgeting purposes if the appropriate softwe were installed and trainig undertaken. 56. To overcome Ukraine's isolation from the outside world, the Ministry of Educaton, together with the larger post-secondary institutions, should establish contact with aid donors to obtain the benefits of the successful education and training experience of market economies. These donors can provide the financial assistace for adm ve and instructional staff at aU levels of education in Ukraine to participate in external training, 9 HEALTH SERVICES 1. This chapter reviews the orgaization leave parts of the population less well cared for and management of health services; health than is necessary. finace; and current Isues that neod to be addressed to enhance sector efficiency and HEALU SECtORtORGANZATION AND effectiveness. Betwen July 1992 and March MANAGEMENT 1993, the Govenment of Ukraine started to implement a number of the reforms suggested Ninitr of Heal Structure here. 4. 'Me Minister of Health is part of the HELTu SYSM DEvE EnT executive level of goverment and fimetions as the chief executive officer of the Mnistry. The 2. Health system goals need to us on Mi y is organized around five functional reducing illness derived from preveotble lines of wiich four are headed by Deputy communicable diseases, chronic dseasos, Misters. The First Deputy Minister acts in the respiratory nfctions In children, tubercosisin capacity of the Minister when he is away. The adults, alcoholism, smoking, and pollution. The fifh line is headed by the Chief Financial challenge will be to redirect the present system Officer. Three key top level committees are the so that it takes advantage of progress made Executive Committee, the Academic Medical internaionallyin the concionof health Council and the Pharmaceutical Committee. and information on its d to meet new This senior level structre has direct chronic-care needs of an aging populaon, and responsibility for certain health care facilities, to contrbute to the health and well-being of the scientific-rech and teaching instites, and whole population. genea admistrtve and professional practice control over other health care institutions. The 3. Priority for protecting the health of M stry also bas general aministrative conrol aduts and the elderly, as well as for the oning over state distibutng and manuf needs of children and vunerable persons, will eneprises for ph cals, general and havetobe maintae inthe specal contextof medical supplies and medical techology. added requirements to rtespond to the Chernobyl Saniary-epidemiological services delivered disaster, other ecological inutsBtht undewmine through 780 centers and core public health health status, and the intatioanterest such services thrugh 700 centers are provided events have generaed. It will be particulady dhiy by the Mstry. Health programs, important to separate realom iagined health facilities and education are managed by the effcts of Chernobyl by relying on sound Minisy of Health, health offices reporting to scientific principles and findings and limiting oblst and regional govenmnmts, the Minstry of unnecary isttutionalization of separa Education, other ministries and enterprises (see programs to deal wih them. Otherwi&s, the Figure 9.1). drain of Chernobyl-assoclated programs on the economy, and the attention and resources they S. The Ministry of Health manages some divert from aras of other real healkth needs, will speciized and teaching hospitals and clinics, reearch centers, and medical sdhools. In 108 Ohapter 9 addition, the office has Infrmal links with, and 6. Hoalth services are funded almost informal s ion of, Oblast-leved health entrly by general goverment revenues and offices. The Miistry of Education sponsors accunted for 7.4 perent of GDP in 1992 (see secondary-level health services training schools Table 9.1).1 Resources raised through the and schools for disabled children that combi Social Insura payroll tax, 3.4 percent of education and bealth facilities. Some other health funding, subsidize workers' visits to minses run their own clinics. The Minstry s The Chernobyl payroll tax of Social Welfare operates specialized programs accounted for about 2.3 percent of sector and facilities for the elderly and disabled. Some resoures, and supported a variety of health care eneprises operate sanitorlums and clinics, and Chernobyl victims. Private individuals' these are subsidized by the Soci Insurance expenditures fiance only 3.3 percent of health Fund. The Chernobyl fund subsidizes services and are incurred primarily when public Chernobyl victims health care services provided sector practitioners see patients in state-run by most of the above health cae providers. Each facflities after official office hours. In addition, Oblast has its own health office repordng to the enteprses often provide clinics and sanitoriums Oblast presidential delegate. These offices run for workers and their families. Enterprise specialized- hospitals and supervise and support support for worker health cares shrinking regionallevel health offices. Regional health rapidly as firms' profts decline. offices report to regional governments and run the overwhelming majority of the nation's Use of Funds hospitals, polyclinics, sanitoriums and public health projects. 7. Health care spending accounted for 17.5 percent of 1992 social sector spending, and 7.7 Sources of Funds j wd_o Vmf TM - s-I1- r 1 1~~ dLJI jkd Figure 9.1: Organizatdon and Financng of the Healt SYStem Health and Serices 109 prcen of GDP. Approximately 87 Table 9.2: Uses of Hel Care Funds. 1992 percent of healt care spending is Total Percent of Percent GOP devoted to treatmen facilities, and Imillon Total hospitals alone account for two-thirds "Ales) of disbursements. Research md F _Ities 183,611 87.0 6.7 education account for about 3.3 Hospials 140,613 66.6 perce of expdt; public Snftouks 21,980 10.4 health, 2.7 percent;9' Ambutor ainics 11,820 5.6 subsidies, 2.3 percent; and other 0 Health irncts 5,171 2.5 pendiX s, 4.7 peren Each of Ambulance Services 2.368 1.1 the above-mentioned categories share lood TrnsfusIon 1469 0.7 of total spending hasbeen relively sent9s constat over time (see Table 9.2). Captal Constrction 200 0.1 June 1992 foreas called for wages Public Health1 5,778 2.7 0.2 to account for 27 percent ofEdcto5342502 expenditures by the Ministry of Educati 5,342 2.5 0.2 Health and local health offices In Subsidies for 4,835 2.3 0.2 1992; equipment, 11 percent; drugs, Ria mice0ical 8 percent; and all other input Research 1,608 0.8 o.l (primarily mantenance of, and a2 9,860 4.7 0.4 supplies for, facilities), 54 percent Total 211,032 100.0 7.7 (Table 18). Notes: 1. Additonal pubric healh expenditures are included In the budgets for specific facilities. 8. High and uneven iat. on 2. Additional teatment for Chetobyl victims and private payments for health services not inciuded aross healtih care inputs and isewher. increasingly restrictive budget 3. Does not sum exactiy due to rounding constraints have precipitated large Sources: June 1992 Drafts of Xt 1992 Budgets for the changes in the composition of Ministr of Health, Soci Insurance Fund, spending over the last three years. Chetobyl Fund, Pension Fund and Employment Since Jamary 1992 average health Fund. sector wages are required by law to equl erage industi wages. Despite this legislation and the resultant real percent of health care expendiures in 1989. wage growth in the health sector, wages will While pharmactica prices have rsea fster account for about 27 pet of total spendiin lhan those of almost any other input, it has 1992, down from 53 percent in 1989. become exemely difficult to obtain drugs so Mainte of, and supplies for, faciities that quantes available have fallen dramatically. absorbed 25 percent of resources in 1991, up Constuction ouas declined from 5.2 percent from only 13 percent the year before. lhe of tota spendign 1989 to 0.1 percent in 1992, Chief of Finance for the Mnistry of Health reflecting the fact that the state is focusing on predicts that these iputs' share of total tpending immediate needs during the current budget will condmie to increase over time as their costs crisis. are rising much faister tha general Inlation. Equipment speng has increased from 3.9 BudPgng Proces percent of the hedth budget in 1989 to II percent in l992, reflecng the fa that the cost 9. In the past, budgetig was done on a of these inputs has increased faster than that of top-down basis. The Ministry of Health other items. Phamaceuticals accounted for 10.6 deveoped a budget for the entire Republic that 110 Cawaer9 had to be apprW ed by the MWsty of Health for from doig so. The choice of budgedg the USSR. This budget was finded from USSR procedures vwAie win regions and iS left general revenues. Ukraines Minstry of Healh largely to indidual faities. Budgeting is then distributed funds to each of the nation's based eiter on the numbers of beds or people, Oblasts and these funded regiovs which funded or on usage of specific services during the individual hospitals, clinics, and ptograms. pevious yea. The Ministy of Health would Budgeting was based on numbers of hospital like all budget to be done based on past beds in service. The state established how many usage. It cannot requie this chage in planning hospital beds and clinic positions should be procedures, but has convinced many hospitals to available per 10,000 people in a geographic area and, in urn, these Table 9.1: Sources of Funds for Health Care. 1992 requirements determined staffing and Total Percent of equipment levels and budgets. No (mlllion Percent of Govt consideration was given to policy Source rubes) Total Revenues' priorities,demographicc er State and Local Geal 191,987 91.0 12.3 of individual areas, or usage levels of Revenues individual facflities. Payroll Taxes 12,079 5.8 0.8 Social Isurance Fund 7.211 3.4 10. In 1992, the budgeting Chernobyl Fund 4,868 2.3 process was reversed from top-down Individusis 6,967 3.3 NA to bottom-up (Figure 9.1) so that Total 211,032 100.0 13.5 individual hospitals and clinics individual h.pital and .l, Note: 1. Includes state and local general revenues and prepare budgets that are colidated resources of te Pension, Social Insurance, at the regional level into a health e Chernobyl Funds. budget to be approved and fimded by Source: June 1992 Drft of the 1992 Budgets for the Ministry of the regional gvernme. While Health, Social Insurame Fund, Chenobyl Fund, Pension finding for regional health facilities is Fund and Employment Fund. derived from regiona budgets, Oblast govnnts can require regions to modify their health care spending, and make the switch voluntarily. Nevertheless, the sometimes provide subsidies to poorer regions. Head of Finance of the Ministry of Health Also, Oblasts redistribute revemnes from richer estimates that over one-half of Ukrainian to poorer regions, thereby reducing the disparity hospitals were using the norm-based budgeting in social sector spending across regions. Since system in July 1992. health care is fimded primaily at the regiona and Oblast level, if a person receives treatment 12. In previous years, budgeting was outside his home Oblast, his city must peformed once per year. Due to the compe sat the facility for costs incurred. uncanty about prices, wages, and government revenues, budget makers have revised their 1992 11. The MOH consolidates Oblast budgets spending estimates every other month since with budgets from national-level facilities. The Novmber 1991. Revision is time-consuming Ministry remains in a position to exercise becase the budgets are not computerized. In control over methods and procedures in the Kiev Oblast not even the Oblast-level hospital delivery of treatment and care at the sub-national uses a computer for this purpose. According to level, but it o longer has formal ontrol over the Chief of Finance for the Health Office of financial actives. In theory, the MOH can Kiev Oblast, most regional hospits have provide subsidies to poorer Oblasts, but in computers, but they lack the software and practice the economic crisis has prevented it training to use them for budgedng. Health and &rvices 111 HEALTH SYm RoCUS Table 9.3: Perentage DlOobudon of Minisy of Hath Spending on Local Health Inputs, 1989,1991, and 13. The Myiny of Hea 1992 oversaw 24,464 health faciities in Percent of Tota 1991 which tgether employed 1989 1991 1992 1,351,482 people, an increase in gpts Actua Actual foecast pennel of 2 peret ftom the Wames 53.3 47.4 27.0 previous yea. The facilities include MAirtean and Supplies 13.4 25.4 NA 48 scientillc-esearch isttte (0.7 PeUUCai10.6 6.3 8.0 percet of total sta), institutesof Food 8.2 6.9 NA higher health educaIon (1.7 percent Fa4d 8.2 2.1 0 of staff), 3,766 hospital facilities, Co 5.2 2.1 01 6,423 ambulatory centers as well as CapjW Repair 4.0 3.6 NA vario other nsions such as Equdpment 3.9 5.9 11.0 ambulace centes, and blood Other 1.4 2.4 NA transfision statio8 . The 3,766 Totl 100.0 100.0 100.0 hospital faities had 671,096 beds source: _ Mnt of Hea (129.6 per ten thusand population). They are organized into a hierarchy offacilities at the d ct, cental regional, city in Mnistry of Health facilies is 24.31100 and oblast levels, as well as vaious specalty population cmpared to the low OECD rate of centers. There were 201,923 physician 5.5/100; patient day per capita are 4.0 employed (39.0 per ten tosand) and 539,940 compared to the OECD low of 0.7; and leng mid-level healkh peonnel (104.2 per ten of stay is 16.5 days compared to the OECD low thusand). Tbe administaie complement was of 6.1 days. 61,219, 5.7 percent of health care faclity staff, which includes the 203 persons worig fr the 15. Even disountig for the poor staus of Ministry and 15-30 staff for health faciities, equint and their quality, there is a admiIsrto at the oblas levd. ho Ministy clear case for reducing the nuber of hospitals staff is far too small to ensure both stegic and staff. Closing some wards and whole managemet of the health system and facilit will permit redeployment of resourc responsivenes to questions and requests for to esue their more effective use In health information from the press, the public, and the promotion, illness prevention, treatment, and legislature. ehabiitation. Removing expired and tec logaly inappropte resources frm the 14. There were 144 non-MOH other hospital system mould limit expectation t they will be cilites in Ukraine and S01 mbulatory replaced or modernized. Closing facilities will facilities witb a total of 28,376 beds and 23,257 also make possible significant budget cuts to physicians in 1990, all run by other mstries reduce the strain on the government budget. and eneprie. The bed-nd physician- supply ratios for Ukaie, with these facilities added, were 135.5 beds and 42.9 physIcis per ten thousad in 1990, levels that are very high compared to the lowest OECD levels. For example, the low OECD bed supply rate is 21.0/10,000 and the low physcin supply rate Is 7.3/10,000, about on-sixth of the levds in Ukine. The hospital admisn rate in Uluaine 112 aCwper9 CURErEN ISSU assistance to finance Imports of essential drugs and supplies for pa cal production and Shwrta In Drugs, Supplis and Equipment techical assistance for short-mer planning for procurement and distribution. MOH needs a 16. In the past Ukraine produced one third sty for the parm cal industry to of the 2200 medical products produced in the secure inputs for production of basic drugs, former Soviet Union, but with many key inputs supplies and equipment. The governent shold of raw materials coming from Russia, other also encourage a major private sector role in tie former Soviet union republics and the West. industry within an effective regulatory Only 8-10 percen of raw material inputs for frmework. producdon in Ukraine could be procured from within the country. The highly integrated nature Blood Products of the former Soviet economy also prevented Ukraine from becoming self sufflicient in the 18. There is no production of blood production of drugs for its own use. Minisbtry s in Ukraine and the quality and offlcials report that in 1991 the equivalent of quantity of blood products available needs US$ 800 million of dmugs and raw materias improvement. The Insti of Hematology and were imported to Ukraine principally from Transfusion, MOH, monitors the quality and Soviet republics. In 1992 the value of imports safety of services provided by a network of dropped to zero because of the breakdown of some 630 blood ransfusion centers. Three exchange in the former Soviet Union and a hard plasma fractionation facilities operate in currency shortage in Ukraine. The Ukraine. The present system and facilities need pharmaceutical and medical products industry is to improve the safety of products and services, near collapse for lack of inputs. Barter among to increase the volume of production, and on a health care facilities was being used to obtain basis that supports priority needs of the health required drugs. Extensive substiton was system, to