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In order to provide a comprehensive view of the issues relating to the application of the ratified Conventions on wages, the Committee considers it appropriate to examine Convention No. 131 (minimum wage) and Conventions Nos 95 and 173 (protection of wages) together.

The Committee notes the observations of the Confederation of Free Trade Unions of Ukraine (KVPU), received on 31 August 2023.

The Committee notes the extremely difficult situation in the country since 24 February 2022.

Legislative developments. The Committee notes that the Government refers in its report to several draft laws introducing amendments to existing legislation in the field of labour that could have an impact on the application of the wages Conventions. The Government indicates that the consideration of draft laws on the settlement of problems in the field of remuneration has been suspended due to the difficult situation in the country. In its observations, the KVPU indicates that several provisions of draft laws regulating wage matters are not in compliance with the Convention. It also indicates that the draft Law on Labour did not take into consideration the technical recommendations provided previously by the Office. While acknowledging the difficult situation in the country, the Committee requests the Government to provide its comments in this respect. The Committee reiterates its hope that in the framework of the revision process regarding the existing legislation on wages, its comments will be considered and that the requirements of the wages Conventions will be fully met. The Committee reminds the Government of the possibility to avail itself of ILO technical assistance in this regard. The Committee requests the Government to continue to provide information on the developments in its labour law reform, including by providing a copy of any amendments to labour legislation regulating wage issues, once adopted.

Article 3 of Convention No. 131. Criteria for determining the level of the minimum wage. In its previous comments, the Committee noted the observations of the KVPU and the FPU expressing their concern that in setting the minimum wage the Government does not take into account a series of factors. In this respect the Committee requested the Government to take the necessary measures to ensure that both the needs of workers and their families as well as economic factors are taken into consideration in determining the level of minimum wage. The Government has not replied to the Committee’s previous request and reiterates that it has prepared a draft Law” on Amendments to Certain Legislative Acts of Ukraine on Remuneration”, which aims at improving the procedure for determining the minimum wage. The Government provides information on the minimum wage that was set for 2022 and 2023 and its adjustments in relation to the State Budget for these years, pointing to the impact of the martial law regime on these decisions. It indicates that the State Budget for 2023 instructed the Cabinet of Ministers to reassess the issue of increasing expenditures, including the minimum wage for 2023, after the termination of martial law. In its observations, the KVPU indicates that Draft Law No. 3515 “On Amendments to Certain Legislative Acts of Ukraine Regarding the Settlement of the Issues of Formation of the Subsistence Minimum and Creation of Prerequisites for Its Increase” is not in compliance with Article 3 of the Convention, as it eliminates the requirement that the minimum wage should not fall below the subsistence minimum for able-bodied individuals, removes existing safeguards for determining the minimum wage of employees in entities financed by the State Budget and considers the “financial capabilities of the state budget” as a criterion for setting the minimum wage. While noting the information provided by the Government concerning the impact of the martial law, the Committee nonetheless requests the Government to provide its comments in this respect.The Committee reiterates its request that the Government takes the necessary measures to ensure that, so far as possible and appropriate in relation to national practice and conditions, both the needs of workers and their families and economic factors are taken into consideration in determining the level of minimum wage, as provided in Article 3 of the Convention. It requests the Government to provide information in this respect, including on the progress made on the adoption of the draft legislation.

Article 4(2). Full consultation with employers’ and workers’ organizations. The Committee notes that the Government has not provided information on tripartite consultations held in the framework of setting the minimum wage for 2022 and 2023. The Government indicates that in May 2023, the Ministry of Economy of Ukraine held a meeting of the joint working commission to prepare proposals to establish the minimum wage for 2024. According to the Government, the employers, the Trade Union Party and the Executive Committee expressed divergent perspectives and proposals at that meeting, pointing to different economic, political, and martial law-related factors. The Committee notes that the Government has not provided information about whether the participants reached a final result or agreement regarding the minimum wage for 2024. The Committee requests the Government to provide specific and detailed information on the content and outcome of the tripartite consultations held in the framework of the revisions of the minimum wage for 2022 and 2023 mentioned by the Government, as well as in the framework of future revisions. With regards to the minimum wage for 2024, the Committee requests the Government to provide information on the outcome of the consultations referred to by the Government.