increase the number of blood common, often for drups not considered an products available. Plasma production will need optmal choice for treatment. The most urgent to be increased and a new plasma fractionation needs identified by a visiting WHO team include plant may be required. To achieve these ends the following the following items. Drus: will require a new central tesdng laboratory insulin and oral anti diabetics, hormones, Wing Western reagents, the introduction of including creams and ointments, anesthetics, modern equipment and technology into the 27 bronchodialators, broad spectrum antibiotics and blood centers to increase their production of analgesics; Supplies: glass and disposable plasma, and a computerbased management syringes, needles, cold chain equipment, and information system for monitoring and renewable, basic, medical and surgical supplies; coordinatig services. The starting point for and Equipment: insulin purification such a program is a strategic plan for blood equipmenttechnology, clean room for aseptic services to meet needs in a staged way, avoiding production/technology, diagnostic, anaesthetic an expensive high-technology initiative that sterilization, and replacements for old, non diverts attention from such seemingly prosaic, functioning and expired surgical equipment. A but critically Important, health needs as way to clear the bottleneck needs to be found so programs for the elderly. that at least self sufficiency in basic drugs and supplies can be established. Trining in HIalth 17. Production capacity exists, athough it 19. Institutes for Higher Health Care may be inefficient and below current standards Education train physicians in general practice, in methods and technology. Ukraine needs pediatrics, preventive medicine, denstisry, and Health wad ServIkes 113 phamacy, with spedaization in the fina year. no less than 10 percent of tional income on 'Me system is being changed this year to health, to benefit relvant to an emploment conform to North Amesican practice in order to agreement. Advice from a team of health imprwve quality. MOH needs tecical professionals with experience In deverlopig assistance in the form of training materials, health legislation that reffect contemporay rricula examinations, quaity auran, and health principles and system developmnt total quality improement methods and directions would be valuable to Ukraine. The programs. From 1993 there will be a reduction team would likely include a legal professional in the intalke of first-year students by 500 per with signicat experience in writing health year for a period of 3 years to achieve a norm of legislation. 34 physicians per ten thousand population. Some medical schools have been considered for 22. There is a need for all parties inmlved closure, particularly in the western oblasts where in developing legislation to become familiar with there is an oversupply of physicians. Reducing inional directuons before stng the basis intakes to medical training Insttes is a sound for delivery of health services. These include beginning to medical human resources planning. the 1948 WHO Charter definition of health, the More needs to be done in this area, including 1978 Alma Ata declaration on Health for All firther review of the norm for physician supply, and defnon of primary care, the 1986 Ottawa which is sdll higher than most OECD counties. Charter on Health Promotion, the 1988 Adelaide consensus on Healthy Public Policy and the 1991 20. Nurses are trained in 109 mid-level and 1992 Swedish and Brazilian agreements on health education instutions reporting through a sustainable basis for health by reducing waste, oblast heath a isaions. These mid-level avoiding over consumption and limting institutions train seven categories of health environmental risks. Without such knowledge worker; about 30,000 nurses are trained per and adequate eaminton of fundametal year. The roles of nurses and physicians are principles, Ukraine risks developing a system quite different preseny than in North America, that looks backward to the past rather than to the with physicians providing much of the care future. urses provide in North America and nurses finctioning much like North American nursing Perspectives on Value for Money Spent on the auxiliaries. There are plans to decrease first System year intakes and close some numrsing schools. More consideration could be given to the future role of nursing in Ukraine in relation to international practice. Igislative Reform iii 21. A program of consolidation and refom of health legislatiori has been initiated as a result_ = .___ of moving legal responsibilities from Moscow to I I! I Kiev. This reform has produced several levels o 1 S 8 4 * 7 a 0 la of draft legislation for eventual consideration by un& me" _M. a V o parliament. Compared to Western health Figure 9.2: Healt Expenditwes of legislation the present draft versions tend to Selected Countries as a Percent of GDP include widely diferent types of functions in ttie same bill, rangng from general principles to 23. From the perspective of the recent past, budgetary matters like the requirement to spend Ukraine likely is geting reasonable value for the 114 cawer money spent on elth cae. Its health staus Iedoad Short Term Action indicators compare well with those of theo Soviet Union and a number of its former 25. The following steps are already under republics (with the exception of indicatos like consideaton In MOH or In selected cases have, alcoholism, drug abuse, abortions, and by waly 1993, already been taken In whole or in congenit defects). From the perpecve of the part prent and neam ftre, however, two problems are dear: (1) the health atmof the popuaton Outpaent Care Shift 30 perce of needs considerale ieme if it is to ipatient procedures and treatments to approa OECD levels, and (2) health sector ambulatory car that can be done safey expenditues will have to sbrink as total output on an outpatient, ambulatory basis. condiues tD decrease if health is to limit the pressures it places on the govement budgeL * Prsoanel Nor.s. Revise norms for Several countries are able to do more with less bed and physician supply to make them (see Figure 9.2). To resolve these problems the doser to North American levels, and health system wil have to do more with less. link st to the care needs of the patient not to the iumber of beds Budget Cuts avaiable. 24. Intoducig greater efficiency into the * Excess Capadty. Withdraw health system is one importat way of doing unneessary hospital beds from service, more with less. A valuable stategy for prefrably by closing whole wards in achieving greater efficiency and lessening the order to gain full Impact of stng pressure health places on the goveent budget reductions; rationaize hospital service is for the Ministry to voluarily review the delivery by retaining only programs present budget and seek ways to reduce it yet relevnt to sevice area needs, especially aintain services. Budget reduction must be in rural and oblast fcilities, and cloing done in a way that contiues services provision nonviale, unnecsy hospitals. to vulnerable groups. In particular, care must be taken to maintain the defacto social service * Medical Educaton. Decrease the ftion carried out by clinics and feldsher intake of medical students (and possibly staions in villages where there is a large elderly middle level health personnel; population, mainly female, that reies on local rationalize the numer of medical school healdth fcilities for support in daily living. The facilies and close those that are budget-cutting strategy should focus on measures unnecessary. that result in ongoing as well as one time savings. Table 9.4 shw 1992 allocations for These changes could reduce spending on headth, reco ons for 1993, and an hospitals considerably, with no loss in quality of esfimated suinable level of health spending service. The expenditure scenario in TIble 9.4 beyond 1993. Ukamine historically used about 3 provid for a 30 percent reduction from 1992 to percent of GDP for health care, and government 1993 in hospital spending. This cut may seem will have to cut back from 1992's 7.8 percent lage, but the 1992 level is inlMated far above soon. But reduecions can offer a cha to previoustar' spendig levels. The 193 improve efficiency and quality. By 1994, teommendations call for other categories of Ukraine coud have a songe and better system pending, except for Chernobyl-reated health than it has today if the recommended changes speg, which could be covered from other are made. accunts, to remain the same. Health wand Serics 1 26. In 1993, tho Miisty of Helt wa Ru n stg for If T&m duq already taking a number of ths o d step, cuding th lour of beds In e padt 27. By actg mw, theo M s co ly I year, and viewing the feasibiliy of ote ba fo log term halt systm edcency d closures. lhe deion to cut medica hool edcdvns with four cn ts enollmet is sound, since un lo among 2 ec vio: physici is alredy ppeng. MOH may Table 9A: Curnt. Suggeted. and S u bl Policy for Health Sp _d Percent of GDP under Atemave Spending Pk e"Pqie Category Suggesd usta y Ac ed Current Proam Program Polky for 1993 Beyond 1993 Shift a thir of 1l tisreatet to out-patdent Hospitals 5.1 3.8 3.1 ate Other Facilities 1.6 1.6 1.3 csde but wit fiwwip ___ ___ ____ cvesbt wih fee physicans Inves in health prmotion. antl-emoldo Public Healthl) 0.2 1.0 1.2 campaign and a prga to trdue 0t Public Health 0.2 0.2 0.1 Education _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Subsids for 0p2 p.1 o te plan for kmport from West dsoad 0.2 0.1 0.1 _ - Z p p en Research 0.1 0.1 0.1__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Other(2) 0.4 0.2 0.1 Total, Health(3) 7.7 7.0 6.0 Notes: (1) Addionl public heath expndtu are Inluded In the budoets for spwcific facdliti (2) AddIna tent for Chnobyl victims d pivt pmnt for lh seo ies not nclnuded eswhere. (3) Does not sum exactly due to run . Sources: June 1992 Ora of the 1992 Budets for the Mst of Health Social Isrance fuA Chernobyl Fund. Pension Fund and Emplloyment Fund. close some sdhools for trainhg middle lvel * Fin g impts ofoesse dru nd health pe el and has sdW somenis supplies for produ n and procedure to an mbulatory setting. to iud (I) short tem planig fo However difficult it may be, medica-school aq ,% the rsquird d ad closures must be addressed. spplies anddrmining how, whe ad whee hy wi be dbuted to e prI needs are mat d (a) 116 aapter 9 developing a strategy for the have more control over their ih"_ica1ndustry in U l" to reproductve role; (OU) increasing access scre supplies for the populatdon, to and use of conraceptivesto lower the encouraging a Mnor private sector role present high rate of abortions, including within an effective regulatory the possibility of developing productive framework. capacity for self sufficieny in contraceptives; (iv) sheing * Intrzodwing reforms in health-system women and child health progms to management to improve effectiveness, to lower present lvels of morbidity and iude (I) strategic health policy that mortality; (v) assting other vulnerable focuses on pdmary care, hoalth groups, particulaly persons with long promotion, healthy public policy, ad term psychiatric Ulness; and (ul) healthy social and physical developing a range of health and support enirnmts; (U ranlizin the programs, both inttutiona and home structure and functions of the health based, to meet the needs of the elderly. system from Ministry level down, reinforcing local participation, * Developing health personnel, including accountability, and responsibility; (U assistance with restructuring the present developig con mehdods for approach to taining medical and other fnanci pla ang ad control based on health professionas, and ihntat health program budgeting; (v) rationalizing management training, to include (D rltosisbetween MOH and the restucturing the process of tining ies of Finance, Evironent, health professionals toward the North Education, and SocW Welfa to American model, introducing new strengthen MOH control and curricula, taching, and examination accountabiity for its stewrdship of the methods; (U inroducing the concept of health system; (v) introducing modern 'approved acts' as a basis for defining health infonnation system methods that the role and scope of practice of a health bring together health status, clinic, profession to permit laborsubstitution fcl and utilization dat strams In effects, strghening the role and an itegrated way for managing the profession of ursing. system at each of its levels; and (vO) developing coordinated enabling and * Planning the financing of health service regulatory legislation; and (vii) delivery through a national health improving quality of services and their insurance scheme, including (i) the delivery by introducing quality principles for its delivery and their assurance, tot quality mangement and economic implications, Qi) relationship acceitation methods. of the schemeto other social safety net programs; (Iii) alteative arrgements * Strengthening and moderzing primary for organiational responsibility and cae (baic) health services, including accontabiity for its Implementation ad those targeted to women and children, operations; (iv) associated reforms family planning services, and the necesary for viability and success of the elderly, to include (f) itoducing health scheme in the health sector financial prmoton, and straengeingprevention administration and other areas, and their programs; (U) introducing famiy rtive timing; (v) enabling legislation; planning programs to enable women to and (vi) staW for implementation and Health and S&.ces 117 a plan and timetable fororganizing and proceeding with the schome, These steps, If introduced in 1993, can help lessen the demands on hospital care because they help preveat Illness, as with aborion-related hospital costs that would be avoided with family- planning services. Management Improvements can both reduce cost sad Improve quality. Health Insurae 28. The Introduction of health insurance has been charatizd by some as a way to solve many of the financW problems of the health system. However, a health insurance scheme does not create new money in the economy for health care. Financing will have to come from existing resources. Health insuace introduces a new set of complex dynamics into the health system that can adversely affect service delivery. Premature introduction of heath insurance can lead tO financial problems, distortions in priority for service delivery and distraction away from the need to deal with more findamena problems in the health system. Several Eat European countries, especially the Czech and Slovak Federal Republic and Hungary, are experiencing serious difficulties because of the Il-timed introduction of a health insurance scheme. Once such distortions set in they are very difficut to overcome, a particularly dangerous situation since the distortions would add to the problems of the present ineffective system. 29. Proceed at this time with the introduction of health insurance is premre for a number of reasons: ( he istabiities in the economy; (4) absence management and finacial Inistraion tools; (OS lack of conseus among key stakeholders on values and priciples of a new scheme; and (iv) the need to study finacial implications and implementation requirements. Nonetheless, plaing assisted by experienced health-fnce specists from OECD countries should continue as part of straegic management for the health sector. BU&TOGRAPHY RIREIS PRwARO IY URA l CoNsuLTANS FO TB STtImIY Assoov, Geoge Fedorovych. 1992. On the Eoonomic Siuaion and Employment In Ukraine. Golovana, Yevgeniy and Nataiy PaXna. 1992. Population's State of Hedth and Development of the Heath Protection System. Golovaty, Nikolai F. 1992. 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Gomulka, Stanislaw. 1991. 7Ih Causes of Recession Folowing Stabiiation. Reearch Series/Number 15. London: Shool of Economics. Gomlka, Stanislaw. Economic ReObnns In Poland, 1989-91: Alms, PoUcies and Outcomes. Research SeIes/Number 19. London: Sch oolof Economics. 1991. Gomulka, Staniw. Ihe Pzzles of Faly Fast rowrh and Rapid Collpse wder Socialism. Reseach Series/Number 18. London: School of Economics. 1991. Hammesh, Daniel, 1992. Unemplymwe Iwwejfor Devlping Countres, Working Pa Series 897. Washigton, DC: The World Bank. Hansson, Carols and Karen Liden. 1983. Moscow Women. New York: Random House. JF. 1991. Reform of Ukraines public fince: Immediae policy tass. Wash DC: IW, Fisca Affirs D eat nTEFAX. Business Today.' 27 March 1991. Translated. FBIS-SOV-91-102. 28 May 1991. pp. 46.47. INTERFAX. 'Soviet Buiness Repot' 29 October 1991. Trandated. FBIS-SOV-91-210. 30 October 1991. p. 47. INTERAX. 'Soviet Business Report.' 5 November 1991. Tranated. FBIS-SOV-91-215. 6 November 1991. pp. 31-33. INTERFAX. 13 Sptember 1991. Trnated. JPRS-UEA-91-036. 17 Setember 1991. p. 11. 122 BIblogphy INT AX. 28 October 1991. Translated. FBIS-SOV-91-209. 29 October 1991. p. 64. kwselya. -At the USSR State Committee for Prices and the USSR Mistry of Finance.