Article 5. Enforcement. In its previous comments, the Committee took note of the KVPU observations concerning the lack of proper inspections and the complicated procedure to authorize them. It requested the Government to take appropriate measures to ensure the effective application of all provisions relating to minimum wage. The Committee notes that the Government does not provide information in this respect. It indicates that the work of the State Labour Service on monitoring the provision of the minimum wage by employers has been affected by the current situation in the country since 24 February 2022. In this respect, the Committee notes that the martial law regime has imposed a series of restrictions on labour inspection activities, which are examined, together with the relevant KVPU observations, under its comments on the Labour Inspection Convention, 1947 (No. 81), and the Labour Inspection (Agriculture) Convention, 1969 (No. 129). Therefore, the Committee requests the Government to refer to its comments adopted in 2023 on the application of Convention No. 81 and Convention No. 129.

Article 12 of Convention No. 95. Wage arrears situation in the country. For several years, the Committee examined the situation of wage arrears in the country and previously noted with deep concern the increasing amounts of wage arrears. In this regard, the Government indicates that the elimination of wage arrears remains one of its main priorities. It reports on a series of relevant initiatives. However, the Committee notes with deep concern that, according to the statistics provided by the Government, the amount of wage arrears in the country continued to increase between 2021 and 2023. The Government indicates that the main reason for the increase is the difficult economic situation and military actions taking place in the territory of Ukraine, which influence, inter alia, the functioning of enterprises. In this respect, the KVPU also continues to refer to long-standing problems with regards to settling wage arrears, indicating that this remains one of the most acute social and labour problems, which has been further exacerbated by the current situation. It refers to draft Law No. 9510 “On Amendments to Certain Laws of Ukraine Regarding Strengthening the Protection of Workers’ Claims payment of salary arrears, including in case of insolvency of the employer”, which aims to ensure the rights of employees to receive wages in full and in a timely manner. It indicates however that the draft Law is proposed to enter into force only on 1 January 2025, which would prolong the uncertainty for employees until that date. The Committee requests the Government to provide its comments in this respect and provide information on any relevant legislative developments.

The Committee will examine the application of Article 12 in practice in relation to its three essential elements: (1) efficient control and supervision; (2) appropriate sanctions; and (3) the means to redress the injury caused, including fair compensation for the losses incurred by delayed payment (see the 2003 General Survey on the protection of wages, paragraph 368).

Regarding efficient control and supervision, in reply to the Committee’s previous request, the Government provides detailed information on the situation of wage arrears, including their extent, their accumulation in specific regions and enterprises and the number of workers concerned. The Committee notes that the monitoring of wage arrears is carried out by the State Labour Service solely on the basis of operational information of regional military administrations and central executive authorities regarding the state of repayment of wage arrears at enterprises. In this context, the Government indicates that it adopted Resolution No. 1037 of 16 September 2022 “On the introduction of special monitoring of repayment by enterprises, institutions and organizations of wage arrears”. According to the Resolution, other central executive bodies as well as regional, Kyiv city and district state administrations, in addition to other entities responsible for the management of state property are obliged to ensure the special monitoring of the repayment of wage arrears at enterprises, institutions and organizations that belong to the sphere of their management or are located in their relevant territory. This is in addition to the work of temporary commissions on the repayment of wage arrears and the monitoring of information about wage arrears submitted in electronic form by enterprises, institutions and organizations. In its observations, the KVPU indicates that the State Statistics Service of Ukraine has stopped publishing statistical information on wage arrears since 24 February 2022. The Committee requests the Government to provide its comments in this respect.It requests the Government to continue to provide information on the number of workers concerned and the extent of wage arrears. The Committee requests the Government to refer to its comments under Conventions Nos 81 and 129 and continue to take the necessary measures to ensure efficient control and supervision of regular wage payment in the country and to indicate its results.

Regarding the imposition of appropriate sanctions, the Government reiterates that it is preparing draft amendments to the existing legislation with a view to strengthening the protection of workers’ rights to the timely payment of wages. In its observations, the KVPU indicates that the current draft Law on Labour has not reviewed the amount of penalties for delayed wage payments, as demanded by the KVPU. The Committee requests the Government to provide its comments in this respect and to refer to its related comments under Conventions Nos 81 and 129. It requests the Government to pursue its efforts to strengthen the penalties in national legislation to ensure full application of the requirements of the Convention, indicate the measures taken in this respect and the impact of these measures, including the amount of penalties imposed on violators, and whether there has been a reduction in the number of workers affected by arrears in the payment of their wages.

Regarding means to redress the injury caused, the Government has not provided information on the number of enterprises that have paid wage arrears to workers during the reporting period. In this respect, the Government indicates that the collection of operational information on the state of repayment of wage arrears, especially with respect to business entities of private ownership, has been complicated due to the martial law regime. It indicates that the Law “On the protection of the interests of reporting entities and other documents during the period of martial law or the state of war” provides for the possibility for business entities to submit information on the payment of wages within three months after the abolition of martial law or the termination of the state of war. The Government once again refers to the work of temporary commissions on wage payment, which includes the issuing of warnings to heads of enterprises regarding disciplinary punishments. The Committee notes that the Interdepartmental working group on the repayment of salary arrears (financial support), which was established in October 2020, was revived in May 2023 and meets on a weekly basis. Furthermore, the Committee notes the Government’s indication that it has prepared draft legislation aiming to increase the amount of compensation for a delay in wage payment. In its observations, the KVPU reiterates that the compensation mechanism provided for in the current legislation fails to compensate workers adequately for all losses in the event of wage arrears. It highlights the need to adopt changes to the legislation that would strengthen the employer’s responsibility for delayed wages, ensure adequate legal protection of the employee’s right to receive timely remuneration for work, and guarantee the priority receipt of owed wages by employees together with adequate monetary compensation for damages incurred as a result of the violation of the terms of payment, in addition to the satisfaction of any monetary claims of employees in the event of insolvency of the employer. The Committee requests the Government to provide its comments in this respect and to pursue its efforts to remedy the persisting wage arrears situation.

The practice of “envelope wages”. The Committee notes with regret that the Government once again does not provide relevant information. In the absence of a response from the Government on this issue, the Committee once again requests the Government to provide information on the progress made regarding the elimination of the practice of “envelope wages”, according to which workers are forced to agree to the undeclared payment of wages.

Articles 5–8 of Convention No. 173. Workers’ claims protected by a privilege. For a few years the Committee has been noting that section 2(4) of the Code of Bankruptcy Procedure excludes state-owned enterprises and has been requesting the Government to indicate how workers’ claims are protected in the case of state-owned enterprises. The Committee notes with regret that the Government has not provided information in this respect. The Committee once again requests the Government to clarify how workers’ claims are protected in the case of state-owned enterprises, given that section 2(4) of the Code of Bankruptcy Procedure excludes state-owned enterprises from its application.