- 30 April 1991. pp. 1-2. Trsated as "Finance Bodies on Estomated Effect of Prices." FBIS-SOV-91-091. 10 May 1991. pp. 26-27. Izvs*ya. 'Foundations of Legislation of the USSR and the Republics on Income Indexation.' 9 July 1991. p. 2. Translated. JPRS-UEA-91-031. pp 1-4. Jwvesttya. 'What the Compensaton Payments Will Be.' 21 Mawch 1991. p. 2. Translated. JPRS-UEA-91-015. 29 March 1991. p. 62-64. Iesiya. 16 October 1991. p. 1. Jackman, Richard. 1992. Wage Policy in the Transidon to a Market Economy The Polish Expqe'ice, The Case of Poland In Wage Policy During the Thmsition t a Maket Economy, Wodd Bank Discussion Paper No. 158, Washingn, DC: World Bank. Jarvis, Sarah J. and John Micldewright 1992. The Targeting of Family Allowc in Hungary. Public e.,und s and the poor: ncide and targelng, a Wodd Baf* coVWew. Washington DC: World Bank. Jenkins, Glenn P. 1992. Implications of Economic Transition and Demographics for Finncing Pensions in the Former Sociaist Economies. Harvard University. Ka~akhstwwkayapranl& 2 August 1991. p. 2. Translated as"Law on hcome xedion." FBIS- USR-91-046. 5 November 1991. pp. 34-37. Keynes, John Maynard. 1936. The general weory of emplyment, ntes, and money. Cambridge: Cambridge University Press. Khudyakova, T. 1991. -Pension Fund 'On the Rocks.'" Izvesya. p. 3. Traated. FBIS-SOV-91- 087. 6May 1991. p. 28. Kincaid, Ward. 1991. Regional vwiatons in Soviet mortality by cause of death: An analysis of yeas of potenti life losL Washingtn, DC: US Census Burea. Kormilkin, A.V. 1990. "About Poverty-Not for the Las Time." Emika orgmaIz a prmyshlenwgo progwdoa (EKO). Transated. JPRS-UEA-90-040. pp. 75-80. Nonai, Janos, 1980, Ewmmia ofShorage, Nordh-Holland, Amsterdm. Kornai, Janos, 1990, The Soalist System, Princeton University Press, Princeton Kovalev, A. 1989. *Kto i pochemu za chertoy bednosti." E_ gazeta. No. 25. p. 11. * 0~~~~~~~~~~~~~~~~0 to~~0. . 124 BIBiograpy Pravda. 'On Compensatng the Population...' 25 March 1991. p. 1. Traslated as 'Ukase on Savings Compensaion Published.' Pravda. 'On the Refbrm of Retai Prices and the Social Protection of the Population.' 21 March 1991. pp. 1-2. Trnslated as 'Text of Cabinet Price Reform Published." FBIS-SOV-91-056. pp. 32-40. Pravda. 1991. pp. 1,2. Tranlated as "Gorbachev Issues Decree on Retail Prices,' "Agreement with Republics on Price Reform,' and Funding Arrangements Detailed.' FBIS-SOV-91-054. 20 March 1991. pp. 14-23. Pronina, L. 1991. 'How Much Has the Cost of Living Increased?' Argwney fay. No. 16. Translated. JPRS-UEA-91-024. 17 May 1991. pp. 75-78. Rapawy, Stephen. 1992. Soclo-Economic Indicators for Ukraine. Washington DC: Center for Inrntional Research, US Bureau of the Census. Robinson, E.A.G. 1931, rev ed., 1958.71e s=uCwe of competiie Indusy. Cambridge: Cambridge Univ Ptess. Romnyuk, V. 1991. Tha Exorbitant Mmimum Consumption Budget. Izvesaya. 26 July 1991. p. 1. Translated. FBIS-SOV-91-146. pp. 61-62. [1991aJ Romnyuk, V. 1991. USSR Presidens Decre on the Minimum Consumption Budget...' Iwstya. 23 May 1991. Translated. PBIS-SOV-91-103. 29 May 1991. p. 52. [1991b] Romanyuk, V. 1991. Whom Does Indexation of bcome Proect? uIdya. 3 August 1991. p. 1. Transated. JPRS-UEA-91-034. 23 August 1991. pp. 29-30. [1991c] Rose, Richard. 1992. Divisions and contradictions in economies in transition: Household portfolios in Russia, Bulgaria and Czechoslovakia. mimeo. Washigton DC: World Bank. Rutwski, Michal, 1990, Labour Howallg and FRare Open Unrploymm In Eam Ewrope: lhe Case of Poish Indusay, London School of Economics, Centre for Economic Performance Discsion Paper No.6, July. Scherer, Peter, 1990, A Review of Nadonal Labor M1et Polies In OECD Counies, Semi on Economic Adjustment: Employment and Social Dimensions, Washington, DC: World Bank .red) Schulz, James H. 1992. Economic Support in Old Age: The Role of Socia Insurance in Developing Counies. Brussels: International Social Security Assn. Schumpeter, Joseph A. 1942, 4th ed., 1952. Capitalism, socaism, and democracy. London: George Allen & Unwin. BIblogapy 125 Sen, Amartya. 1992. The Political Economy of Targedng. Publc ependlures wad the poor: Incdence and targeting, a World Bank cofrence. Washingoon DC: World Bank. Simon, D., and Usteko, 1993. Labor in Kiev. F Wlal Thes. Sotsaistichesldy trud. No. 3. 1987. Svod zkonov SSSR. 1984. Vol. 2. Moscow: Izvestlya.' Thd. 1991. p. 4. Translated. JPRS-UEA-91-035. 9 September 1991. p. 90. U.S. Department of LAbor, 1986, Economi Adjuwtent and Worker Dslocaton In a Conqekl Sociey, Report of the Secreay of Labor's Task Force on Economic Adjusutent and Worker Dislocation, Washington, DC: Deparment of Labor. Ukraine, Government of. 1993. Action plan for the Government of Ukraine to implement and develop 'the basis of the national economic policy" for the year 1993. Kiev: Council of Miisters. Ukraine, Law. 1993. On state asiste to families with children. Kiev: Council of Mnisters. Ukaine, Ministry of Health. 1992. File on Draft Ntional Legslaion: Bil on Principles for Legislation on Health Care; Bill on Medical Insurance; Bill on Trasplantation of Organs and 7issues; Bill on Medical-Legal Experdse; Bill on Psychiatric Care. Mimeo. Kiev. Ukraine, Ministry of Health. 1992. Indicators of Population Health and Activity of Health Care Facilities of Ukraine for 1990-1991. Vol. 1. Kiev. Indicats of Resources for Health Care for the Population and their Use in Ukrine. Networks and Personnel. Statistical Materil for 199041991. Uraine, Miy of Statistics. 1991. "Socio-Economic Conditions in Ukraine for 9 Months in 1951." Kiev. Ukraine, Ministry of Statistics. 1991. Narodne gospodarstvo ukis'wi RSR u 1990 rotsi. Kiev: *Tekhibka. Ukraine, Ministy of Statistics. 1992. Socio-Economic Conditions of Ukraine in 1991." Kiev. Ukraine, Ministy of Statstics. 1992. 'About Social and Economic Development of Ukraine: First Qurt 1992." Kiev. Uiyadyy kwyer. 1992. Social Protection Guateed by Government. English translaton, Jamary 1992. UNDP. 1991. Huma= Deeopment Report. New York: Oxford University Press. USA Bureau of Census, Center for Intenational Reserch. 1992. 'Ukraine: Statistical Summary." Translation of Ukrainian materis. Washington DC: Census Bureau. 126 BIbIlogrph USSR, Gosdomstat. 1990. SSR v tsa vwh l go. Moscow: Fnsy i statlsta. USSR, Goskomstat. 1991. Naroaye hosut SSSR v 1V g. Moscow. USSR, Goskomstat. Preu-1yaai Issued Irregarly. "USSR Law On Pensions fbr USSR Citizens." 7d. 30 May 1990. Tnated. FBIS-SOV-90-121. 22 June 1990. pp. 33-54. WeM saiVi. 1988. No. 9. WHO, EURO. 1992. HFA Stastical Indicator Database. CopenhAgen. WHO, EURO. 1992. Highlights on Ukrane Draf. Copenhagen. WHO, EURO. 1992. Ukraine, Population by Country, Age Gtoup and Sex. WhO. 1992. World Health Statistics A . Geva. World Bank. 1987. Poland: Reform, Adjustment nd Growth. Repor No. 6736-POL Washington DC: World Bank. World BankL 1989. Poland Subsidies and Icome Distributon. Repot No. 7t6-POL Washington DC: World Bank. World Bank. 1991. Hungay Reform and Decenization of the Public sector. Volume I. Report No. I(X)61-HU. Washington DC: Wodd Bak. World Bank. 1991. Poland Income Support and the Social Safety Net: Policies for the Transition. Report No. 9661-POL. Washingon DC: World Bank. World Bank. 1991. Wage and Employment Policies in Czecholov"a. LuLs A. Riveros. Worldng Papen 730. Washington DC: World Bank. World Bank. 1991. World Dewjopmewt Repo. New Yorl Oxford University Pres. World Bank. 1992. Options for Pension Refrm in T7nisia. Dimitdi Vittas. Financial Policy and Systems Division, Country Economics Depament, World Bank. World Bank. 1992. Poland Health System Reform: Meetg the Challenge. Report No. 9182-POL. Washington DC: World Bank World Bank. 1992. Poland Social Setors Expendu Review. Rort No. 10158-POL. Washington DC: World Bank. World Bank. 1992. Unemployment Insuran for Developing Counties. Repor No. 897 Washington DC- World Bank. BNIbilOVwph 127 Yakovliv, Ye. 1991. bUrview with Ye. Katdskly, Det Minister Gokomud USSR." Plai4teMwwywm No. 2. p. S. Trslated. JPRS-UEA-91-035. p. 65. CHAPTER NOmS 1. Active policies, including job-matching services, traing, and skills assessment, help Ihe unemployed worker get a new job. Passive policies, such as cash benefis or severance pay, compen_te for lost income without contrbtg to finding work. 2. World Bank staff in Washington DC are cure y preparing a major worldwide review of pension experience and will offer recommendatio for substantial changes In pension systems. The results of this study can be provided to the Government of Ukraine when avaiable. 3. Tese groups would Include aged rural people living alone, orphans, the seiously disabled, families with three or more children, single parent and pensioners receiving less than 1.5 tms the minimum penion. Ibese groups constiute from 10 to 20 percen of the populadon. 4. In preag this report, Bank staff did not atemp a review of the many and complex arrangements for consumer subsidies, because an IBE mission analyzed them in some detail (Chu and others, 1992). They are discussed briefly only as part of the aggregate prom of public socl sp . 5. In this secdon various health indicators of Ukraine are compared with those of six countries: Belarus, Poland, Portugal, the United Kingdom, Sweden, and Canada. Bdarus and Poland are not only neighbors but were also part of the fomer communist bloc. Portugal has a populaton distribution very close to that of Ukraine, and by some estimates a comParable GNP. It also has the fature of being on the regression line of per capita epend on health regrssed against DP per capita, arguably speding about the right amount on health for its economy. The United Kingdom has a populationthat is comparable in size to Ulkine and spends a share of GNP on health that is also comparable, although much more in per capita terms because of its high income. Sweden and Canada are included to offer comparisons with two counies t have well respected and relatively mature health care systems. 6. Lancet ediorial, 1992. EnvIronmental pollution: it kills trees, but does it kill people? Lancet 340, 3 October 1992, 821-2. 7. Most disabled, on reahing retremen age, can cboose between a disability or retiremet pensio Military retrees and Chernobyl vicm can receive both disability and rtient pesions. 8. Most of these allowances are available to famflies with incomes below two minimum wages per person. According to income distbution data from 1990, this is approximatedy 42.5 percent of the population. 130 Chwper Nos 9. In theoy the Chnobyl proll ta I ebamad for i assac, health c and enviromW ntalNrelating to the Chenobyl disaster. In practice, the tax is incrpoe Ito the gerao rmn budget and Cherobyl-rdaed expense are disbured from the budget 10. All chfldren below ago 3 (age 2 if mother did not work prior to childbirth) rceive an allowance from the state. 'Me allowace for childrn betwe_ the ages of 3 (2)0 d 6 is reseried for low Income famills. 11. These benefits exclude monthy stipends dicussed In Chapter 6 of this report. The disabled could be considered a vuleable group, but are not classified as such here. In Ukraine, eve people with minor bandicaps ca be consdered disabled. Furthermore, many of th bonefits included here, such as prviso of a car or the equivalent monetary compensation, do not appear to address basic needs. 12. For example, there are 12 cash allowances that low-income or vulnerable families can qualify for. These include separate s for children's food, children's clodthng, children's prducts, and general child mainteace. Under the category of general child mainenance, famlies may qualify for difert allowances, or differet stipends levels within an allowance, depending on the number of chldred they have, the age of their childre, heir income, w3hether the mother worked befr childbirth, the age of the mother, whether the children are eligible for other allowans, whether the family is headed by a single parent, whether the absent parent pays alimony, and whether the single parent was rised in an orphanage. 13. For example, all famiies are eited to an allowace for each child under the age of 3 (2 if the mother did not work or atted a higher education school and i over 18 prior to childbirth). Th Pension Fund pays for these allowances out of its own resources for children under age 1.S. Stipends for children ages 1.5 to 3 (2) are funded by state general revenues given to the Pension Fund but eararked for this puwpose. If the mother worked or atended a higher education school prior to childbirth and was still employed or a stdt at the time the baby was delivered, the allowance is administrd by the mother's enterprise or school. If the mother did notrk or study prior to childbirth or was laid-off before the birth, the allowance is adinisted by a district-level social welfare office. 14. For an analysis of the reasons for labor hoarding in socialist economies see Rutkowski (1990). For estimates of Its magide for the Soviet Union see Porket (1984). 15. Explaiig the reasonm for different labor market reactions to demand and supply shocks is beond the scope of the sttdy. The impot inemediate point in the exlanation is that entWrprI tend to regard the supply shock as temporary and continue to hoard labor, whereas they tand to regad the demand shock as more permnent ad thus to start firing. 16. Frtwell et.al.(1991, pp. 16-18) ague strongly in favor of active policies on the trounds of overall cost reduction. Chapter Notes 131 17. This option Is similar to a solution recniy adopted in Sweder, where the budget of the national training agency, AMU, was shifted to th Employment Service and used to procure training servlces on the open market. The AMU was forced to compete for funding. ITe AMU financed 80 percent of expenditures on training with the private sector providing the remainder. 18. A subsequent visit with the Ministry of Education revealed as many as 800 specializaticiis available in vocational schools, although there is discussion of reducing this number to 300. See the chapter below on education services, especially the sections on vocational and technical education and training. 19. This box is based on Ulrich Zachau's compilation from R. Layard, S. Nickell, and R. Jackman (1991); J. Ahmad, F. Corricelli, and A. Revenga (1992); F. Coricelli and A. Revenga (1992); T. Lane (1992); and M.A. Kiguel and N. Liviatan (1992). 20. There is an extensive English language literature on the Soviet welfare state, including the definitive (but somewhat dated) study of McAuley (1979). A more recent but uneven collection of studies was edited by Lapidus and Swanson (1988). Additional sources and Russian language mateials have been noted in the bibliography. See Braithwaite and Helenlak (1990). 21. Before 1990, disaggregated employment statistics were released, but the current Narggs Uk. 122Q does not have a separate line item for miners. Military personnel were eligible for enhanced old-age pensions, disability benefits, and survivor benefits under the Soviet system. Ukaine passed its own version of a law regulating military pensions in 1991, and a supplementary law on non-cash benefits in January 1992. 22. The 1990 all-union pension law reaffirmed the right of certin individuals to higher, personal, pensions for special service to the state paid to ardsts, athletes, politicians, and others deemed to have served in some special fashion. The money amounts of these pensions are usually several orders of magnitude beyond the standard allowances, according to passing references in the press, but the number of personal pensioners is small. 23. The exact ruble amounts are readily available in Svod zakonov SSSR (Code of Law of the USSR), (vol. 2, pp. 678-686; 712-718). 24. People engaged in hard labor can retire with fult benefits earlier than the gjneral population. In addition, people in other jobs can retire after 25 years of service (20 for women) regardless of their age, although benefits for this group are lower than for those who work until full retirement age. 25. In the past it was assumed that the collective farms where these individuals had worked would take care of them upon redrement. For this reason these retirees received only a small pension from the state. Currently this group receives on average only slighdy less than urban retirees. 132 CJwer Notes 26. Pensions are calculted as a fuction of salary at the time of retirement. The adjusted pensiom will be calculated by increasing the peson's reirement-date Income to 1992 levels. For examplo, a person wbo retired in 1974 would have his or her base income Increased by 14.8 times whereas the income of a person who redred in 1988 would be inreaed by 10.5 times. The replacement rate on this new income will continue to depend on length of service. 27. Government revenues include state and local revenues and income from the Pension, Cberanobyl, Employment and Social Insurance Funds. 28. Ranges ar given tohtbtis chapter to capture the fact that the Ministry of Fiace and the Pension Fund differed in their July 1992 forecass for total 1992 Pension Fund rvemnes and penditures. Final date for the year were not available for this report. 