In its previous comments the Committee noted that the Government was preparing legislative amendments to strengthen the protection of workers’ claims concerning the payment of wage arrears in the event of an employer’s insolvency, as well as a draft law introducing protection of workers’ claims with the assistance of a guarantor institution. In this respect, the Committee takes note of the Government’s indication that there have been no further developments due to the martial law regime. The Government indicates that there is an increase in the share of bankrupt and liquidated enterprises whose employees do not receive payment due to the insufficiency of liquidation property. In its 2023 observations, the KVPU indicates that employees of bankrupt and liquidated enterprises are the most unprotected, despite the fact that the law provides for the protection of their wage claims. According to KVPU, the protection of employees by means of a privilege is not guaranteed in practice, since in the case of insufficient liquidation property, claims regarding wage arrears are recognized as repaid even if not actually paid. This results from section 64(7) of the Code of Bankruptcy, which indicates that claims that are not repaid due to the insufficiency of remaining property are considered to be extinguished. In this respect, the KVPU highlights the need to create a guarantor institution to meet the monetary claims of employees in the event of the employer’s insolvency. The Committee requests the Government to provide its comments in respect of these observations. It requests the Government to keep it informed of any legislative developments aimed to strengthen the protection of workers’ claims concerning the payment of wage arrears in the event of an employer’s insolvency, including through the creation of a guarantor institution.

In order to provide a comprehensive view of the issues relating to the application of the ratified Conventions on wages, the Committee considers it appropriate to examine Convention No. 131 (minimum wage) and Conventions Nos 95 and 173 (protection of wages) together.

The Committee notes the observations of the Confederation of Free Trade Unions of Ukraine (KVPU), received on 25 August 2021 and the observations of the Federation of Trade Unions of Ukraine (FPU), received on 2 September 2021, on the application of the Conventions. The Committee also notes the response of the Government to the 2020 observations of the KVPU and FPU on the application of Convention No. 95, received in 2020.

Legislative developments. Following its previous comments, the Committee observes an absence of information on the adoption of a new Labour Code but notes that the Government’s reports refer to several draft laws introducing amendments to existing legislation in the field of labour that could have an impact on the application of the wages Conventions. In this respect, the Committee welcomes the Government’s indication that it is preparing legislative amendments to strengthen the protection of workers’ claims concerning the payment of wage arrears in the event of an employer’s insolvency, as well as a draft law introducing protection of workers’ claims with the assistance of a guarantor institution. The Committee also notes that, according to the KVPU, a number of recent legislative initiatives threaten to erode most workers’ rights, including on wage matters. The Committee requests the Government to provide its comments in this respect. The Committee hopes that in the framework of the revision process regarding the existing legislation on wages, its comments will be considered and that the requirements of the wages Conventions will be fully met. The Committee reminds the Government of the possibility to avail itself of ILO technical assistance in this regard. The Committee requests the Government to continue to provide information on the developments in its labour law reform, including by providing a copy of any amendments to labour legislation regulating wage issues, once adopted.

Article 3 of Convention No. 131. Criteria for determining the level of the minimum wage. In its previous comments, the Committee noted that in their 2019 observations, the ITUC and the KVPU indicated that the minimum wage does not adequately take into account the needs of workers and their families and the cost of living. It also noted that the KVPU added that: (i) the Government has not considered the trade unions’ suggestion to introduce a system of indexation to ensure that the minimum wage would not lose its value due to the rising inflation during the year; and (ii) in setting the minimum wage, the Government does not consider the overall wage level in the country, leading to a significant gap between the minimum wage and the average wage. The Committee notes that the Government indicates in its report that national legislation provides for criteria to determine the minimum wage complying with the Convention, and includes the possibility to review the minimum wage based on inflation. The Committee also notes that the KVPU largely reiterates its previous observations. Similarly, the FPU indicates that: (i) in establishing the minimum subsistence level in the state budget, used to determine costs of living, only budgetary feasibility has been taken into consideration; (ii) the minimum wages should be higher, according to trade union calculations taking into account education, medical care, and housing costs, as well as the family component; and (iii) a number of legislative proposals to change how the minimum subsistence level is calculated may lead to a fall in growth rates or a freezing of the minimum wage. The Committee requests the Government to take the necessary measures to ensure that, so far as possible and appropriate in relation to national practice and conditions, both the needs of workers and their families and economic factors are taken into consideration in determining the level of minimum wage, as provided in Article 3 of the Convention.