29. The social lnsurance payroll tax rat in first quarter 1992 was 61 percent but was 37 percent thereafter. Eighty-four percent of this tax is earmarked for the Pension Fund. 30. Thae are offices of the MSW located in each district of Ukraine that undertake a variety of tas associated with pension and allowance administration. 31. To arrive at this savings, the following simplifying assumptions were made: 1) the ret populaon is spread evenly across ages and does not increase over time such that the same number of people enter retirement as died in each of the next seven years. 2) Life expectancy for people age 60 does not change over the next seven years. Women currently retire at age 55 and, if they reach their 60th birthday, die on average at age 79.5. Thus, they experience 24.5 yas of retrement on average. At the end of 7 years, they will be reting at age 62 so their average years spent in retirement will decline to 17.5. Men currently retire at age 60 and, if they reah their 60th birthday, die on average at age 72.4. Thus men experience 12.4 years of retremnt on average. At the end of two years they will be retiring at age 62 so their average years spent in retirement will decline to 10.4. lbus the total of men and women's client years in the system at a given point in time will decline from 36.9 to 27.9-a reducton of 24 percent. Thus total spending on cash benefits would be reduced by an equal amount. It is assumed tha cash benefits' share of total pension spending is equal to the share forecast for the second semester of 1992. Esmaed savings as a share of toa spending is not significanly influenced by the choice of the Pension Fund's or Ministry of Finance's mated 1992 budget. 32. Forecast pension spending over the July 1992 to June 1993 period is compared to forecast spending with benefits reduced by 50 percent for retired and disabled people who continue to work. Spending in the Jauary to lune l993 period is assumed to equal spending for the last six months of 1992 in current Rubles. 33. Most of these allowances are available to families with incomes below two mininmm wages per person. According to income distribution dma from 1990, this is approximately 42.5 percent of the population. 34. Includes only administave expenses for the Social Insurance Fund and some expenditures by social welfare offices. Additional adminstrative cost information was not available. 04peer Notes 133 35. All childrn below age 3 (agc 2 if mother did not work prior to childbith) recive an allowance from the state. Ite allowance for children between the ages of 3 () and 6 is reserved for low income families. 36. To arrive at these figues, savings were estmated for each We of benefit based on the likely reducdon In sending that would result from the abovepecified demograhic requirements. For example, estmated fu benefits for the informed elderly were not reduced fom their currt level on the assumption that most beneficiaries in this category would be claified among the disabled. The new estimate for the allowance for children under age 3 was 20 percent of its current level, on the assumption that not more tan 20 percent of the general population would be included in the new target group. In each caso, savin wro conservatively estimated to arrive at the minimum amaount the governmet could save by adopting this policy. 37. Ite applicanttacceptance ratio was 5:1 in 1991 and dropped to 2.5:1 in 1992. 'Te Rector speculated thathte sharp decline in the number of applicans was mosdy due to the shrinking salary gap between people with and without higher education. Tbis appe to be at vaiane with the reports to the mission that there is a strong demand for graduates in economics, finance, and related fields. 38. Total state revenues include state and local general revenues and resourcs of the Pension, Social Insurance, Employment and Chernobyl Funds. The range in the health sector's share of total government income reflects the fact that the Pension Fund and the Mistry of Finance differ signifcandy in their forecasts for Pension Fund revenues. 39. In additn n, some public health expenditures are included in the budgets tbr specific facilities. UlKRAINE Employment, Social Protection, and Social Spending in the Transition to a Market Economy STATISCAL ANNEXES 134 Table 1. UKRAINEt Ppulation by Age Groupa and Oblasts (1909 Date; In Thousand Peple) ... ............... ..............., . ,.... _.._..,,.............................................. up to 14 14 15 16 17 18 19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70. Total a ................................................................................................................................... Totat: 1O.74 720 m 7M5 m 694 6.0 3,352 3,958 3,900 3,741 2,706 3.220 3,70 2,953 3,232 2,020 4,002 51.439 Kale 5,279 362 372 386 378 350 321 1,684 1,969 1,924 1,826 1,295 1,504 1,72 1,314 1,275 663 1,100 23,863 Female S.094 357 354 369 355 344 319 1,667 1,96 1976 1,915 1,411 1.76 1,978 1,639 1,958 1,357 2,901 27.576 crime R. S13.s 35.5 34.0 35.2 32.4 30.6 30.4 154.0 191.7 200.1 199.1 137.7 159.6 174.3 13M.8 143.4 77.8 142.4 2,430 Virnnytaa 356.9 27.3 27.6 28.7 26.5 24.2 22.5 113.6 127.6 122.1 124.9 96.7 129.0 141.1 121.5 139.5 99.3 191.9 1,921 volyn 241.9 17.0 17.1 16.9 15.8 14.1 13.0 67.9 82.0 79.4 67.4 51.6 55.0 65.9 74.0 64.8 41.6 73.1 1,058 Onipropetrovk 76s.8 52.0 S2.6 56.1 56.0 54.2 49.5 260.4 306.2 294.3 286.8 197.3 257.4 305.5 209.4 247.9129.0 285.3 3,870 boantsk 1033.0 69.7 68.5 .o 71.1 68.1 60.7 322.8 414.0 423.4 411.4 269.3 338.8 421.4 344.3 359.3 176.2 386.6 S,312 Zhytauqr 312.3 23.4 23.1 23.2 20.8 20.0 19.0 94.4 106.8 107.1 99.9 77.4 96.4 110.0 95.3 104.3 n.4 131.8 1,538 Zakarpatefa 307.2 21.6 21.7 21.7 21.0 18.6 18.6 92.2 103.2 98.4 88.8 71.5 65.4 70.2 67.9 59.5 43.9 54.1 1,246 Zaporithzhi 417.0 28.4 28.4 30.0 29.0 27.1 25.2 136.2 162.7 162.2 162.5 105.0 139.2 154.1 110.7 135.0 68.8 152.3 2,074 Ivanaotrnk*ivsk 320.1 21.8 21.3 21.5 20.5 19.3 16.8 100.0 115.4 107.8 92.S 74.3 75.9 88.7 92.2 75.2 S6.9 91.1 1,413 Kiev Regfon 389.0 r.3 27.6 28.2 26.5 24.6 22.8 12s.3 148.9 141.7 133.7 97.0 125.9 142.4 9S.7 122.4 86.1 169.5 1,934 Kirovohrad 237.1 17.1 17.1 17.4 15.9 14.9 13.6 73.s 84.7 82.8 84.8 65.4 83.6 91.0 62.S 89.1 56.3 121.1 1,228 Luhansk S64.9 371 37.3 39.3 38.6 36.8 32.6 173.9 228.3 227.4 212.8 138.5 180.9 233.5 178.S 187.8 91.7 217.2 2,857 Lviv 574.8 39.2 41.9 43.9 4S.7 45.2 41.5 206.4 229.3 210.6 173.3 151.9 149.3 169.7 169.3 142.1 107.2 186.1 2,72 Nykolaiv 284.3 19.4 19.8 20.5 18.0 16.2 15.0 85.2 105.8 103.5 101.1 n.o 88.2 89.7 68.6 79.2 4.O 96.0 1,328 Odessa s26.5 37.5 37.4 39.1 37.9 36.9 34.3 184.0 203.6 201.4 202.8 145.6 174.5 184.9 139.7 151.7 100.1 186.0 2,624 Polttva 320.2 23.4 23.6 24.7 23.5 21.2 19.7 106.6 121.4 116.5 120.2 88.0 116.4 133.4 93.2 123.5 se.3 184.4 1,749 Rivne 275.1 18.8 18.6 18.6 17.4 16.4 1S.8 79.7 92.9 89.6 74.1 58.3 63.5 n.1 n.9 60.5 43.6 76.4 1,164 sus? 267.S 19.2 19.4 20.0 19.4 17.3 15.4 82.6 100.4 102.1 101.3 68.4 87.6 104.3 79.6 105.0 70.2 145.8 1.427 Tenomplt 241.4 16.9 16.7 16.5 15.6 14.7 14.4 73.3 86.4 82.4 72.7 59.5 66.2 76.8 83.3 70.9 56.4 99.9 1,16 Khrkiv 597.1 41.2 40.9 44.2 47.7 47.3 42.5 223.1 250.1 243.5 244.1 170.5 18s.5 232.6 160.7 204.4 122.3 273.7 3,175 Kherson 271.0 18.9 18.9 19.4 7.5 16.2 1S.3 81.6 96.8 98.1 94.s 64.1 82.7 88.6 64.6 71.1 39.2 78.3 1,23r KIhetnwt*ky 294.4 22.0 21.9 22.4 20.4 19.0 18.2 91.8 108.6 1076 100.0 79.1 95.8 100.0 101.1 103.S 76.7 143.2 1,522 Cherksy 286.3 21.6 22.1 22.5 20.8 18.1 15.7 85.4 103.8 101.4 105.4 79.0 101.9 119.6 78.3 112.7 75.7 15s.6 1,527 hoemivtsf 205.6 14.2 15.1 16.0 16.1 14.5 13.0 65.3 72.0 68.7 64.6 S.5 54.3 57.5 57.6 52.7 42.5 64.7 941 CI'nmihfv 252.3 18.5 17.8 18.5 16.5 15.3 14.3 75.5 90.7 96.6 94.1 67.7 86.4 104.5 95.4 114.9 78.8 155.1 1,413 Kiev (Cfty) 514.3 30.8 36.1 37.8 42.3 43.1 38.2 196.9 222.6 231.0 228.3 174.0 157.6 173.5 101.8 112.2 72.8 140.2 2,559 Sour: Cmaf I for 9Epteratfen of Productive Resowu of Ukraine. a/ Including r-kreiniens Upso1 04/22/93 14:34:29 135 Tables 2. UKRAINEs SOUTHWAs Population by Age drosm, Sn d tMt (1989 Date; In Thousand Peopl) up to 14 14 15 16 17 18 19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 5-59 60-4 4 5-69 70. Total a ................................................................................................................................... SOUTHEAST Crimea R. 514 35 34 35 32 31 30 154 192 200 199 138 60 174 35 143 l8 14 2,430 Nate 262 18 18 18 17 16 16 78 94 97 95 4 75 81 59 57 26 39 1.131 fcate 251 17 6 17 1s 15 14 76 98 103 104 73 85 94 5 S2 14 1,29 Oniprop vtrev8k 770 5. 53 S6 S6 54 49 260 308 294 2st 197 257 305 209 248 129 285 3,670 Nate 392 26 27 28 28 26 24 129 153 144 139 92 119 14S 96 102 42 78 1.78 Foul* 378 26 26 28 2 2 28 26 132 156 14 10 U 1os 138 160 1u14 u " 8 2 2.082 Donatsk 1,033 70 69 73 71 68 61 323 414 423 411 269 339 41 3A44 359 176 387 5,312 Nate S5 6 36 37 36 34 31 160 207 212 202 128 154 194 159 146 T 104 2,458 feale 507 34 34 36 35 34 30 163 207 211 209 141 184227 186 214 119 282 2,853 Kher*iv s9 41 41 44 48 47 2 22 20 0 2 24 11 9 1n 189 26 161 204 122 4 3,175 nate 305 21 21 22 25 23 20 113 123 118 118 82 88 108 71 81 38 72 1,49 faste 2 2220 20 22 23 24 22 110 27 126 126 89 100 124 90 123 84 201 1,726 Kh rs4n 271 19 19 19 18 16 15 82 97 98 94 4 83 9 1 65 7 1 39 78 1,237 Mtae 138 10 10 10 9 8 7 40 48 49 47 31 39 42 29 28 13 20 77 Pas-l 133 9 9 10 9 8 8 41 49 S0 48 33 43 46 36 43 2 58 460 Luhanak 56 37 37 39 39 37 33 174 228 227 213 139 1813 Z4 178 188 92 217 2,857 Nate 288 19 19 20 20 18 16 86 11S 114 105 6 82 108 84 76 29 S6 1,321 Pnal, 277 18 18 19 19 18 16 87 113113 108 72 99 125 9 112 63 161 1.536 Nylotatv 284 19 20 20 18 16 15 85 106 104 101 72 88 90 69 79 46 96 1.328 Wel 14 10 10 10 9 8 7 41 s2 51 49 35 42 4 31 31 15 26 616 Fralt. 140 10 10 10 9 8 445 3 53 52 37 47 38 48 31 70 712 Odessa S27 38 37 39 38 37 34 184 204 201 203 1I" 17 185 140 1S2 100 186 2.624 fate 267 19 19 20 20 19 17 93 102 98 98 69 82 87 62 59 3S 56 1,221 Female 259 19 18 19 18 18 17 91 102 103 105 77 92 98 0 8 93 65 131 1,403 Zaporlxhzhfa 417 28 28 30 29 n 2S 136163 162 162 105 139 154 111 135 69 152 2.074 NaLe 212 14 14 15 15 13 12 46 80 79 79 49 65 73 50 55 22 41 955 tenale 205 14 14 15 14 14 13 70 83 83 84 56 74 81 61 80 47 111 1,119 ........... ............._.,_........,___.___.......... ___._...... __......................................... Source: Cecct for Exploratfon of Productive Reources of Ukrafne. Note: Totals my not add up due to rmding. aI Non*Ulraini ens 04/2219 14:3S:50 136 Tablet 3. UI*INU 8C1 Popltatsin b' MO GeOO Se, sd Obtat (1989 Oata; in Thousod People) up to 14 14 15 16 1T 18 19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55459 40-64 65-69 704 Total a ................................................................................................................................... tfigR Cherkasy 286 22 222 n 18 8104101 10S 79 021 2078113 r6e155 1,27 "ate 146 11 11 11 10 9 8 42 51 50 51 38 48 56 3 44 24 38 62 Femat. 141 It 11 11 10 9 44 52 52 54 41 546 45 69 52 118 845 Chernlhfv 252 18 18 18 17 15 14 n5 91 9 4 66 86 104 95 11S 9 155 1i413 Note 128 9 9 9 9 8 8 30 45 48 47 33 40 48 42 44 24 37 626 Femat 124 9 9 9 a r 7 S8 S 45 47 35s4S 6 5 s 4 t 53s 118 7 Khmetnytsky 294 22 22 22 20 19 18 09 108 100 79 96 1Q0 101103 77 143 1S22 Nole 150 11 11 12 11 10 10 47 53 53 49 38 45 46 42 39 25 37 691 Female 145 11 11 11 9 9 8 44 5S 55 51 41 51 54 59 64 51 106 O30 Kiev Regtn 389 27 28 28 2S 23 125 149 142 134 97 126 142 96 122 86169 1 934 Nate 198 14 14 14 14 12 11 62 74 71 67 48 9 67 41 47 27 43 8S3 Female 191 13 14 14 13 12 1 64 7 71 6r 49 67 n 54 n 591 2 1Q051 Kiav (City) 514 31 36 38 42 43 38 19 2Z Z1 228 174 8 174 102112 t 3 140 2,559 Nate 263 13 19 19 22 121 16100 10 108 106 2 7 6 47 6 4 43 1,20 Female 251 117 16 21 222 09 116 113 2292 82 91 54 6649 971 ,356 Ktrovohrad 237r 17 I 17 16 15 14 73 8 3 85 65 8 91 63 89 56 121 128 Nate 121 9 9 9 8 8 7 37 42 41 41 31 40 43 28 34 18 32 558 Female 116 8 8 8 8 7 7 3V 43 42 43 34 43 45 35 55 38 69 670 Poltava 320 23 24 25 23 21 20 10 121 117 120 88 116 133 93 13 88 184 1,749 Nate 163 12 12 13 12 10 9 53 61 r 59 42 56 64 41 48 28 45 785 Feale 158 12 12 12 11 11 10 53 61 59 62 46 61 69 52 76 61 139 963 SUSY 267 19 .19 20 19 17 15 83 10102 101 68 8e 104 80 105 70 14 1,427 Nate 136 10 10 10 10 8 8 41 50 s1 51 34 41 49 33 40 22 3V 643 Female 132 9 10 10 10 9 8 42 50 51 51 35 55 46 65 48 109 4 Vlrmytafa 357 2 28 29 26 21 14 114 122 122712s 14y 1 122139 919 1o92 1m Nate 181 14 14 15 14 13 12 s5 63 61 61 U S9 65 51 52 31 49 857 Fmtae 176 13 13 14 13 11 1 56 64 62 64 50 r0 76 8 1 88 143 1. 04 Zhytomyr 312 23 n 23 21 20 19 94 107 107 100 77 96 110 9 104 72 132 1,538 Nale 158 12 12 12 11 11 10 49 54 54 50 38 45 51 41 40 24 36 031 Female 154 12 11 11 10 9 9 46 53 53 50 40 51 59 54 64 49 96 706 Source: Cr1l t for 1Eplortfon of Prodwctfve Remores of Ukraine. Note: Totals ay not ad p due to roadfng. af Un-Ukraini1a tsb 04/22/93 14:36:43 137 table 4. UWRAUE# WaTs Paputation by Ag Groups, Sex ond Obtet (1989 0stas In Thcusand of Pepte) .,,,....._. ,...............,................... ....................._......... up to 14 14 15 16 17 18 19 20-24 25-39 30-34 35-39 40-44 45-49 50-54 55-59 60-64 45-69 70' Tott a ,................................................................................................................................... WEST Chirnitsa 206 14 15 16 16 15 13 65 7n 69 65 47 54 58 58 53 43 48 941 Note 104 7 a 8 8 7 7 32 35 33 31 33 25 26 25 21 16 22 437 ft*to 101 7 7 a 8 a 7 33 3V 35 33 35 30 31 32 3a 2 43 503 lvano-Frankilvak 320 22 21 22 21 19 19 100 115 108 92 74 76 89 92 n 57 91 1,413 Nate 13 11 I 12 11 10 10 51 58 54 46 36 3S 40 41 30 19 29 46s fePoa1 157 11 10 10 10 10 9 49 57 54 47 39 41 49 51 46 37 62 748 Lviv 575 39 4 44 6 4 5 4 02 260 229 211 17n 152 149 170 169 142 107 1862 72 Mae 292 20 22 23 24 24 22 108 117 106 ss 74 71 78 76 5S 3 61 1,294 Feat. 282 19 20 21 22 21 20 98 112 105 88 78 79 91 94 8s 70T 25 1434 R1vne 275 19 19 19 17 16 16 80 93 90 74 58 6 72 73 60 4 76r 1164 Kate 139 9 10 10 9 9 8 41 47 46 37 28 30 33 33 23 15 24 552 fra.t 136 9 9 9 a 8 7 39 46 44 37 30 34 39 40 37 29 52 613 Ternoplt 241 w 7 17 16 16 1S 14 73 86 82 60 6 7r 83 5 s6 100 1.164 Note 123 9 9 8 8 8 7 38 44 41 35 29 31 35 37 27 19 30 536 Fe.1t. 119 8 8 8 8 7 7 35 43 41 37 31 36 42 47 "4 37 70 628 Votyn 343 17 17 17 16 14 13 68 82 79 67 52 55 46 74 65 42 7 1.058 Nate 123 9 9 9 8 7 7 35 42 40 34 26 26 29 32 25 15 34 499 Femte 119 8 8 8 7 7 6 33 40 39 34 26 29 36 42 40 27 49 559 Zakerpattla 307 22 22 22 21 19 19 92 103 98 89 72 6S 70 68 40 44 54 1.246 Nate 156 11 11 11 11 9 10 46 5 49 44 35 31 32 30 25 18 20 602 Famale 1s5 11 11 10 10 9 9 4 53 50 45 36 35 38 38 35 26- 34 64 Source: Coatof for Exptormtion of ProdLctivw Resources of Ukraine. Notes Totals msy not add up due to rosmdln. a/ Non-Ukrainfans 04/22s39 14:32:47 138 Table S. UKRAINE: Poputation by Working Age. Urban Residence and obtasts (in Percent Shares of Ukraine's Totol) Percent of Oelow Of Which Of Whfch Over Of Which Population Working Living Working Livfng Working Livinv Total Age In Tomns Age In Towns Age In Towns .................................................................... ..................... Ukraine Total 100.0 22.9 68.0 55.8 70.8 21.2 56.0 Crtaea R. 4.8 23.6 65.9 57.9 70.2 18.2 70.1 Vinnytlsa 3.7 21.4 50.6 52.6 50.1 26.0 28.2 Volyn 2.1 26.0 51.4 52.8 54.7 21.2 34.4 Onipropetrovak 7.5 22.S 84.0 57.3 85.6 20.2 76.7 Dcretsk 10.3 22.0 90.2 56.9 91.3 21.2 87.5 2hytomyr 3.0 23.3 58.1 53.1 58.8 23.6 37.7 Zakarpattia 2.4 27.9 40.0 56.1 43.1 16.0 3s.7 Zaporizhzhia 4.0 22.8 76.3 57.1 78.8 20.1 67.5 Ivano-Frankivsk 2.8 25.7 42.6 54.7 46.1 19.7 30.6 Kiev Region 3.8 22.9 59.4 54.9 58.7 22.2 36.9 Kirovohrad 2.4 22.1 64.1 53.6 66.3 24.3 46.6 Luhansk 5.5 22.3 86.8 56.7 87.9 20.9 81.9 tviv 5.3 24.0 59.0 56.3 6".1 19.7 47.1 Nykoativ 2.6 24.3 65.8 56.2 68.5 19.5 58.6 Odessa 5.1 22.8 63.4 57.5 69.4 19.7 S8.4 Poltava 3.4 21.0 60.4 53.6 61.7 25.4 41.4 Rivne 2.3 26.8 46.9 53.9 51.1 19.2 30.5 SUMY 2.8 21.4 68.5 53.1 67.8 25.5 45.4 lernopil 2.3 23.7 4S.2 52.6 47.0 23.7 24.8 Kharkiv 6.2 21.3 79.7 56.9 81.4 21.8 70.2 Kherson 2.4 24.8 59.2 57.0 63.4 18.2 57.6 Khmelnytsky 2.9 22.2 56.4 52.? 54.0 25.0 27.9 Cherkasy 3.0 21.6 59.3 53.2 58.2 25.2 37.0 chermivtsi 1.8 24.8 41.2 54.6 49.4 20.6 33.1 Chermihiv 2.7 20.4 62.6 51.1 60.5 28.4 35.1 Kiev (City) 5.0 22.8 100.0 62.3 100.0 14.9 100.0 ,. .....................................................................................****X@e* Source: Statistical Yearbook, 1990, pp. 29 and 30. and staff calculationr. upukao2 04/22/93 14:38:34 139 Table 6. UKRAINE: Population by Workfn Age, Uitsn Rfdsnce* nd Obtwts (In Percent) ................................... ... .... ............................................................. elosa Of Witch Of Hich Over Of Which Population Working Living Working Living Working Living Total Age In Toswn Age In Toam. Ag. In Tows ............................ ............................................................... o lkrsine Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Crlmes R. 4.8 5.0 4.8 5.0 4.9 4.1 5.2 Vinrytsf a 3.7 3.5 2.6 3.5 2.5 4.5 2.3 Volyn 2.1 2.3 1.8 1.9 1.5 2.1 1.3 Dnipropetrevak 7.s 7.4 9.1 7.7 9.3 7.2 9.8 Donetsk 10.3 9.9 13.1 10.5 13.5 10.3 16.1 Zhytomyr 3.0 3.0 2.6 2.8 2.3 3.3 2.2 Zakarpattis 2.4 3.0 1.7 2.4 1.5 1.8 1.2 Zaporizhuhia 4.0 4.0 4.5 4.1 4.6 3.8 4.6 Ivano-Froakivsk 2.8 3.1 1.9 2.7 1.8 2.6 1.4 Kiev Region 3.8 3.8 3.3 3.7 3.1 3.9 2.6 Kirovocbad 2.4 2.3 2.2 2.3 2.1 2.7 2.3 Lueiank 5.5 S.4 6.9 5.6 7.0 5.5 8.0 Lviv 5.3 5.6 4.8 5.3 4.8 4.9 4.1 Nykotafv 2.6 2.7 2.6 2.6 2.5 2.4 2.S Odes" 5.1 5.1 4.7 S.2 5.1 4.7 4.9 Poitava 3.4 3.1 2.8 3.3 2.8 4.1 3.0 Rivne 2.3 2.7 1.8 2.2 1.6 2.1 1.1 SuWy 2.8 2.6 2.6 2.6 2.5 3.3 2.7 Ternopil 2.3 2.3 1.6 2.1 1.4 2.S 1.1 Kharkiv 6.2 5.7 6.7 6.3 7.2 6.3 7.9 Kherson 2.4 2.6 2.3 2.5 2.2 2.1 2.1 Kinelnytsky 2.9 2.9 2.4 2.8 2.1 3.5 1.7 Cherkasy 3.0 2.8 2.4 2.8 2.3 3.5 2.3 Chermnvtsi 1.8 2.0 1.2 1.8 1.2 1.8 1.0 Chernihiv 2.7 2.4 2.2 2.5 2.1 3.7 2.3 Kiev (City) 5.0 5.0 7.4 5.6 7.9 3.5 6.3 ................................................................................... Source: Statistical Yearbook 1990, pp. 29 and 30 and staff estimates. upekdaol 04/22/93 14:39:40 140 Table 7. ULAIIIE: Population by A Greore, sex wt EIpl@)_t (1989 Data; In Thowud Peplo) ....................................... .................................................................................. _, EplToyed State &ntepwisoS Koiha Totat fPsi Faste Total faLe Fete Total ( ale FeP to Total Nlos Fmal. ........;a................................. ........................ ..... up to 14 10.374 5,279 5,094 0 0 0 0 0 0 0 0 0 14 720 362 357 1 1 0 1 1 0 0 0 0 15 7V 372 354 12 7 5 9 5 4 3 2 1 16 755 36 369 40 24 16 30 17 13 9 6 3 17 733 378 355 151 74 76 124 56 69 25 18 7 18 694 350 344 334 182 152 282 142 140 S0 39 12 19 640 321 319 413 212 201 355 170 18S 56 42 15 20-24 3.352 1,684 1,667 2.648 1,344 1,304 2,333 1,139 1,194 296 192 104 25-29 3,958 1,969 1,969 3.668 1,893 1,M 3,261 1,437 1,6Z3 378 236 143 30-34 3,900 1.924 1,976 3,712 1,880 1,832 3,305 1,631 1,674 379 229 149 35-39 3,741 1.826 1,915 3.594 1.785 1,810 3,190 1,549 1.642 380 219 161 40-44 2,706 1.M 1,411 2.S92 1,259 1,333 2,252 1,080 1,173 323 168 1SS 45-49 3,220 1,504 1,716 3,017 1.435 1,581 2,449 1,162 1,287 553 265 288 50-54 3,705 1.72 1,978 3,214 1,548 1,666 2,548 1,220 1,327 653 320 333 55-59 2,953 1.314 1,639 1,489 1,023 466 1,153 ?50 404 327 269 S8 60-64 3,232 1.275 1,958 686 404 281 590 333 257 88 68 21 6-69 2.020 663 1,357 229 124 105 19 103 96 27 19 7 704 4,002 1,100 2.901 113 63 S0 96 53 43 13 8 5 Totat a/ 51,439 23,863 27,576 25.916 13,20 12,656 22,181 11,049 11,132 3,562 2,100 1,462 .. ..... ........ .......................................................................................................... SMurce Couarict for Ixpioration of Prodtive Resources of Ukraine. a1 tncludfng non-Ukrainfans 04/22/93 14:40:48 141 Table I Popuation Growth Ukaie 19811992l (in 1000'8) __- :| 11 -I I '-- 1981 1982 1983 1984 1983 1986 1987 1988 1989 1990 1991 1992 Total 5169.8 0,357.5 WA na 50,914.1 51,076.5 51,237.6 51,376.9 51,514.8 51,636.8 51,745.8 51,801.9 Male 22,9543 23,070.0 na na 23,402.9 23,501.4 23,602.2 23,697.4 23,7955 23,884.1 aa da Femle 27,2155 27,287.5 nla na 27,5t11.1 27,575.1 27,635.4 27,679.6 27,7193 27,752.7 Wa nh Sam:. t. Yeas 190 1990 WHOIElRO.ESR Uns May 19.19M Md Yw EMkWA1 2. Yom 1991 MOIL ta 92 is as of tst isJmy Figuir' 1 Population Growth Ukraine 1981-1992 tts*It im im tm tu t_I_ tew u t_Y t _ _ Table 2 Popuato Struturc AU Ukine All~~ ?1..,b'I.' 1. li l- Ir' -- - - 0A14 j 15-49 50.59 60.64 65-69 70i TOWl .~~ . ._ .... - m Total Poplatn (tbousml) 11093.1 24425.1 6658.1 3232.5 2020.0 40013 51430.7 Age Ca y as 9 Total 21.6 475 12.9 63 3.9 7. 100. Me- 5641.4 120092 3041.3 1275 663 1100 23730.5 Female 5451.7 12415.9 3616.8 1958 13S7 2901 277002 Make as % of Age Category 50.9 492 45.7 39A 32.8 27.5 46.1 Cumulatie % Mals 23.8 74.4 872 92.6 95A 10I.0 fes sas * of Age Cago 49.1 50.8 54.3 60.6 672 725 539 Cw ative % Femaks 19.7 64.5 77.6 84.6 89.5 100.0 Boom Cm " Ef$aratw of ntodw Rmwou of Ubm Kie.. 1969 dag Figure 2 Population Suture All Ukraine 1 WW 40 40 so, - so la , ,, --4w * .r ....- U * 6% 143 Table 2.0 Populaion aracisics Of Oblasts ' % . P~iIats Oa of of MafM % of A D and Fe8ale 60 60 and O1,st on Ukin Gnaw and Greater Oreater UI Ukraine 51430.7 100.0 19. 22. 12.8 VhmyWa 19202 3.7 22A 28.2 153 Volyn 1058A 2.1 17.0 20. 12.9 D%MNiVVA 38719 7. 17.1 21.2 12A Doneslk S311.8 10.3 17.4 21.6 125 5 IS37.6 3.0 20.1 2S.1 14.1 L..ed! 1245.6 24 12.6 14. 10.6 Zlebhb 2D73.9 r 4.0 172 213 12.4 v anmo-Fanmkvsk 1413.2 2.7 15.8 19.4 11. HKt3ev R9qin | V19343 3.8 195 24.8 132 Kirvoluud 1228D_ 2.4 21.7 27.2 15.2 -Luanik 28S7. S. 17A 21.9 12.2 LVi% 2727A| 53 16.0 19.7 11.8 ,ykollglv v 13283 2.6 166 20.8 11.8 0dmsoa 2624.1 5.1 16.7 20.6 12.2 Pbolava 1748.0 3A 22.7 28. 1SA Rimap 11642 23 15.5 193 113 SbrnY 1425A_ 2.8 22.5 283 15.5 TLwmwpil _ : 1164.0 2.3 19.5 24.0 142 Khaddv 3174.7 62 189 23.7 132 Khuuuon 1236.9 2.4 15.2 19.3 1O0 K!!~~ JCbYk1525.6 3.0 21.2 26.5 14.7 _bum 1525.9 3.0 22.5 28.3 1S.5 Cbmlisl 940.8 1.8 17.0 202 133 Cbmulbiv 1412.8 2.7 24.7 31.0 16.8 Kiev G(f I 2553A S.0 12.7 15.6 9.5 imna I _24266 4.7 IS 18.7 10.7 S_: COMBa tvBabm datsew R_mo tf Ub eIv 19119 dIrn 144 X~~ =m tMW C A MaM iMiiX ]! i _ 3 j S _ Table 2.1 Population Structure Vinnytsia Oblast Age rtoup VwdaO ~~~~~~0-14 |15S49 | SOw9 ||60-64 65- 70+ |Toal Tota Pop.lzlo (u ) 3842 843A. 2626 139S5 993 19 19209 Age Catey as % of Toull 20.0 43.9 13.7 73 52 10.0 100.0 male 194.5 4152 116.1 S1. 30.6 48.7 856. - -- - -. Fesle 189.7 428.1 1465 87.8 68.7 1432 1064.0 Maim as% of AeCaegoe 50.6 592 442 37.0 30.8 25A 446 Cu _96ati es 22.7 712 84.7 90.7 943 100.0 Faes as % of Age Cto 49A 50.8 55.8 63.0 692 74A SS.4 Cumulativ % Femals 17.8 58.1 71.8 80.1 86.5 100.0 saw= CM" fr _BZFm of Prtoducdv Ruows of uba. KIev. im dut Figure 2.1 Population Structure Vinnytsia Oblast * -~~~~~~~m U1 so. ........... ...- .o0 a, 80 70 7 al 40 i:f I ]... _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~~~10 014 1540 mm3 s-4 am0 1 146 Table 2.2 Population Structue Volyn Oblast 0-14 15.49 50-59 6 464 65.69 70+ Total TOWal Pow1patc (t s) 58.9 480.2 139.9 648 41. 73.1 1058.4 Jg4 Cawgaryas % of Total 24.5 45A 13.2 6.1 3.9 6.9 1000 male 131.6 241.9 61.6 25.0 15.1 24.1 499.3 Female 1273 2383 78.2 39.9 26.5 490 5592 AWeS as %eof SoeCalegTy0. 50.4 4.1 38.S 363 33. 472 Cumuladve % MWes 26.4 748 87.1 92.1 952 100.0 Females as % of Age Caegofy 49.2 49.6 55.9 61.5 63.7 67.0 Cwmualve % Femals 22.8 65A 79.4 86.5 912 100.0 Saw= C_ fw Eqion ot Pooducde Rooes of Uraes. Kv. 199 dft Figure 2.2 Population Structue Volyn Oblast 10. ........ ftf100 IW- 0 / o, .......... ...-. _ /. % do,,.. -- % * ~~~~~~~~~~~~~40 O o 13JL0~ ~ f~0 Ap14 147 Table 2.3 Popuation Structue Dnipropetrovsk Oblast _ srz - - - Sj Gru - - - _ D___vsk_Oblast _014 1S-49 50-59 60-4| 65-69 70+ TOlW | ~~~~- = _ ToWi PopWaii (thosws) 821.8 1172.9 514.9 247.9 129.0 2853 3871.9 Age Categoryas % of Tolal 21.2 48.4 133 6.4 3.3 7.4 100.0 |Mae 41S.2 908A 241.3 101.9 423 77.6 1789.8 Female 403.6 964A 273.7 146.0 86.7 207.8 2082.1 Males as % of Age Category 50.9 485 46.9 41.1 323 27.2 462 Cumative % Males 23A 74.1 87.6 933 95.7 100.0 Females as % of Age Ca2egeoy 49.1 S15 53.1 58.9 67.2 72.8 53.8 Cn__laive % Female 19A 65.7 78.8 85.9 90.0 100.0 -3om ni fr Ezpia ot Prauw Rurac of Ubaes KIv 1959 dat Figure 2.3 Population Structure Dnipropetrovsk Oblast SO .. 0 so~~~~~~~~s w 7'1 1 0* IE0f'Sil I= El . 148 Table 2A Popultion Structure Donetsk Oblut ____ts ____ last 0-14 1549 50-9 60_64 6549 70F Total TOWal PopAulaion 1102.8 2521.2 765.7 3593 176.2 386.6 5311.8 Ae Caegoy as % of Toal. 20.8 47.5 14A 62 33 73 100.0 Male 562.0 1236.7 352.6 145.8 57.1 1043 2458A Femae 540.8 1284.5 413.1 2135 119.2 282.3 2853A Maes as % of Age Category 510 49.1 46.1 40.6 32A 27. 463 Cumulate i Males 22.9 73.2 875 93A 9S.8 100.0 Females as % of Age Category 49.0 50.9 53.9 59A 67.6 73.0 53.7 Cumuladve % Females 19.0 64.0 78A 85. 90.1 100.0 Sum: Cgqmci Ot Exgim l Podudnvn Raon ofdUba^ I. 1W9 Ia Figure 2.4 Population Structure Donetsk Oblast ^~~ukw 0 LI C I400 *l U 9D ~~.............. .._ 00 70~~~~~~~~~~~~~~7 s% % 3e- ......s 40 go ~~ 149 Table 2.5 Population Sructe Zhytomyr Oblast r --. --- - A j. - -l ZZ4yunnyt (Xhi"t } ~~~~~Age Ofoup_ _ 0-14 1549 5059 60P64 65-69 70+ Totd TOWa Pbpuladoa (thousands) 335.7 688.0 205A 104.3 72A 131.8 1S37J6 Age Categoy as % fTofT 21.8 44.7 13A 6.8 4.7 8. 100.0 mate 169.7 345A 91.7 40.1 23.7 35.7 706.4 Female 165.9 342.6 113.7 64.2 48.7 96.2 831.2 Mlaks as % of AV 50.6 50.2 44.7 385 32.8 27.1 45.9 __um_ative 9Z m_aim 24.0 72.9 85.9 91.6 95.0 100.0 Fmales as % of Age Category 49A 49.8 55.3 61.5 67.2 72.9 54.1 Cuda_ive _ Females _ 20.0 61.2 74.9 82.6 88A 100.0 S3w: Can*i for 8Wrda of Prodav Rasowvs of Ubrs KbM. I9M9 dm Figure 2.5 Population Structure Zhytomyr Oblast 108 100 t 00o, (No 400 70. ----------- -- 710 %00 ...00% 10 -10 0.14 1548 am.6 604GMO ApsmW Table 2.6 Populadon Structure Zakaipatda Oblast _________________I -*&n _ _XAge boup- L_________b___ 0.14 15-49 50-59 6064 ! 65-69 1 70+ Tota Tota Popaion (&hu s) 328.7 621.2 1382 59.5 43.9 54.1 1245.6 Age Cegory a 9 of Total 26A 49.9 11.1 4.8 3.5 4.3 100.0 male 167.3 309.0 61.8 25.0 18.1 20A 601.6 Female 161.A 312.3 76.4 34.5 2S.9 33.6 644.1 Mal as % of Aso ego 50.9 49.7 44.7 42.0 41.1 37.8 48.3 Cuinuative % maln 27.8 79.2 89A 93.6 96.6 100.0 Feades asISofAgeCioeoy 49.1 50.3 55.3 58.0 58.9 62.2 51.7 Cumulatie % Femaes 25.1 73.5 85A 90.8 94.8 100. Sm- cam Ez$cRaaa o PVo4w_V. RPiu or Uba, Iiv. 1989 dal Figure 2.6 Populadon Structure Zakarpatta Oblast 00 .. .~~~~....... 40 * .00 r 00 10 10 o .0 04 14 ISO no SW so 151 Table 2.7 Population Strucum apo ia Oblast .aolzii ;U~ I . r i ___________at 0414 15-49 50-59 604 65.60 704 | Touda ~~0 - Nx=Nw= Tota Popltion (thusands) 445A I07S.5 264.8 135.0 68.3 152.3 2073 AgeCategcyas%ofTotal 215 48.6 12.8 6.5 33 73 100.0 ai be 226.7 487.1 123.1 54.7 22.2 41A 9553 Female 218.6 520A 141.7 803 46.6 110.9 1118.6 Maks as % of AVe Cgoy 50.9 48.3 46.5 40.5 32.3 272 46.1 Cumulative % Males 23.7 74.7 87.6 933 95.7 100.0 Females as % of Age,Cogoy 49.1 51.7 53.5 59.5 67.7 72.8 539 Cumulative* Females 195 66.1 78.7 85.9 90.1 S-os Cia mt 8rxplba of Pndalve Raour of Ukrin K I Mv, 19S9 Figure 2.7 Population Structure Zaporizhzhia Oblast oo [1] 1o00 90 ~~.......... ..--r_.. .00 60~~~~~~~~~~~~~~0 70 %o so% 40 40 30 so~~~~~~~~~~~~0 10 10 o 0 0.14 154. am am no 70e 152 Table 2.8 Populadon StuctUre Ivano-Fanldvsk Oblast |~~~ I - g !.-r---- --- Ivao_ankk_Oblast 0-14 15-49 50-59 | 6044 65-6 j 70+ | ToWal Totad (h (tousands) 341.9 6672 1809T 75.2 56.9 91-1 14132 Are Cag_r as %9of Tota 24.2 47.2 12.8 53 4.0 6A 1000 Male 174.3 332.2 805 29.6 19A 293 6653 Female 167.6 335.1 IOOA 45A6 375 61.8 747.9 Males as % of Age ColeM 51.0 49.8 44.5 393 34.2 32.2 47.1 Cunuladt % Maes 262 76.1 88.2 92.7 95.6 100.0 Females as % of Agea tegory 49.0 50.2 55.5 60.7 65.8 67.8 52.9 Cumuadve % Femals 22.4 67.2 80.6 86.7 91.7 1OO.0 sawcs cOmil for SxpIutiaa of Pmducdv RmOos of Link^. view. 1969 4fa Figue 2.8 Populauon S =rctu Ivano-Franldvsk Oblast 1EZI 70 fI0 .... so S~ 80% so so 153 Table 2.9 Populadon Srtre Kiev Region Khv~~~~~~~~~~~~g Re , Kiev Regio 014 1549 5059 6064 65-59 704. TOW TOa (Uosaad) 4162 902.1 238.1 122A 86.1 1695 19343 Age Cagory as % of ToWa 21.5 46.6 12.3 63 4.5 8.8 IOO1 Male 212.0 446.2 108A 47.0 273 42.5 883.5 __________________ 2042 455.8 1293 75A 58.8 126.9 1050.9 Mas as % of Ape S0.9S 495 455 38A 31.7 25.1 45.7 Cumlatlve% Mals 24.0 745 863 92.1 952 100.0 Feales as % of JE Calegy 49.1 505 S45 616 683 749 54.3 Cumulatle% Femaues 19.4 62.8 752 823 87.9 100.0 Soeme Co.ll f Ezpara of ftoEp d P R _ad Ubki.. MIm. 1969 dia Figue 2.9 Populadon Stucue Kiev Region Mtb~~~~~~~~~~-0 %" ,,,,,............ -"' " do, so - I* 70 I *0. 40 10, 10 o ~~~~~~~~~~~~0 0.14 1640 an4 a"4 11 0 Apuie 154 Table 2.10 Populion Struct Kizovohrd Oblast Kk~~~ ONsat ~ ~ ~ - AgJ - K__o_ _ad OblastC 0-14 15.49 50-59 64 65-59 70 Tola _____________ 2542 553.8 153.5 89.1 563 121.1 1228.0 Age Categ as % o Total 20.7 45.1 12.5 73 4. 9.9 100.0 Male 129A 273.2 71.0 340 18A 322 5582 Female 124.8 280.6 825 55.1 37.9 89.0 669.8 Males as % of Age Caegoy 50.9 493 46.3 382 32.7 26.5 45-. Cumuladve %Mas 232 72.1 84.8 90.9 94.2 10OQ Females as % of Age Caegoy 49.1 50.7 53.7 613 67.3 73.5 4.5 Cumulae % Feae 18.6 60.5 72.8 81.1 86.7 100.0 S :nm COmBd for Bzioma of Prodan Rom=u of Ubh. Kiv. 1919 die Figure 2.10 Population Structure Kiwvohrad Oblast loo. c | 400 900 .......... .... ---o 900 10 .0 70 7~~0% g. _g.o 0- - 155 Table 2.11 Populadon Stmtue Luhandk Obl LWM Obis0 ISI 04 59 65.69 1 70+ TOW Tol Pulalion 602.0 13463 412.0 187. 91.7 217.2 28570 Age CaLegry as % of ToWu 21.1 47.1 14A 66 3.2 7.6 1000 Mbe 306.9 661.9 191.8 762 28.7 55.9 1321A Fem_ e 295.1 6844 220.2 111.6 63.0 1613 15353. Males S %of Age Caze 51.0 49.2 46.6 4Q6 313 25.7 462 c0mulkve % Males 23.2 733 878 93.6 95.8 100.0 Females as % of Age C 490 50.8 S3A 59A 68.7 743 53.8 Cwmmlave %Females 19.2 633 78.1 85A 89.5 100.0 Sm CoMi for Exiamtio of PmduetW R_oom *fUkuibe. X;. 1M99 dm Figure 2.11 Population Stucture Luhansk Oblast S1 S U S~~MM 100, c 1 a_ 400 SIo. ............. .. _ ob 70 ..7 0 40% .o soI 4, . I . 10. *10l5 0 0 0414 140 w0e5 SW4 a54 70., 156 Table 2.12 Population Structure Lviv Oblast Lvliv Oaua rAge - ----- ___ ___ , 0-14 15-49 I 50-59 60-64 65-69 70+ J To Towa Papisau (,tusud) 614.0 1339.0 339.0 142.1 107.2 186.1 2727A S p ean u%ofTowl 22S 49.1 124 5.2 3.9 6.8 100.0 Ma) 312.2 674.2 154.1 55.5 37.0 60.9 1293* Female 301.8 664.8 184.9 86.6 70.3 1253 1433. Mals as % of Age CaWo 50.9 504 45.5 39.0 34.5 32.7 47.4 Cumulav % Malte 24.1 76.2 88.2 92.4 95.3 100.0 Femalesas%a, A egory 49.1 496 54_ 5 61.0 65.5 673 52. CumulaU _ _emale 21.0 67.4 803 86A 913 100.0 SawE COMB Ir Eqbs at Poft dve Remw of Uah. Mmer. 1969 da Figure 2.12 Population Structure Lviv Oblast Man es 10 . ;........ ......... 15770 ----- -so *0 40 10 ~~~~~~~~~~~~~~10 0414 1149 5U 6041 654 70+ 157 Table 2.13 Populadon Sticnwte Mykolaiv Oblast - , . - , ,.L~! -- - r - M__________________ 00-14 15-49 50-9 I 60.64 65-59 70+ j ToW l Tot Fop ( ) 303.7 645.1 1583 792 46.0 96.0 13283 APe CacWY aS Of Total 22.9 48.6 11.9 6.0 3.5 72 100.0 Male 1543 3152 73.6 31.3 152 26.5 616.1 Female 149,4 330.0 84.7 47.9 30 69.5 712.2 | M as 96 of Ag° Ca epq _ 503 48.9 46.5 395 33.0 27.6 46.4 CWNulad % Males 25.0 76.2 882 932 95.7 100.0 Femalesas8%Of Ageae 492 51.1 53.5 60.5 67.0 72A4 53.6 CumuAve % Females 21.0 67.3 792 85.9 90.2 1OO. bm COMA fw Explavao of Pro iwdv Rsm of Uba_e. Ki. 19 d* Figure 2.13 Population Structure Mykolaiv Oblast 1 xwFub 100 E100 0 .............. .... 00 so, .~~~~00% To 70 10 -~~~~~~~~~~~~~~10 0 0 0.14 1540 am1 W"4 106 7 158 Table 2.14 Populadon Structwe Odessa Oblast Age GIOII - _____________________ 014 1549 50-59 60.64 65-69 70+ Toa TOa 564.0 1297.6 324.6 151.7 100.1 186.0 2624.1 A0C y as% of Totad 215 49.5 12.4 5.8 3.8 7.1 100.0 Male 286.4 636.8 148.8 59.0 34.8 555 12213 FePale 277.6 660.8 17S.8 92.7 65.3 1305 1402.8 Mates as % of Age Ca5egory 50 49.1 45.8 38.9 34.7 29.8 46.5 Cumulave % Males 23.5 75.6 87.8 92.6 95.5 10.0 Female as % of Age Cegory 49.2 50.9 54.2 61.1 653 70.2 53.5 Cubmladve % Pes 19.8 66.9 79A. 86.0 90.7 100.0 v- miI Sw Coqusi for Ezpiwalhom c(PmduwIv Reom of Ukrine. Kimv. I96 dM Figure 2.14 Population Struce Odessa Oblast 100 ,1 900 so, .b00 o0. 110 30~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1, 30.. *1 0 159 Table 2.15 Populadon Stuctue Pokava Oblas Pdt_va Olilast 0.14 15-49 50.59 6044 6549 | 704 | Total Total Popbul (lmh_) 343.7 781.7 2265 1235 883 184A 1748.0 _.e Categas %co Tota 19.7 44.7 130 7.1 5.1 105 100.0 | M__e 1746 384.1 IOS3 47.9 27.6 45A 785.1 4_ __ 169.0 397.5 121.2 755 60.7 139.0 963.0 Males as S of Aso Catem 50.8 49.1 465 383 31.2 24.6 44.9 ICum_a_ 96 Males 22.2 71.2 84.6 90.7 94.2 100,0 Females as a%of AV ago 49.2 SO9 535 61.2 68.8 7SA 5S.1 - cwwat % FUN 17Ai S 8. 71A 79.3 8SSi 100S Sam m to BqwIm oef Pve RotoeRa of Mahm. Kbv. ISS Em Figure 2.15 Populaton Strucwte Pokava Oblast 100 [11111~Ch 100 s .00 10 71 U ~~~~~~~~~~ 00 M.4 1540 am. am4 am4 70 APO" 160 Table 2.16 Population Structure Rivne Oblast Age Choup _ RivueOb_ 0-14 115-49 50-59 60444 669 170+ ToTW Toa Pbpuwlaion (thusnds) 293.8 544.9 145.0 605 436 76A 11642 -Age Catepry as % of Tot 252 46.8 12.5 5.2 3.7 6.6 100.0 Maio _ 148.9 274.9 65.3 23.1 14.9 245 551.6 RFen ___e 145.0 270.0 79.7 37.4 28. 51.9 612.7 Males as % of Age Category 50.7 505 45.1 382 34.1 32.0 47A Cumulbaive % males 27.0 76.8 88.7 92.9 95S6 1000 Females as % of Age Category 493 495 54.9 61.8 65.9 68D 52.6 Cuunuladve % Females 23.7 67.7 80.7 86.8 915 100.0 ScW: Caum (a EuWbsdc of Podad Rms oftUbsis KisV. 190 d"a Figure 2.16 Population Structure Rivne Oblast 70.7 so,r .... so - S 40 40 10, la 0- % 0.14 1540 G0M6 am4 am0 0 161 Table 2.17 Population Stucture Sumy Oblast L A~. . 2 . - - - Sumg Ob_ 0_14_1S-49 S0_S9__ 60164 1 65-69 704 TOW TOW ____________sa___ 286.7 633.f 183.9 105.0 702 145. 