Article 4(2). Full consultation with employers’ and workers’ organizations. In its previous comments, the Committee noted that the KVPU indicated that: (i) the negotiations on the determination of the minimum wage were not conducted in accordance with the procedure established by the applicable General Agreement; and (ii) neither the Government nor the Parliament formally heard the position of the trade unions and that consequently the minimum wage resulted from a unilateral decision of the Government. The Committee notes that, in the framework of the joint working commission’s meetings to prepare proposals to establish the minimum wage for 2022, the parties could not reach a consensual proposal to be submitted to the Government for consideration. The Committee further notes that the KVPU reiterates its previous observations. The Committee requests the Government to provide specific and detailed information on the content and outcome of the tripartite consultations held in the framework of the next revision of the minimum wage.

Article 5. Enforcement. The Committee previously noted that the KVPU, in its observations, indicated that proper inspections are not carried out, due to the moratorium on inspections, and due to the lack of an appropriate number of inspectors. In this respect, the Committee notes the Government’s indication that both labour inspectors and specialists from the main departments for labour and social protection of the regional state administrations carry out monitoring of employers’ compliance with minimum wage requirements. The Committee observes that the KVPU reiterates its previous observations concerning the lack of proper inspections and refers to the complicated procedure to authorize them. The Committee requests the Government to take the appropriate measures, such as adequate inspection reinforced by other necessary measures, to ensure the effective application of all provisions relating to minimum wage. It also requests the Government to provide information on the measures taken in this respect. Regarding labour inspection, the Committee refers the Government to its comments adopted in 2021 on the application of the Labour Inspection Convention, 1947 (No. 81), and the Labour Inspection (Agriculture) Convention, 1969 (No. 129).

Article 12 of Convention No. 95. Wage arrears situation in the country. For several years, the Committee examined the situation of wage arrears in the country, which is particularly prevalent in state-owned coal-mining enterprises, and it previously noted with concern the increasing amounts of wage arrears in that industry. In this regard, the Committee notes the Government’s indication, in response to the KVPU and the FPU’s 2020 observations, that the wage arrears situation is an urgent issue, and that measures were taken to settle wage arrears in certain coal extraction companies. The Committee also notes with deep concern that, according to the statistics provided by the Government, the amount of wage arrears in the country has still increased between 2020 and 2021. The KVPU also continues to refer to long-standing and systematic failure to settle wage arrears, as well as persistent social unrest among the workforce and multiple protests concerning non-payment of wages. The Committee will examine the application of Article 12 in practice in relation to its three essential elements: (1) efficient control and supervision; (2) appropriate sanctions; and (3) the means to redress the injury caused, including fair compensation for the losses incurred by the delayed payment (see 2003 General Survey on the protection of wages, paragraph 368).

Regarding efficient control and supervision, the Committee notes the Government’s indication, in response to the KVPU and FPU’s 2020 observations, that labour inspectors monitored 451 businesses with wage debts between January and September 2020. With reference to its comments adopted under Conventions Nos 81 and 129, the Committee requests the Government to continue to take the necessary measures to ensure efficient control and supervision of the regular payment of wages in the country, and to provide information on the number of workers concerned, the extent of wage arrears, as well as the results of measures taken in this regard.

Regarding the imposition of appropriate sanctions, the Committee notes that the Government reiterates that it is preparing draft amendments to the existing legislation with a view to strengthening the protection of workers’ rights to timely payment of wages. The Committee also notes the KVPU’s indication that some initiatives for legislative amendments may increase the accountability of managers, increase fines threefold, and remove a loophole from current legislation which allows managers to avoid criminal liability if they manage to pay the wages prior to incurring a fine. The Committee requests the Government to pursue its efforts to strengthen the penalties in national legislation, including through the adoption of the abovementioned legislative amendments, to ensure full application of the requirements of the Convention. It also requests the Government to indicate the impact of the measures taken, including the amount of penalties imposed on violators, as well as whether there has been a reduction in the number of workers suffering from arrears in the payment of their wages.