1425A AVe Coely as % of Toal 20.1 445 12.9 7.4 4.9 102 100.0 Male 145.6 313A 82.7 40.5 21.9 37.0 6415 Female 141.0 320.1 101.2 64.5 48.2 108.8 784.0 Malu as % of AgV CasE y 50.8 49.5 45. 38.6 312 253 45.0 Cumaziw% Mals 22.7 71.6 =845 90.8 94.2 100.0 FePmle as % of Agcaleg 492 50.5 55.0 61A 683 74.7 55.0 Ctaulative _ Females 18.0 58.8 71.7 80.0 86.1 100.0 Saw= CO=l for KbvnU, ofPioda Racs ofUbai. 19K 9 dmU Figure 2.17 Population Structure Sumy Oblast 106 LIII ~ 106 g0 I I a -cum 00 90 ........... ...- 0 70 ,,,, - ' 70 80 :8 0 90 0.14 1S 50IS Wu44 so40 7 162 Table 2.18 Population Structure mrnopil Oblast Tenopil Obltt - _ _0-14 15-49 5059 6W 65f69 70+ ToWt I~~_ __= Total tliw(dio ) 258.3 St8A 160.1 70.9 64A 99. 1164.0 Aae oCamory a nof Total 22.2 44.5 13.8 6.1 48 8.6 1.00 Malo 131.1 257.1 11.6 26.6 19.3 30A 536.1 FemClo 121.2 261.2 88.5 44.3 37.0 695 627.8 Males a % ofA A Ctt_ 50.8 49.6 44.7 37.5 .3 30.4 46.1 camuwve % Males 24.5 72.4 85.8 90.7 94.3 MO.0 Femaes as % of Age Cat 49.2 50.4 55.3 62. 65.7 69.6 53.9 Cumalavo * Peumoes 20.3 61.9 76.0 83.0 88.9 IOV.0 Sam: Cwumc for gktuAm of PdmtNve 1ome* of ttkul*. ckhv. 19" dt* Figure 2.18 Population StruCttire Temopil Obalat 1e0. Cft 1" on0 roi100 o ........ . . , se.~0 % % * U * - 40 _ 0 0.14 1640 W*' 163 Table 2.19 Population Stctre Kharldv Oblast Age Ghouop Khazkiv Qblasa - - ___a_____Obla ____t 0-14 15-49 50-59 60L64 6S-6 70+ ToWa Toa Popwlation (L& s) 638.3 1542.6 3933 204A 122.3 273.7 3174.7 Age Canegory as % of Totd 20.1 48.6 12A 6A 3.9 8.6 100.0 male 325.5 7524 179.0 81.1 38A 72.4 1448.8 Female 312.8 790.2 214.4 123.3 83.9 201.3 172S.9 Moles as % of Age Catoy 51.0 48.8 45.5 39.7 31A 26.5 4S.6 |CumwLatve*% Mlmis 22.5 74A 86.8 92A 95.0 100.0 Females as % of AeCgory 49.0 512 545 603 68. 73.5 54A Cunmuadve % Females 18.1 63.9 76.3 83.5 88.3 100.0 Som: C.l for E3zIuio Poodv Rm of Ubuim Kim. 1969 dat Figure 2.19 Population Sruture Kharidv Oblast So. so 10o . .......... 40 _40 10 10o o ~~~~~~~~~~~~~~0 044 15.40 0 10 70_ 164 Table 2.20 Population Structure Khersoh Oblast 1hos w'Obl -- - -- - l_________________ 0-14 1549 50-59 6064 6549 70F TOtal Tota!oulatlon (hsd) 289.9 605.2 153.2 71.1 39.2 783 1236.9 Age Category as * of Total 23A 48.9 12.4 5.7 32 63 100.0 Male 147A 297. 713 28.0 12.6 203 5773 Female 142.5 307.5 81.9 43.0 265 58.0 659A Males a % of AVeCgor 50. 8 492 46.5 39A 323 25.9 46.7 Cumulave Males 25.5 77.1 89A 943 96.5 100.0 Females as %ofgE Caegoy 49.2 50.8 53.5 60.6 67.7 74.1 533 Cumulave % emales 21. 68.2 80.7 87.2 912 100.0 Sowe Coma for Bzicadc of ro4uiPw RUomma of UbAMm.i. 19W9 di Figure 2.20 Population Structure Kherson Oblast m'Nom 100, II 400 * a. U % L0% 40, ~ ~ ~ ~ ~ ~ 90 so~~~~~~~~~~~~~1 165 165 Table 2.21 Populadon Stuctre Khmelnytsky Oblast gbm y ObI- 0-14 15-49 SO59 60i044 6 169 70+ J Tolal Poplato (thoumsda) 316.4 684.8 201.0 103.5 76.7 1432 1525A. Age Category as % of Toal 20.7 44.9 13.2 6.8 5.0 9A 100.0 Male 160.8 340.1 88.4 394 25.2 372 6912 Female 155.6 344.7 112.6 640 51.4 106.0 834A Ma1aas af ge Categoy 50.8 49.7 44.0 38.1 32.9 26.0 4S3 CumlaStv 9 Maes 23.3 72.5 85.3 91.0 94.6 100.0 Females as% ofAge Category 49.2 50.3 56.0 61.9 67.1 74.0 54.7 Cumlatve % Pemales 18.7 60.0 73.5 81.1 87.3 100.0 S-m: Cometi for Ezp4ids of Pmdnve Reao of Ubina. Kiev. 199 dm Figure 2.21 Population Structure Khmelnytsky Oblast * SU 700 r 1 :'" .............. .. 1666 * 00 80 U0 10 10 o: 0 166 Table 2.22 Populadon Structure Cherkasy Oblast p. - ~~~~~~~~~L~~g.2R -!w _014 1549 50-59 [ 60.64 | 65-69 70+ | ToWa = = =C =c~ - = ToW Populadon (tusands) 307.9 676.1 197.9 112.7 75.7 ISS1. 1525.9 Age Category as % of Totd 20.2 443 13.0 7A 5.0 10.2 100.0 ._ e 156.6 329A 90.2 43.5 23.9 38.0 6816 Female 151.3 346.7 107.7 69.1 51.9 117.6 8443 mans as % of Age Catqgny 50.9 48.7 45.6 38.6 31.5 24A 44.7 Cumulative * males 23.0 713 84.5 90.9 94A 100.0 Females as % of geA ratcy 49.1 513 54A 61A 685 75.6 553 Cumulative % Females 17.9 59.0 71.7 79.9 86.1 100. Sm: coma br *b_m et Pofuadve Rinen @o Uvai Kiv. 19S9 " Figwe 2.22 Population Structure Cherkasy Oblast _ 100 ....... U so, -so1 70.T do, 00 % *40 40 90 9~~~~~~~~~~~~~00 10 ~~~~~~~~~~~~~~~10 0 E Ein0 0.14 1543 803 60s~ 0 ApGimp 167 Table 2.23 Population Structure Chernivtsi Oblast I _ _ 9, , , , ^ , .ge . up ____ Cbamivtsi Obla 0-14 15-49 50-59 60.64 65-69 70+4 ToWal ToWal NbpAon (thousads) 219.8 446.0 115.1 52.7 42.5 64.7 940.8 Age Cateory as % of Total 23.4 474 12.2 5.6 4.5 6.9 100.0 Mae 111.5 216.6 51.2 20.6 15.7 21.8 437A Femae _ 108.2 229A 63.9 32.2 26.8 42.9 5034 Males a 6 of Age Category 50.7 48.6 44.5 39.0 36.9 33.7 46.5 Cumulative % Males 25.5 75.0 86.7 914 95.0 1000 FIemaes as % of Age Cgory 49.3 514 55.5 61.0 63.1 663 53.5 Cmultive % Females 215 67.1 79.8 86.1 91.5 100.0 Sow: Cosi for Saplensm of Produlve Resoure or Ubknu. Kiev. 1989 da Figure 2.23 Population Structure Chernivtsi Oblast 00o 00 so.s,.f so so, __ _00 0~~~~~~7 Ao@Q~~~~~~~s *0 40 160 168 Table 2.24 Populaton Sucture Cherniv Oblast Age Chxrp Chemlihiv Oblast I --- AeOu __________________j 0-14 1 15-49 50.59 60-64 65-69 70+ Total Toa Poplaion (thousands) 270.7 593A 199.9 114.9 788 155.1 1412.8 Age Caegoy as % ofTotal 192 42.0 14.1 8.1 5.6 11.0 100.0 Mhue 137.4 293.8 90.0 43.9 24.1 37.1 626A Female 1333 299.6 1099. 71.0 54.6 118.0 786A Males as % of Age Caegory 50.8 49.5 45.0 38:2 30.6 23.9 443 Cumulative % Maes 21.9 68.8 832 90.2 94.1 100.0 Fmales as % of Age Caegory 492 50.5 55.0 61.8 69A 76.1 557 Cumlative % Females 17.0 55.0 69.0 78.0 85.0 100.0 Saue Coam fat EpIftas of Prodd Ruas of Ubs. Kaev. 1989 dka Figure 2.24 Populadon Structure Chernihiv Oblast .......... ......._ to [Z 100 so, s wo %" 10 E70 0~~~~~~~~~~~~~~~0 *b _ 0.14 1540 OmS am064 ApGts* 169 Table 2.25 Populdon Structure Kiev City Age OM Kiev a _ty _014 1549 50-59 604 65-69 j 704 Total Total Poplation (thousd) 545.1 14079 2753 112.2 72.8 140.2 2553A Age Cay as % of Total 213 55.1 10.8 4.4 2.9 5.5 100.0 male 276.2 678.1 130.0 463 24.2 42.8 1197.5 Famale 2689 729.8 1453 65.9 48.6 97A 1355.9 Males as % of ge Category 50.7 48.2 47.2 41.3 333 30.5 46.9 Cumative % Males 23.1 79.7 90.5 94.4 96.4 100.0 Females as % of Age C 493 51.8 52.8 58.7 66.7 69.5 S3.1 - I - - Cumuative % Females 198 73.7 84A 89.2 92.8 100.0 Saw= COMMA fio zkeAmlm of Rcdm Rio.c ofUbus K, 198e dIza Figure 2.25 Population Strucue Kiev City If, _ __,, 100, I -10 U U 0.............. 10 _so , bw140 40* 170 Table 2.26 Populaon Structe Crimea C ..... l * l I - _______1014 1549 50-59 6064 65-69 70+ Totl Tood Fopa3lIaoa (ousad) 549.0 1204.8 309.1 143A 77.8 142.4 2426.6 Age Category as % of Total 22.6 49.7 12.7 5.9 3.2 5.9 100.0 Male 280.2 587.6 140.0 57.1 25.5 38.7 1129.2 Female 268.8 6172 169.1 863 52.3 103.8 1297.4 Male as % of Age CaM ey _ 51.0 48.8 45.3 39.8 32.8 27.1 46.5 Cumulaive % Mlaks 24.8 76.9 89.3 943 96.6 I00.0 Females as % of Age Category 49.0 51.2 54.7 602 672 72.9 53.5 Cunuladve % Females 20.7 683 813 88.0 L 92.0 100.0 SM_ COMB bEai of Ptodnotm Ruswv of Ubruh. Mm. 1969 do Figure 2.26 Population Structe Crimea 10._f 100 aso 770 7 40 -40- 30. ~ ~ ~ ~ ~ ~ 0 10 0. 0 0M4 ISO 00401 SW4 am4 lo 171 Table 4 Life Expectncy and Srvival by Gender Ukraine and Selected Countries United Ukraine Bear Polad Pomt"al Kingdom Swede CbAd 1990 1990 1990 1990 1990 1988 1989 u1* L ub LA L eAb U L -~ _v- - - smg - Suwhm - a- - a- WAX *ApX WaX nApV X WA*X ,ApX SAX sApX WAX SXAX WA.X WApX *APX *ApX Age 0 65.6 100.0 66.2 100.0 66.5 100.0 70.1 100.0 73.0 100.0 742 100.0 73.7 100.0 1 65.6 985 66.1 98.6 66.7 98.2 70.0 98.8 72.6 99.1 73.7 993 733 992 15 52.2 97.6 52.6 97.8 53.1 97.6 56.5 98.0 58.9 98.7 59.9 99.0 59.6 98. 45 25.8 87.9 26.2 88A 26.1 89.7 29.3 91.5 30A 953 31.5 95.2 31.5 945 65 12.5 59.7 12.9 60.7 12.5 61.8 13.8 72.4 14.2 78.2 15.0 80.3 15.3 78A Females Age 0 74.9 100.0 75 8 100.0 75.6 100.0 77.3 100.0 78.7 100.0 80.1 100.0 80.6 100.0 1 74.8 98.9 755 99.0 75.6 98.6 77.0 99.0 78.2 993 79.5 99.5 80.1 99.4 15 61.2 98.3 62.0 98.5 61.9 98.2 63A 98.5 64.4 99.0 65.7 993 66.3 99.1 45 32.6 952 33.2 95.6 33.1 95.6 34.6 96.0 353 97.2 36.6 973 373 97.1 65 15.8 81.7 16S 82.8 16.2 82.8 17.0 86.6 18.1 863 18.8 88.9 19.8 87.9 Soc= 1991 WId ROI SN da Auhl WRO Guav 1992 Table 5 Vital Events Rates Per 100,000 Ukraine and Selected Countries 1990 United l_______ Ukaine Belarus Poland Portugal Kingdom Sweden Canada Birth Rate 12.7 13.9 16.4 13.5 13.6 12.9 14.1 Death Rate 12.2 10.7 9.9 10.1 11.8 12.1 7.5 Natural Increase 0.5 3.2 6.5 3.4 1.8 0.8 6.6 SouiW 1991 WaMllHalh ShWdcs WAnvJ. WHEO Ge 1998 Nnbf: L. Cal& 1935-90 173 Table 6 Vital Events Rates Per 100,000 Ukraine Live Naturl Year Births Deaths Iwreasel 1980 14.8 11.3 3.5 1981 14.6 11.3 3.3 1982 14.8 11.3 3.5 1983 16.0 11.5 4.5 1984 15.6 12.0 3.6 1985 15.0 12.1 2.9 1986 15.5 11.1 4.4 1987 14.8 11.4 3.4 1988 14.4 11.6 2.8 1989 13.3 11.6 1.7 1990 12.7 12.1 0.6 1991 12.4 13.5 -1.1 1992' 1 11.5 14.6 -3.1 Sow: MOH s cdtd bi Kbodmmky,. (hMa Famy Fhmhg ad Ithb of Wo_m is Ukbu 199M. NOW: 1. Fis Qum 1992 174 Figure 3 Vital Events Rates Per 100,000 Ukrine 1980-1992 22' 20- 128 i| 14l 10 §I l 2 8- -4 _ Yer 175 0 ~~~~ ~~ *0 0 1 o~~s i Fv~1 I~ 11IW S 1BE% g~~~ 1' li [h ff W L S W8 f u 8 a 4- - - . - ., . . ... . oSbwI Table 8 Age Standardized' DeathP Rates Per 100,000 for All Ages and Both Genders By Selected Causes, Ukraine and Selected Countries Country Cause of Death and Year (ICD-9 Basic Tablation List) United UkLaine Belarus Poland Pormgal KChudm Sweden Canada 1990 1990 1990 1990 _ 199 19988 1989 Infectious and Parasitic Diseases 11.8 7.6 8.9 7.8 4.0 SA 4.7 (01-07) Malipnant Neoplasms (08-g4) 184A 176.6 212.8 170.5 220A 169.0 202.5 Malignant Neoplasm of Stomach 27.9 35.1 21.2 27.8 12.7 103 8.6 (091) _ Malignam Neoplasm of Trachea, Bronchus and Lung 40.8 37.4 51.4 213 543 23.9 54.3 (101) . Malignant Neoplasm of Female Breast 21.1 18.2 22.6 25.7 40.3 26.8 34.1 (113) _ _ Diseases of the Circulatory System 589.0 544.7 589.2 405.9 363.6 368.1 291A (25-30) Ischeniuc Heart Dise (27) 317.1 336.0 121.0 85.6 2153 2093 172.2 Cerebrovascular Disease (29) 191.2 148.3 73.1 216.6 51.3 69.0 52.9 Diseases of the Respiratory System 66.5 73A 449 67.8 84.3 55.8 59.5 (31-32) Bronchits, Chronic and Unspecified Emphysma and SAsthma 47.8 46.2 25.0 13.9 125 13.1 8A Diseases of the Digestive __ System 29.7 22.7 34.5 44.7 26.9 24.2 27.7 (13-34) Injwy antd Poisoning I (1347: 107.4 103A 825 66.3 333 52.9 51.5 Motr Vehicle Accidents (E471) 23.0 23.2 22.4 26.9 9.0 8.8 ISA Suicide and Self Inflicted Iniury 20.5 21.3 13.8 85 7.8 17.8 13.1 All Causes 1141.9 1080.2 1123.7 954.2 820A 753.1 7267 sa8m: 1991 Wowld ROlb SWbta Amnul. WHO Geva 19M NOW 1. _Imdutiut to doe Eupea pauazm 177 Table 9 AVe Speciflo Death Rates for Tuberculsi Ukraine and Selected Counitris C~umS of Deadh (IMD9 I Unted Tabulato LiS) mid Ukralu Belarus Fnind P~1g1Kigdlm SwodnCaad AM __ _ 1990 1990 1990r 1990 190 198818 020C021 TCUeIodslof U F M F U F U F U F U F M F Re0spiraory Systa c1lYear 0.9 1.3 -. . . .. 0. . 1-4 0.3 0.1 - 0.3 - - -- - 5-14 *.. 0.! 0.1 *. - -0.0 15-24 0.6 0.3 0.3 0.1 0.1 0.0 0.1 0.5 .- 0.0 .- 0.2 . 25-34 8.3 0.9 2.8 0.2 0.9 0.4 2.0 0.5 0.1 0.0 -. 35-44 22.1 2.2 8.5 0.6 3.2 037 2.3 0.5 0.1 0.0 0.2 -. -- . 45-54 34.0 2.4 17.2 2.0 9.9 IA 5.9 1.1 0.51 0.2 0.2 0.- 4 55.64 32A 2.9 18.7 2.3 16.0 2.3 10.7 0.9 i 1 0.5 0.5 0O4 1.2 0.3 65-74 27.7 4.9 15.6 5.5 26.1 5.8 10.7 1.6 3.5 1.0 1.5 0.9 2A 1.5 75+ 24.0 5.6 18.6 9.4 34A 12.5 19.8 5.4 7.6 2.1 5.9 2.9 7.9 2.4 022-025 Tubwrclois Othe c Year 0.3 0.3 -- * - . 1.8 *. .- .- --- 25-34 0.3 0.1 OA .- -- . *.- 0.3 0.0 0.1 - . 0.1 35-44 0.5 0.3 0.1 .- 0.3 0.0 0.3 0.2 0.1 0.0 -. *- 0.1 45-54 2.7 0.7 0.9 0.3 0.2 0.1 0.8 -.- 0.2 0.1 -. . 0.1 0.1 55-64 4. 15 1.2 OA 0.3 0.0 1.7 0.9 0.3 0.2 I. * -. 0.1 65-74 7.0 1.2 0.5 1.2 0.2 0O4 1.8 0.9 05 0.3 0.5 03 0.3 75+ 5.5 1.4 I6 1.5 0A 0.2 2.1 1.2 1.5 0A 0.8 2.0 1.1. 05 SW=s 19W WON Hem~ 5m0u AmII WHO Gam 192*. mIbm 0.0 us zb VAs am be kman 005 Table 10 Total Ferdlityl, Infant Morlita , and Matemal Mortali3 Rates Ukraine and Selected Countries -= -.~_..___ _-. ...,,_ . ...... =_ __ ... ._ . ..... United l___________ k- Mm_ _ ___ _b g_ Kngo Sweden CSna_ _ ____To_t _ __ _ .1 ___ Woma 1.9 .. 22 1.8 1 is 1,7 Rt Per 1000 LVBe Birhs 145 12 19' 12 8 6 7 MortalyRe lIle Per 100.000 Lve Birts [ 32 32 ,S 7 4 2 SatO. 1. 1991 WaI Healt Swis A _eai WHO G ma 1992 (199847 e4a). ;!t WodW Daebopmnm Report 1992. Mhe WIM Back, (1990 due) I tOH BIas. 1991 4. Kheduuvsy. G.. Famly Pli_nd aMM Heat of W , i Ubalee Kiv, J*l M (19" MM tW* S. Judnafa of Medt Stlza Pala 9 179 Table 11 Infant Mortality Rate Ukraine 1980-1992 -T - - - __ __ _ '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 92 Infant 16.6 162 16.1 n/a n/a 15.9 14.7 14.6 ISA 13.1 13.0 13.6 15.0 Moralty per 100,000 Live Births ________ Scuo: HFA SutsWcal ndic Dabse. W}HO (1981-90) and MOH Ukmine (1991.1992- Ia Q) Figure 4 Infant Mortality Rate Ukraine 1980-1992 is 17- le- &14- I12- 10 low[1f1ids mw $d8 180 Table 12 Age Specific Mbatemal and Infant Death Rates by Selected Causes and Ages Ukraine and Selected Countries _ Case of Deh (1CD- Urnted. 9 Baic Tdxbal k Ukraine Belarus Poland Ztrnz Kingdom Swedw Canada LIst) 1990 1990 1990 Mr9)190 1988 1989 and Atm M F M F M F M F M F M F M F 38 AbJUlo 15-24 0.4 .. 0.1 0.1 0.1 . -r 25-34 0.4 0.5 03 0.1 0.1 0.0 3544 0.4 0.4 0.2 0.2 0.1 .. 0.0 390 Ie a o Clu=binh 15-24 0.3 0.1 0.0 .. 0.0 25-34 0.3 OA 0.2 0.4 . .. 0.1 35-44 0.3 . 0.2 0.2 .. _ .. 0.0 391 Toxaemia of Prepancy 15-24 0.3 . 0.0 0.1 25-34 0.2 0.1 0.2 03 0.2 . 0.0 35-44 0.1 0.1 0.. . 02 .. 392-394, 399 40,41 Con&id&oG fle FF Pap and 0dw co Ohsicml Causes '-a 15-24 1.2 0.3 03 .. 0.1 0.5 0.2 25-34 1.2 13 0.5 0.1 0.2 0.9 0.2 35-44 0.7 0.7 03 0.3 0.1 0.2 0.0 440 Spina Bifida and cI Yea 37.2 34.8 38.2 47.9 80.9 973 16.7 213 93 6.9 10.4 3.7 14A 1S.7 442 Congadlal7 Anoalies of Heot and Orculaloy asmns- i Year 181.2 148.6 169.2 129.2 214.6 160.2 105.1 93.9 $1.7 64.9 72.6 719 93.0 85.6 441. 443-447, 449 An_malies cl Year 196.0 152.1 196.5 159.7 168.6 161.7 1635 164.8 82.9 68.0 114.1 116.1 116.8 117.5 453 Birth TdaYear 769 480 110.5 45.0 103.7 59.6 16.7 3.5 1SA 9.7 25.9 1.A 1OA 6.3 450.452 454,455 459 Otber s , Year 5049 351.8 462.3 294.7 816.2 611.9 580.5 382.8 362.2 293.0 2733 154.8 334.1 2423 _ 1991 WO M SMm AiL WHO Gw0 992 ... a Mic o uw bs I= Om 0.05 - _ - m__ i g _ 0 d BW S _ gS F t X i F $ S S I - - - - -| A ~~~~~~~e vt * Table 14 Ministry of Health Estimaed Demand for Contracepives for 1991 Ukraine Value in Dumomlnadou Number Millon Rubles SUS Coodoms 468 miUion item 702 14.04 Hooal Craees 9.9 mlin pac 114 18.S0 j 2A million ils 39.6 32 S_m: MhsW of HwP 183 Table 15 Prevalnce and Incidence Rates Per 100,000 Total Populadon by Disease and Percent of Total Cases Registered at Health Care Institutions 1991 Main Categoies of Dise (ICD-9) Prgvalene % Cae Inidence % Cses Rat Rat All Categories 120,377.2 100.00 62,0Q9A 100.00 nfecious & Parasitic Diseases 4,1102 3.4 2,697.8 4.0 Neoplasms 2,550.5 2.1 610.4 0.9 Enhoaine & Metabolic 3,401.3 2.8 65238 10 Blood & Blood-Fonning Organs 620.9 0.5 243.5 OA Mental disorders 4,426.8 3.8 448A 0.7 Nevous stem & Sense Organs 11,180.7 9.3 5,426.8 8.1 Circuy System 19,6075 16.3 2,512.2 3.7 Respiraory System 40,912.6 33.9 36.02416 53.5 Digestive System 9,826.1 8.2 2.541.7 3.8 Genitourinary System 4,948.0 4.1 2.559.9 3.8 Conmplications of Pregnancy 4,000.9 0.8 3.4843 1.2 Skin & Subcutaneous rissue 4,6155 3.8 3,724A 5.5 MUsculoskelezal System 6,364.9 5.3 2,841.2 4.2 Congenital Anomalies 356.1 0.3 85.7 0.2 Injury & Poisoning 6,020.3 5.0 .. Symptoms & MI-Defined Conditions 2825 0.2 182.2 03 wms. a: ~nw _1 Pleptlatim and AdlliSoHallb Cme hilhd 1990 an 1991. Vdl 1. O dU_th' ca (or Me" , SwIni. Kiev 1Q92. NO: Sffosd Cnoe noted at die riabity of da in Vol I ma be u_b.c of bodagoi In -o-maoa at de doshLuioml lveL 184 Table 16 ForeCaSt SorCeS of Funds for Health Care in 1992 Source Total % Of % of Govt (Rb.M1) Total Revenues (1) State and Local Generld 191,987 91.0 12.0 to 12.6 Revenues Payroll Taxes 12,079 5.8 0.8 Social Insurance Fund 7,211 3.4 0.5 Chunobyl Fund 4,868 2.3 0.3 Individuals 6,967 3.3 NA TOTAL 211,032 100.0 12.8 to 13.4 (1) Includes stae and local general revenues and resources of the Pension, Social Iuance, Employment and Chemobyl Funds. Ranges reflect disag-eement between the Penin Fund and the Ministry of Finance about 1992 Pension Fund revenues. Sources: June 1992 Drafts of the 1992 Budget for the Ministry of Health, Social Ismnce Fund, Chenobyl Fund, Penion Fund and Employment Fund. 185 Table 17 For"ecast 1992 Uses of Health Care Funds Total % of % GDP (Rb.MM) Tota Facilities 183,611 87.0 6.7 Hospitals 140,613 66.6 Sanitoriums 21,980 10.4 Ambuktory Clhnics 11,820 5.6 Other Health Centers 5,171 2.5 Ambulance Services 2,368 1.1 Blood Tlnsfuiion Servkes 1,459 0.7 Capital Construction 200 0.1 Publc Health (1) 5,778 2.7 0.2 Education 5,342 2.5 0.2 SubsidieE fir Pharmaedutica 4,835 2.3 0.2 Research 1,608 0.8 0.1 Odher (2) 9,860 4.7 0.4 TOTAL (3) 211,032 100.0 7.7 (1) Addional pubLic health expetres are included in the budgets for specific facilties. (2) Addiional tbeatent for Chneobyl victims and pivate paymens for health services not included elswher. (3) Does not sum exacly due to rounding Sources: June 1992 Drafks of the 1992 Budgets for the Minisy of elbdth, Social Insurnce Fund, Chemobyl Fund, Pesin Fund and Employment Fund. 186 Table 18 Ministry of HB h and Local Hal nputs Inputs Percent Of Total 1989 1991 1992 Actual Actual Forecast Wages 53.3 47.4 27.0 Mai ntecand Supplies 13.4 25.4 NA PhaFmacetical 10.6 6.3 8.0 Food 8.2 6.9 NA Consbuc 5.2 2.1 0.1 Capil Reair 4.0 3.6 NA E3ui 3.9 5.9 11.0 Other 1.4 2.4 NA TOTAL 100.0 100.0 100.0 Sore: Miny of Hal 187 Table 19 Human Health Service Resources of the Ministry of Health System 1991 hI MOH Hlth Car Facilities' In MOH Network Category Nunber % Nuber % MOH Network of Health Care Facilities Pbhsans 201,923 16.8 * Mid-Level Heath Service Personnel 539,940 44.9 * Non-Techmical S rsonnel 333,791 27.8 . iuinan -Technical Nrsonnel 1990) 6,800 0.6 * Adminismaive Personmel3 (1990) 47,660 4.0 . Other 61,219 5.7 Total 1,201,333 100.00 1,201,333 88.9 Total Sciendfic-Research . Toal Staffin48 9,704 0.7 H ' of whic 4,433 are scientific personnel Insutesof Higher Health Educaton * Total Staff in 18 Insdatutions 22,387 1.7 . of which 7,770 are teachin personnel * eahng 51,928 stud 1nt_ Staff of the Scientific- Manufacturing Union UbIaine 82,558 6.1 Stffio oTadecand_ Ma_ gUnion Poly Mad 11,487 0.8 Toclmology Staff of Odher Health 24,013 1.8 Total 1991 1,351,482 100.0 1990 1,324,517 Sam MOB, GOs4 Aamksic Fim. u 1992 Noew: 1. ibmeas. 24.4 WAa facltimm MOHt network of wh* 1.766. on boIa fasildes bobh ad 6.423 uumm e fca. Of bstoaLIl). mimdieeg malot.Mc. mwaa (acdU" mat ad *no ad feglmal levt. lTo SclciIkR_snd Hso htblil_ a MOu ew MOH h Ib im camil wmb b aaineu aimlra" . Th1s heudn sff of Un MOU (03 pame) Amsff a aub dMma l bed aidmba h (15-30 3. Iureau of Foruic Msdicins, Bureau Of Medi StistI, Regioasa accouml cetr, growp for Tchnicl supsan Of Ca _uto 188 Table 20 Network of Hospital Facilities and Beds of fte Mistry of Healdt 1991 Type Of Fadlity Number Beds % Bda _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~Total Obl8st 30 28,54S 4.3 City 683 173,571 25.9 Specalist 125 21,165 3.2 City Chlldrens 124 23,170 3.2 ContWal Regnal 481 171,732 25.6 District 1,481 53.001 7.9 Psyciatry and Substace Abuse 92 65,960 9.8 Childbirth Centres 83 17,055 2.5 Dysps (Medica Rhab/Prophylactic) 411 63,211 9A Total 3,766 671,096 100.0 S-uc Iadm of Plpfd HUM _h andW Ne4b: 1. Tbsmm 24.4641 ahfaciidu in nX MOWH uww Tbu we ypiay pwqed baspla hI of dats tm aiabuImy tacHtUnd pdy c diM ambul __ancsM hlod tmM4im wkePo snas miw-pldrnioisgkd _a&i ad oIh etbru (bwe of foridc ned expie. bwetm of medilU r.gioalidam c _a,s and nIm ta ana =prv of carcom 189 o . 0_ ~~~ ~iDa, >l Be0 -\8i 40 -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 be b I - -I U taI ii -- X T- - 11ui II Figure S Incidene of Aborin and C as Bitth Repltion Ukmine and Oblasts 2H_~__ LW_U Odma_ Donok _ Vhlyn Chentfid ---------r100-W----------1--4 Saaoo Pldao, 8.adLe_a8uuk N.D..SoIl msqums t odm "* ImrqisUkaf adThlthfum. D.W 3a.mdh.f bWb* _ iAbw19 192 Figure 6 Complicaions of Abortion Complications After Abortion Prevalence Per 100 Women Complication After Abortio Inl=ammation of Uterus and Uterine Organs Secondary Sterili 30 Complicatons of Pregnancies 50-60 Miscarrae 50 Uterine Bleding During Deliveries 22 13-15 Abortion Asodated Chronic Morbidity 1990 Womem Undr Pyan carin ysaa Medical htuo Rate per 1000 Women (thoands) Fefile Ap Salpingta and Oophoritis 67.4 307 Endometriosis 5.0 23 Erosion and Ectropion of Cervix Uteri 136.2 620 Complications of Prgnancy, Delivery and Postatl Period 70.4 570 Sterility 33.3 269 Sooe: Khbotno, G., FPamy Plating and aled of Wom in Uine, Kiwe, Juiy 1m 193 Figure 7 lndicaton of Hospital Resources Allocated to Aborltion Related Care 1991 1. Supply of gynaecological beds (including aborion cas) 37,055 * rate per 10,000 total population 7.2 * estimaed rate per 10,000 females 13.4 2. Excess average days occupancy of gynaecological beds over average occupancy of total beds 6 days 3. Nimr of women undergoing abortion 957,000 4. Cost of an abortio in Kiev 650 rubles 5. Percent of women undergoing aborton and number subseqny treated for compications of inflamation % 6. Proption of treated that that can expect to be cured with one teatment half 7. Proporton and number requiring treatent for half reslting chronic condiion 143,550 8. Aveage number of couses of treatment for chronic condition 5-6 9. Average course of teatment 21 days 10. Average 1991 cost per teatment 3,505 rubles 11. Number of women undergoing treatment for ftility (largely asociated with complcations of 52,161 abortion) 80u103 KhaGoto,sky., 1992 194 Figum 8 Miity of Health Senior Level Organization Minister Of Health l 1~~~~~~~~----------I------1--- first :*mWmbMsdIc_- , m c | DPUtY international Adt=o2 , Idu MInmw Reldtun , l I~~~~~~~~~~~~~~~ IS Depu" | Minister --,. . 'PhanncuUas Deputy i. DePuy M*SW aNW CNId Saihy hupeu 195 ~~~.1~~3 II ~~~~~~L...;..... FVgure 8.2 Deputy Minse Minister of Health H~~~~~~~----- -------- t + ~~~~~Minister L i, I Inds F --- * i - ~_-l Centre for I e A 2nWi .Healfh Carem Sdenc & ! ManufactUrin i Union 1. U -a S_ O-R_se h_dM 197 ii ;.~~~~~~-.-.-------- ..........H L-----------I-- W (E l f W A~~~~~~I.h X l f mlwL .X.E 0Wi~~~ ~~~~~~~~~~~~~~~~~ I Figure 8.4 Dext MWsW and Chief Sanitay Inpector Ministe Of Health ~~~~~~~~~~~~~~~~~I IS I ~ ~~~~~~~~~~~~~~~~~~~ _ Ceputy Mlnisr and Chief Santr Inspector 199 G Epd_ Oo bn ~~~~~~SeM@s 199 lebte 74. URAtNS: Aveag A.At Wae ~~~~........ ........ ....... *,v. 1960 1951819718 9 9 ¶99 1991 0192 Ukrarw 15.1 1n.9 179.0 185.0 199.8 217.7 247.3 471.5 2,8S3.0 Crim t. 154.2 ¶69.1 174.6 181.1 196.0 214.7 250.0 4A.4 2,318.8 viwvysie 136.7 15S.3 160.2 166.4 179.1 194.7 222.0 406.5 1.966.0 volyn 139.1 1S5.8 162.8 168.9 180.7 19.? 221.0 424.4 2.S4.4 ObIProtvsk 163.1 181.1 1s8. 190.2 207.4 22A.4 225.0 508.2 3,66.9 Oormtek 14.3 195.4 199.S 203.6 217.5 236.8 268.0 547.7 4,684.4 2hyteuwr 137.1 1SS. 140.3 169.3 179.0 194.4 227.0 470.0 2,19.9 Zakrpattie 1.S 1S9.? 15.s 12.8 16s.s 200.1 m.0 3W.5 1.479.1 pwoihah1S 5S9.5 178.1 162.6 187.1 203.8 22S.0 2S7.0 S00.3 3,221.8 Ive -fr.*ivak 141.1 16.3 167.4 13.-6 188.9 204.2 227.0 429.4 2,211.2 Kiev Rag"on 6.8 16S5.4 177.2 187.9 202.2 217.0 260.0 493.5 2,676.3 Kilrovohred 149.8 173.0 177.4 181.3 194.S 212.0 240.0 44S.0 2,064.4 Luhw k 170.8 193.3 16.9 200.3 213.5 231.0 262.0 S16.3 4,23.9 Lvi v 147.9 1u5.7 170.3 177.6 112065 2M.0 443.S 2,352.4 AotslSv 151.3 171.7 178.5 15.7 196.O 15.9 50.0 439.9 1.941.2 Oasa 154.9 169.7 135.6 180.8 195.6 214. 24M.0 4S.2 1.9.5 Potteva 1S1.2 17t.7 177.3 184.9 196.7 215.2 243.0 470.8 2,613.? ltivne 139.2 157.0 142.1 10.0 181.5 192.4 221.0 4.2 1,992.5 OAW 143.? UT.6 173.6 197.7 194.0 207.8 57.0 471.1 2,0.2 lerOpil 13S.A 152. 157.6 165.6 178.4 191.0 218.0 41?.1 2,264.2 *aawiv 158.7 180.1 184.4 190.4 205.9 225.6 W22.0 4.7 1.156.? 1 *S" 150.2 16. 172.5 177.2 90. 209.3 241.0 43.1, 1,80.5 Imnytlky 18.6 157. 63.1 168. 182.9 197.7 22.0 35a 2.153.0 C heksy 143. 16.0 U1L8 176.0 191.4 206.6 2.0 46.7 1,9.4 COwmivtef 134.7 1S2.1 157.3 16.2 175.6 191. 2181.0 392.9 1,9582 Chwalbiv 139. 1S4.2 159.2 16.3 160.7 194.2 221.0 419.6 1,"8? slov (city) 145 181.8 184.8 195.8 216.9 243.6 248.0 48 2.S.6 sws Ninistry of L 09s5856 200 Table 1.107 UKRAINE: Single-Headed Famities o/ (From 1989 Cenus) ...... .............,............._. Thousand Famtilies ................................................................................_ Ukraine 1898 Crimea R. 107 Vinnytsia 61 Volyn 29 Onfpropetrovsk 158 Donetsk 222 Zhytomyr 51 Zakarpattia 32 Zaporizhzhia 81 Ivano-Frankivsk 45 Kiev Region 65 Kirovohrad 40 Luhansk 111 Lviv 94 Nykolaiv 47 Odessa 105 Pottava 60 Rive 31 Susy 47 Temropil 31 Kharkiv 134 Kherson 43 Khmlnytsky 47 Cherkasy 49 Chernivtsi 30 Chernmhiv 48 Kiev (City) 130 ........ ....................... ............................... Source: inistry of Statistics. a/ Incomplete families are those headed by either mother or father, and/or one of their parents, with children. ushf 22/04/93 14:55s40 201 Table 1.105 UKRAINE: Professional Training of the Unemployed (March 31, 1992) (Participants) .... ..................,............ ....................... Coursea Cour&e Number Profess. -- Of Total Rer-Trained Plas Places Placed in Trained First R*- Skill Offered Needed Re-/Train Total Trained Trained 1ppadb ................................... .................................................................................................................... Trained Tctal 64 3 6S p99 1.508 738 22? 506 5 Laid-Off People -- - 474 255 19 232 4 Vomen 2r.488 3.231 930 517 144 371 a Young People Up to 30 Yrs - 76? 383 19? 185 1 Unemployed -- 486 136 10 126 -- Of Total: In Enterprises and Organizations 13.684 1.348 293 248 138 109 1 In Professlonal-Techn. Schools 2?I. 2.841 224 75 2? 48 olw in State Techn.College 27.051 2.841 224 75 27 4 -- In Specialis ed College 2,369 8S 21 15 -- 15 In University 3.258 290 196 109 11 97 1 o/w In State Univ. Contd. Educ. 2,807 290 196 109 11 97 1 in Branch Univ. Contd. Educ. s.871 1,141 330 119 10 10? 2 In Other Educational Institutfans 12,310 994 444 172 41 130 1 ,,............................................................................ .... ........ _....... Source: Ninistry of Labor a/ Based on a contrct,. eptoyment centers bave at their disposal cours vYacanCies offered by educational institutions, enterprises and organiastions. Note: Nu'ber of people contfnuing training: 1,712 0/w wonen 1,042 Laid-off labor: S70 people uuprt 22/04/93 15:41:34 202 Table 1.109 UKAINE: AvroW Amt Vag.s In Indutry (In Porfent m1 "tlo) ................................. ................................................ ... ,. ...... -199 ...... Rubles 2 .otal Rthles X Total ................ .................................................... **................................ Ini try Total 549 100 2,853 100 0/v lghtly-Pafd 8rnches Coal Min1ng $T0 159 6,565 230 Oil Ratine.r/Processing S22 101 2,729 96 Chemfcat 522 95 2,729 96 Low-Paid Branches Construction Natrila s 528 96 2,365 83 Light lrJustry 462 84 2,374 83 ............. ........................... .. ......... Sources Ministry of Lbor uawi 22/04/93 14:44:16 203 Table 1.79 UKRAIIM: Vorkforc FtuctUtfon; Construftion (In thousand Eptoyees) ............. ..................................... ............... ---*- 1985. .*--- ---- 1990 .......... *-... 1991 .......... Avy.o. Total Left on AvV.No. Total Left on Avg.Vo. Total Left en Eqloyed Left Own Vish Employed Left Own Wish Eaptoyed Left Own Wish ............................................................................................. Ukraine 932.8 359.5 112.4 1,159.7 372.5 151.2 1,149.4 345.9 150 . Crimea R. 47.6 24.8 7.0 59.8 23.5 10.4 58.4 20.7 10.7 Vinnytefa 19.9 11.3 2.4 30.0 10.5 3.6 32.0 10.1 3.7 Volyn 12.3 S.9 1.6 18.8 5.9 2.1 18.9 4.9 1.9 Oniprspetrowk 90.0 23.9 8.7 116.0 33.1 14.9 114.9 33.5 15.6 Donetsk 119.4 39.4 15.8 128.6 40.6 18.0 130.3 40.4 18.3 Zhytomyr 19.1 10.5 2.2 25.3 8.4 2.9 26.4 7.1 2.9 Zakarpattfa 12.8 8.7 2.7 15.3 5.8 2.8 14.6 5.0 2.4 Zaporifzhzha 43.7 17.1 5.8 S2.3 18.3 7.6 52.3 16.4 7.8 Ivano-Frankivsk 20.5 8.8 2.5 23.3 6.9 2.6 24.2 6.4 2.7 Kiev Region 47.4 20.4 6.1 58.5 19.4 7.9 53.2 14.9 7.0 Kirovolrad 73.1 16.9 5.4 82.9 21.1 8.7 78.8 20.0 7.9 Luhansk 16.5 9.3 2.3 20.6 7.8 2.9 20.9 7.9 2.9 Lviv 66.7 21.7 8.6 76.0 23.7 9.9 76.S 22.9 1O.9 Nykolaiv 40.5 14.9 3.7 56.5 12.t 5.1 56.0 16.0 5.7 Odessa 25.9 12.4 3.8 32.0 12.4 5.1 31.2 10.6 5.0 Poltava 42.0 22.3 6.0 5.0 22.1 8.9 45.7 16.7 7.9 Rivne 28.3 11.0 3.4 40.4 10.7 4.6 40.9 11.0 4.8 SmUy 20.8 7.7 2.6 28.2 8.7 3.4 27.9 7.6 1.2 Ternopil 22.1 7.6 2.2 29.6 10.0 2.9 30.9 9.7 3.1 Kharkiv 12.2 4.4 1.3 18.5 5.8 2.2 18.0 5.0 2.2 Kherson 61.9 20.4 6.7 68.9 23.8 9.4 68.1 22.0 9.2 Khmslnytsky 24.3 10.5 3.4 34.2 12.0 4.3 32.6 10.8 4.7 Cherkasy 18.4 9.5 2.5 27.S 8.5 3.1 28.5 7.9 2.9 Chernivtsi 22.1 10.9 2.0 30.9 10.7 3.7 31.1 10.0 3.6 chernihiv 9.3 3.9 1.5 14.0 3.7 1.9 14.0 3.5 1.7 Kiev (City) 16.2 5.3 2.2 21.2 6.1 2.4 22.9 5.0 2.2 Source: Ninistry of Labor usf tc 22/04/93 15:33:42 204 Table 1.60 UKRAINE: Mandatory Leaves Without Pay (Decefber 1991 - February 9M) (People) ... ... *.... .............. .............................. ............. ................... . ................ ..... . Number of Average Mandatory Of which, for Duration of: Enterpris. Monthly Leaves up to 2 Wks tp over Researched Employw. w/o Pay 2 wks I Month 1 Month ;;i',a, ........... ... .... -...........7........ .. ------------------------------- ..... ........... .. ..... ......... ..... Crimea R. 7 7,145 1,199 -- 500 699 Vimyteia 8 13,018 3,285 *- 1,138 2,147 Volyn 10 26,492 2,678 626 2,052 -- Dnipropetrovsk 7 37,151 3,054 757 2,297 Donetak 6 9,433 492 200 232 60 Zhytomyr 8 6M835 2,111 262 1,610 239 Zakarpottia it 14,104 6,216 99 S,279 838 Zaporizhzhia 12 18,028 13,461 6,342 7,089 30 Ivano-Frankivsk 10 12,003 2,005 450 821 734 Kiev Reiagn 8 21,862 2,577 73 109 2,395 Klrovohrad 8 18,810 12,637 -- -- 12,637 Luhaenk 17 12,250 3,315 1,649 948 718 Lviv 59 4,952 7,243 -- -- 7,243 Nykolatv 4 7,799 3,289 37 -- 3,252 Odessa 41 28.000 5.600 -- -- 5,600 Pottave 7 15,648 2,148 1,588 560 Rivne 9 23,285 9,074 1,359 7,715 sumy 9 17,646 4,561 437 184 3,940 Ternopil 10 8,517 1,268 1,173 72 23 Kharkiv 12 43,697 5,853 5,251 469 133 Kherson 11 31,736 4,563 330 -- 4,233 Khmelnytsky 11 16,877 4,648 2,162 2,486 Cherkhsy 6 15,578 8,396 7,700 14 682 Chernivtsi 11 15,097 3,633 3,126 400 107 Chernihiv 12 24,860 14,308 8,462 5,846 Kiev (City) 11 41,081 13,754 -- 7,434 6,320 Sevastopol (City) 8 12,000 1,454 -- 1,454 Ukraine Total 333 543,904 142,822 42,083 39,540 61,199 ... ... ... .... ............... .............................. ,........... .. .. _. . ..... Source: NMnistry of Labor uwontri1 22/04/93 16:01:25 205 Table 1: Forecast Sreof Funds for Healt Care in I= Source Total % of -% of Govt (Rb.W Total Reeues (1) State and Local General 191,987 91.0 12.0 to 12.6 Revenues Payrol Taxes 12,079 5.8 0.8 Social Insurance Fund 7,211 3.4 0.5 Chemnobyl Fund 4,868 2.3 0.3 Individuals 6,967 3.3 NA TOTAL 211,032 100.0 12.8 to 13.4 (1) Includes state and local general revenues and resources of the Pension, Social Insurance, Employment and Chernobyl Funds. Ranges reflect disagreement between the Pension Fund and the Misty of Fnance about 1992 Pension Fund revenues. Sources: June 1992 Drafts of the 1992 Budgets for the Mnistry of Health, Social Isrce Fund, Chemobyl Fund, Pension Fund and Employment Fund. 206 Table 2! oEcast 1I2Ue of Health CMr ud Total % of % GDP (Rb.MM) Total Facdties 183,611 87.0 6.7 Hospitals 140,613 66.6 Sajdtoriums 21,980 10.4 Ambulatory Clinics 11,820 5.6 Other HEealth Centers 5,171 2.5 Ambulance Services 2,368 1.1 Blood Trnsfsion Services 1,459 0.7 Capita Consuction 200 0.1 Public Health (1) 5,778 2.7 0.2 Education 5,342 2.5 0.2 Subsidies for Pharmaceutical 4,835 2.3 0.2 Research 1,608 0.8 0.1 Other (2) 9,860 4.7 0.4 TOTAL (3) 211,032 100.0 7.7 (1) Addidonal public health expendirs are included in the budget for specific facilities. (2) Addiional tetment for Chernobyl victims and private payments for health services not included elsewhere. (3) Does not sum exacdy due to rounding Sources: June 1992 Draft of the 1992 Budgets for the Ministry of Health, Social Insurance Fund, Chemnobyl Fund, Pension Fund and Employment Fund. 207 [{ [ § 8 a oI2 t E 8{a, IF~~~~~~~~~~L [t iB r t&Rf X! * q b U ' Table 3: Ministry of dalth ad Local Health 1 Inputs Paerct of Total 1989 1991 1992 Actual Actual Forecast Wages 53.3 47.4 27.0 Maintenance and Supplies 13.4 25.4 NA Pharmaceutical 10.6 6.3 8.0 Food 8.2 6.9 NA Construct 5.2 2.1 0.1 Capital Repair 4.0 3.6 NA Equipment 3.9 5.9 11.0 Other 1.4 2.4 NA TOTAL 100.0 100.0 100.0 Source: Ministry of Health 209 Table *.1 UMCRAINE: Student/Teacher Ratios; Coperative ................... I.................................................. Devlo Develtpirs Ukraine Countrfes Coumtries ~~~~~~~~~~.......... 9.3.......... 31.2,...............0..3. ................................................ Total Enrollment (Mllen.) 9.3 231.2 720.3 lldrer of Teadrs (Nilltfa) 1.13 15.1 29.7 Student/Teacher Ratio 8.2 1S.3 24.3 ................... .......................................... ...*... Source: Ninistry of Ediation and UNISOO Arl Statistical Yearbook 1991. Data for Develo Cotntries are for 1989. usd1 22104/93 1S:23:53 210 Table 4.2 UOWINE: Enrollment nd Teachers In Priary d Secondary Schools (School Years 91-92) Total Enrollment (Thousand) 6,918 Nuber of Teaches (Thouad) 538 Student/Teacher btlo 12.8 ... ..................................................... Source: Ninistry of Statistics ued2 22/04193 15:38:42 211 Table 4.3 ULKAINEs UnIversities (AcadAmic Year 1991 - 92) 0/v o/t" Nolding Holding full Tlime Resters Doctor. State University Oparte. Students Faeulty Equfval. Equival. Dneprqpetrovsk State tniversity 12 8835 1,277 559 83 Donetsk State University 11 5SS93 1,062 524 64 Kiev State University 19 12,200 3,612 1,079 293 Lviv State University 13 7.230 1.911 529 96 Odessa State University 9 5.306 807 473 83 Simferopol State University 8 3.962 538 267 38 UJgorof State University 10 4,340 916 329 75 Kharkiv State University 12 6,845 1,857 875 129 ZapolieState Universtty 10 3.893 553 193 25 Chernivtsi State University 12 5,487 88 375 47 Khark1v Law Institute 4 3.188 371 184 40 Total: 120 66.879 13,789 S,38? 973 ....................................... ......................................................................... Source: Ninfstry of Education. All data are for 1992. ued3 22/04/93 15:49:07 212 Table 4.4 UKRAINE: Enrollments and Faculty in Universities a1 ......... .............................. *........................................ Student Nw6er of Student/ Country Enrollment Faculty Faculty (Thousand) (Thousand) Ratio Franme 1.124 46 24.4 Federal Republie of Geran 1,465 151 13.3 Italy 1,349 54 25.0 Korea 1,143 34 33.6 Spain 978 51 19.2 United States 7.716 494 1S.6 Ukraine 67 14 4.8 .............................................................. Source: For Ukraine: Ninistry of Educatlon; for other countries: UNESCO Statistical Yearbook 1991. a Inctludes Equlvalent Institutions. Note: Data for Ukraine are not str1ctly coepable uith those for other countries because they cover only th eleven universities In Ukraine and not "equivalent institutions." But this dbes not alter the fact that the stutxentfaculty ratio Is och lower than in the other countries. Data for the latter are for 1989 and 1992 for Ukraine. 22/04/93 14:28:21 213 Table 4.6 USRAINE: 1992 Education Spendng: Forecast (In Nillion R"te and Percent) ..... ..............,........................ Percent Percent 1992 udget Total Govt. Total Ed. Percent Expenditure (Rbl. Nn.) Ed. Budget ExpendWture of MP .... ....._.. ............. ............................. , ....... Total ftate/Locat mudget 181756 100.0 85.S 6.7 Total Personal Costs 99.°86 S4.6 46.7 wages and onuses 72.648 40.0 34.2 Payrolt Tax (37k) 26.638 14.7 12.S Stipends 10,323 5.7 4.9 Capital Repair S,443 3.0 2.6 Eq.upment Purchase 5.037 2.8 2.4 Capital Investment 1,739 1.0 1.0 Textbooks 900 0.5 0.5 Computers 434 0.2 0.2 other (Intol. Utilities 58,411 32.1 27.5 and Maintenance) Enterorises 30,812 n.e. 14.5 1.1 Total 212,567 100.0 7.8 _.................................................... ............................. Sources: June 1992 draft of the Nfnistry of Education's 192 budget, the Ministry of Finance's Jun. 1992 drft consolridated local educatfon budget, miasion estimates. a/ Ni"ion estimate based on daycare spending by the stat* govermmn udSo 22/04/93 14:10:49 214 Table 4.5 UKRAINE: Percentage of GNP Spent on Pubtlc Education Ukraine 7.8 Europe, fncluding the former USSR 5.5 Developed Countries 5.8 Developing Countrfes 3.8 The bortd 5.5 ,,,,,,,,,,,,,,,,,,,,..............................................................................,4.....t....... Source: UNESCO Statistical Yearbook, 1991 and Ukraine Hinistry of Finance. udS 22/0/493 15:09:00 215 Mlowances And SodA e 216 woa D-e-- B Sionmlvo F_O Birth Alowance Oae tm allowawe glv. to all families t birth of 300% of _ _ _ _ _ _ _ _ _ _ _ _ chld d m iii w g _ _ _ _ If either parn . ployd: . paresau e SW Stub OR Child Aowance Monthfl lowance for children vnder up 3 ginto Under 3 A1 faMilie with mothers wo woed pior to _cildblth or who waro uader aop 18 f mother wodrd 1 year 100% of Motes PF ild & mii wage Eloyer or OR p_e .________ _________ _________ .___ _ Scbool or SW (3) thu PF (4) f mothor wkd < 1 year 50% of min Mohes PandSSw WAge Employer or GR passed . Shool or SW (3) du PF (4) Cgild Awance Moatly alowance gie to all familie with moters 50% of nSi SW PFP Iuu Under 2 who did t wor sk or atend hlhe eduation prior to wag OR passed _____________ childbirth for each child under u 2 ._._._._. .hdiu PP (4) Child Allownce Addidtonld mony allowance for oweh cd of mn 100% of SW State OR for Miitary called up for active militay ervio min wae pasddwu ________________________________________ _________.__ __ PF Funeral Allowance One-time allwa given to faily of deceasl Person___ Workiag peo 200% of Employe or SIP ,mi wap School Unmplyed person 200% of SW State OR ._ _ _ _ _ _ _ _ _ _ _ _ _ __ n.n wagemin _ _ _ Retred peran 2 oths SW P- Disabled Child Addional monthy alowa, to fmie wth non- 22.5% of SW PP (service Allwnc wodug mohr oarg for disbled child under 16 min wag pension budget) Diabetic Child Add mont alane for acoh chl wih 6.7-17.2% SW Local GR AUowace diabetes ages 0 to 14 of mii wap Inktitndind Mondity allowance for eah child under 18 in 100% of 1 ntiw Local GR Child ALowae insti for pscal or mentl disabilfy or disease miii wag. pasedthru _____________________ e~dbudet (1)4MM UM Uuad = OR-gMMs J%M=U% 17MM*U Imig SW 50U 9M DW mm a ciQm o MmbQ of e og (4 lIe imai PuaXte a_oane for dh up teqe 15, 5. *m ..alwmesfc awu tvuw fa oMda ebawm 1 Seesew aa aOd we fndts mftIso )ubhod au ffeg Oak, y j Sbdoeid Vm au tk d, a S*ah ia 217 [~ [[ XI ..~~~~~~~~~~~ . Bd foir Disbled who R to Ejnanca Need 1 -rla 1"~~.5 Nan. Duetdpdo sniSh AdIshin Fmg Cms Cortain diabled people an oed to a fiee car or Cuwat car m SW -R __________ tho equivalent sum in cas - _ __ __ Motied Cetan disbled people ao ntled to a fre Cutrrnt SW S_ t OR Wh_eelairs ixed wdhcfhair Wheelchair Prosthetics Certan disabled people ae entitled to fe prosthetic Curren SW Sta OR _ _ _ _ _ _ _ _ _ ~devices - -f Woking Dabled Addiil aowan for th Woking Diabled in 49% of m _ SW Sat OR Allowance Disabled Groups I and 11 (ie. tho se aeionly wage S oitrium Additional allowance to sme diabled peopb for As necessaY SW Stao OR Treatomen sanitarium treatment______ Tephone Telephn ialAon for diabled people i disabled Currnt SW Stas OR _cegores I and II prie (1) Char= Chlmobyl Fund; OR-Genrl Revenues; PF-Pension Fund4 SIF - Soci Insurance Fund; SW-D it Offices of Mistry of Socil Welae Soures: interviews and repos from the Chernobyl Fund, Minstry of Finance, Mbiisty of Social Wolfar, Pension Fund, and SocW Insrance Fund. 219 nfits for Low-Income anid Vulemble gM= (fl NMO ~ ~~~ -- etft i dbO4= F f Nam Ducripdn Child Allowan 3 Monthy child allowance when moothes wodred pdor 50% of min E1ploye or Stwe OR to 6 to hildbirth for each child 3-6 in lowncome families wep School of Mor pasdthmu or SW (3) PP Cbild Alowance 2 Monthly child allowance whean Cm dtd not work 50% of min Employer of Sae OR to 6 prior to chiubirth for each chilA 26 in low-income wao School of Fahr pamedt _ _i_ _s fa,,iesor SW PF Child Allowance 6- Monthly child allowance for sngle mothers for each 50% of mum SW Ste OR 8 fr Single chld 6 to 18 (16 if child receivs a studet sipand) wag ModLers Child Allowance 0- Motl child allowance when paret Is singl paet 100% of SW State OR 18 for Orphand brought up in am orphaage. For eah child until8 minwage Parena (16 if child reeives a studont stipend) Chd Allowance 6 Montly child allowance for oach chid < 16 in low 22.5% of Employer or Loc QOR to 16 incom filies if child receives no other allowance, min wag School of pant pension or stipend or child or SW Child Allowa Addtioual monthly allowance for each chid under 12 30% of mm Employer or Sta OR Under 12 a vr low income families (4) wage School of parent tlougwPF ____________________. __ or SW Ahmoy Allowane Additonal mont allowance for each chid if 50% of m.m SW Local R estranged parent owes alimony for chiU under 18 but wage does not pay it LAr Family Additind monthly allowance to famiies with 3 or 22.5% of SW State OR Allowance more chidren < 16 if mother does not work mian wage Child Products Annual comPensaon to low-income famiies for price 100-140% of Employer or Locd GR Allowce icreass in childroe's product (for each child 0-18) montly School of parent min wage or child or SW _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ per year (S)_ _ _ _ Cbild Clothes Annual compensation to low-inome famiLies for pnceo 100-125% of Employer or Loca OR Allowance incrases in childre's clothes (for each child 0 monthly mmn School of parent through middle school (or techical school if sudont wage per or child or SW must buy uniform) year (5) Child and Penoner Additonal monthly allowance for oach child less than 3040% of E3mployer or LOc OR Food Alowaco 18 or penon age adult if either are in low income min wage School of parent families or child or SW Extremely Low, Addiind mont alowance for nUem low lnome Alowance income fam;ies (6) For oach adut in the family 200% of SW LocaOR _____ min wage _ For ech child under 18 100% of SW 1,oclOR min-wag Nurig Homes and The elderly infinmed who lack family support have As necessr SW Loa OR Dayca (7) free acces to nusng homes or daytime care facilities that combie health cae and leisure activities 220 8~~ A AA A^ A| __1 & |H 3l 3 | 3| g-___ I -L L i. A LIL 11 ____ |8g l S l 8 |8tt:t 1 1 n 0 | I X ZQ a~~~~~~~~~~~~~~~~~~~ 1w2 8.t'lS e..~~~~~~~~~~~~I .?8 ..I Name Deriion I Benft Sie lAt dmi- I Dsabilty and Bewae ftr Dbabity ad Death Death_ Diabilkty One-time for disabiity rulting ftom the di-astr. 5,000 to Cher Comenation varies dependg on level of dIilit. 10,000 Rtb. Annual alowan for uperan from dsaster-lated 100% to 300% Cher disabilty. Compeonsatio varies depending on level of of moUnbty _dabit. mm wage Death One-tm compensation for los of beadwier or for bss of 5,000 to Char child 10,000 Rb. Housing and Benft Relaing to Housig and Rd ocatio Relocatin ____ Apartment Rntal Monthly aprmen rent subsidy for people i categories I and Rb. 58 per Clhor II frvo Fud Subsidy Amnal fel subidy for people in categories I and U Rb. 3,50 per Cher fily Compnsaton for 50% of the cost of fuel for people ink NA Cher categoris m and IV who are witing for rolocain and who live in buildings without ceral heating Housig Purchaso Interest free loans with gove ent repaym of 25% to 50% NA Cher of principle for purchase of resdeace or dacha for people i categories I-TV Construction loas for rotcatig famiies Rb. 10,000 Cher perfamly member to max of Rb. 60,000 Relocoai One time allowance for eah relocated fumily member 300% of mm Cher Alowance __ wage Moving Exses Paymet of moving expenses for rlocatg families As ncssary Cher Wags Wil Pament of wages duig moving period for relocating funhe 100% of Cher moving average wage for 15 days Houehold Receipt of 15 year ieest free loan for funaishng now hous 8,S00 per Cher Furiings for rlocating families faiy member Household Goods Stato rpayment of loan families recoived to purchas household NA Cher goods wben family was evacuated for people i categors I and II Contaminated Compesato for ctmaed structures, househol prperty, NA Char property famishn, crops, and vwstock that had to be destroyed. Contamntd ALowas for filies living in areas of high rsadiation 30-50% of Chor Living Condis min wage (3) Food Beneft Relaing to Food 223 Nm n t Se gm Admis- Fhnt triton () The right to puhase food at 50o 75% of its acul co for As neoessy Cher ___________ people in categorIe I and U and sick chtildren_____ -- Fre mea rvod in shools for Stden in iir, secondary As ncessary Cher sad vocatona schools who are in teaories m .Ld- ooA ies or cash equivalent oompensation for famiies of As necessy Car children in categores m and IV who are too IU or too young to aend school . Other_ Benefit' Leure Medic atment, camps and vacations outside tie region for As Employer .SIF workers and teir famile neces Cost-free round-trip travel once per year anywher in the As ncessay Char counstry by any means of transport for people ink categones I-M Tax Exmpto E3xem s from payment of all axes and customs duties for As necessay Cher people i catgos I-IV and reloated families (relocated famis for 3 years) . Public Cost free use of public tanspotai for people in categories I As necessa Char T _Ra oaion and U, for dre made ill by th diaster and adult ___________ accompanying them to md treaa nt facites - - Au5mobies Cost fre proviio of oar to people in Catgries Iand U As necesay Char (1) People affeed by Chemobyl are divided ito four categones. Category I individuals are ho who patcipaed in dt Chenobyl cleanup and who have becom very Ill as a rsulL Ctego 1 individa partiipated in th clan and are surig medical problems as a result ut are not as sick as those in Catoy 1). Category M individuals are those who worked on the cleanup fom 1988 to 1990 and those who have lived or workd in the tioy with heavy diatn (15 cudes/sq. km. or more). Category IV indidals live or wok (or lved or wored) i aeas with moderat riaton (from 5 to 15 curi/sq. km). aa Cher= Chmobyl Fuod; O-Genral Revenues; PF-Pension Fund; SIF = Social Inurance Fund; SW-Ditic Offices of M stry of Social Welfare (3) Sie of aflowane depends on level of radiation Soarce: bIrves and repor frm the Cherobyl Fund, Minity of Finance, Ministry of Socil Welfare, Pension Fund, and Social Insunce Fund. 224 Table 3: PmjeMttd Uses of Pension Funds for 1992 (Pigure Baed on Pension Fund Etimate) USE 1992F Share of % of GDP Rb. MM 1992F Vol. Total Pension Fund 320,354 to 369,302 90 to 91 11.7 to 13.5 Cash Benefits (1) 306,597 to 332,554 82 to 86 Redied 241,341 to 263,858 65 to 68 Disabled 28,639 to 31,129 8 Dqpendetn 16,198 to 16,589 4 to 5 Other (2) 11,409 to 11,693 3 Military 6,126 to 6,968 2 Additional Benefits 2,600 1 Delivery Coss 5,957 to 8,893 2 Repayment of 1991 Loan 4,200 to 4,292 1 Addl Benefits Owed (3) 1,600 to 21,563 1 to 5 Partial Adminon 2,000 1 Costs (4) Chernobyl Vitims Addl. 10,918 3 0.4 Benefits Mn of Defense 23,647 6 to 7 0.9 TOTAL PENSIONS 354,919 to 403,867 100 13.0 to 14.8 StPLus (DEFCIT) (83,120) to 37,738 -21 to 11 (1) Bstmates for the breakdown of cash benefits between types of beneficiary were made based on the mnmber of beneficiaries in each group and the average, pension received. (2) People who never worked including those disabled in childhood and hobos. (3) Benefits accrued but not paid in 1991 (4) Includes only Pension Fund administrion costs. Sources: Pension Fund Draft Budget for 1992 (Ministry of Finance and Pension Fund June 1992 versions), 1992 Draft Consoldate State Budget for Ukaine (june 1992 version) and mission estimates. 225 table 4. UIAIlUz R0tir_1t AM Ptpaletin Wi OepuinI Ratio Projtot (Ni4-Teer populatio, goth S") S/ betiringt Age 1969 2000 2010 *fb*.flb*O*fl*fl* ****W*.***..S.....*.n*Cw*.. fl.S. Cflae..... ......0...... Retfrnt Ag. Popuqltien Curret bf 14,14,J6 13,073,841 13,518,377 62 years 9.20=.606 10.72.242 10,331,134 65 Yem 10.959.470 9,103.750 8.45,111 Psepodery Ratio Current b/ 47.6 42.5 4.5 62 years 26.6 32.4 30.8 4ESYom 33.3 26.2 23.9 Swms: 10 EC313 population projectiws. e/ Promjtf am based an different deffnftfos of the retirmnt age. bY hwisae 54 years fS om aM 59 yar for am. Cd Catculated as the ratio of th fetfirent a" populatfon per 100 people of worig ags, f.e. 15 years of ag till retfirent sge. 11:22:57 226 Table 1: Types of Pensioner and Lsvel of nefits to Eahh As of January 1. L992 Number % of Avg. Amout as Pensioners (000) Total % of Minimum pension (1) Pension Fund Suorted 12,997 97 122 Retirees 10,318 77 125 Disabled 1,224 9 123 Dependents 693 5 96 Other (2) S00 4 75 Military 262 2 144 Miliatry Paid from Ministry of 362 3 522 Defence Total 13,359 100 133 (1) Figures do not reflect July and October 1992 inses. (2) People who never woted included people disabled from childhood and hobos. Source: Ministy of Social Welfare 227 Table 2: 1992 Projected SgUrces of Funds for PensiOnS CRUnges Refled Pbnsion Fund and MOF EsfimatesZ SOURCE 1992F % Of % Govt (Rb. Mi) Tot Revenue (1) Total PenSion Fund 286,182 89.2 25.0 to to to 358,092 91.2 29.4 Employer Payrol Tax 287,320 89.6 to to 356,268 90.7 Employee Payrol Tax 8,493 2.6 to to 11,082 2.8 Other (2) 150 to 200 0.1 Non-Pension Conumitments (9,458) (2.4) to to (9,781) (3.1) State General Revenues (3) 23,647 6.0 1.9 to to 7.4 2.1 State Chernobyl Fund (4) 10,918 2.8 0.9 to to 3.4 1.0 Total 320,747 100 28.1 to to 392,657 32.3 (1) Includes state and local general revenues and revenues from the Pension, Social Insunce, Employment and Chernobyl Funds. (2) Other incldes self employed income tax of 10%, investments and grants. (3) Eanmuaked for miliay pensions (4) Earmarked for addiional benefts to Chemobyl workers Sces: Pension Fund Draft Budget for 19,92 Ministy of Finance and Pension Fund June 1992 versions), 1992 Draft Consolidate State Budget for Ukraine (June 1992 version), Draft of 1992 Chernobyl Fund Budget (June, 1992 version). 228 Table 76. UKRAINE: Orphans en lingtle eo by Age (In Tho wn People) 0 ........... .......................................... Totat: 3134 up to 19 year of *ae 101 20-24 16 25-29 128 30-39 211 40-49 265 50-54 233 55.59 263 60-6 42 65-69 377 70 &W otder 94 ....... ..................... ........................................ Source: Ninistry of Statistics W PoputItion Censa of 1989. uorp 08/26/92 10:01:37 229 ylabt 77. UKAINE: famitis with ChilWm Under IS ............ ................ .......... Thousand Famittis .......................... ....................... Total ?,931 of which2 with I Cbild 4,130 with 2 Childre 3.132 with 3 Chilldren 511 111th 4 Children 102 With S d I(ore Chitdren So ............. ......................................................... Source: Ministry of Statistics Nlot. ll"ed an IM8 Po;mutation Cess ufch1$ 105KsM0 230