Regarding means to redress the injury, the Committee notes the Government’s indication that schedules have been approved in 452 enterprises for the payment of wage arrears, of which 40 percent have been fully implemented. The Government further indicates that, since the beginning of 2021, as required by labour inspectors, 203 enterprises have paid wage arrears to 30,512 workers. The Government also refers to the work of temporary commissions on payment of wages, which includes the issuing of warnings to heads of enterprises regarding disciplinary punishments. The KVPU nevertheless reiterates that a large number of court rulings on the recovery of unpaid wages are not being implemented and that wage arrears are still increasing. In the view of the KVPU, the situation of wage arrears will worsen, following the entry into force of a Governmental decision, which transfers to coal-mining enterprises the responsibility of the Government to settle wage arrears for state miners. The FPU also refers to increasing levels of poverty, and alleges that the compensation mechanism provided for in the current legislation fails to compensate workers adequately for all losses in the event of wage arrears. The Committee requests the Government to provide its comments in this respect, and to pursue its efforts to remedy the persisting wage arrears situation. In addition, noting the Government’s reference to a coal sector reform, the Committee requests the Government to indicate the impact of such reforms on wage arrears in the coal industry and, in particular, on the possible impact on existing wage arrears of the transfer of Government responsibility for the settlement of wage arrears to the mining companies.

The practice of “envelope wages”. In the absence of a response from the Government on this issue, the Committee once again requests the Government to provide information on the progress made regarding the elimination of the practice of “envelope wages”, according to which workers are forced to agree to the undeclared payment of wages.

Articles 5–8 of Convention No. 173. Workers’ claims protected by a privilege. In previous comments, noting that section 2(4) of the Code of Bankruptcy Procedure excludes state-owned enterprises, the Committee requested the Government to indicate how workers’ claims are protected in the case of state-owned enterprises. In the absence of additional information on this issue, the Committee once again requests the Government to clarify how workers’ claims are protected in the case of state-owned enterprises, given that section 2(4) of the Code of Bankruptcy Procedure excludes state-owned enterprises from its application.

Moreover, the Committee notes that the FPU indicates that the national legislation does not adequately guarantee recovery of wage arrears from bankrupt enterprises, where the debtor’s assets are insufficient after settlement with the charge holder. In addition, the Committee notes the observations of the KVPU indicating that, in practice, the state bodies in the field of labour and the judicial authorities do not provide support for the full protection of workers’ privilege under Article 5 of the Convention. The Committee requests the Government to provide its comments in respect of these observations.

[The Government is asked to reply in full to the present comments in 2023.]

The Committee takes note of the joint observations of the Confederation of Free Trade Unions of Ukraine (KVPU) and the Federation of Trade Unions of Ukraine (FPU) on the application of Convention No. 95 (protection of wages) received on 29 September 2020, which refer to the continuing wage arrears situation in the country. The Committee notes that this serious issue is addressed in its pending comments on the application of that Convention.

The Committee also takes note of the observations of the FPU received on 30 September 2020 on the application of: (i) Convention No. 131 (minimum wage), which also refer to issues addressed in the Committee’s pending comments on the application of that Convention, and (ii) Convention No. 173 (protection of workers’ claims in case of the employer’s insolvency).

The Committee further notes the observations of the International Trade Union Confederation (ITUC) regarding the application of Conventions Nos 131, 95 and 173 received on 16 September 2020, which also refer to issues addressed in the Committee’s pending comments on the application of those Conventions.

The Committee recalls that in 2019 it requested the Government to reply in full in 2021 to its comments on the application of Conventions Nos 131, 95 and 173. It requests the Government to also provide in its 2021 reports its comments on the observations of the KVPU, the FPU and the ITUC received in 2020.

Not having received supplementary information from the Government further to the decision adopted by the Governing Body at its 338th Session (June 2020), the Committee reiterates its comments adopted in 2019 and reproduced below.

In order to provide a comprehensive view of the issues relating to the application of the ratified Conventions on wages, the Committee considers it appropriate to examine Convention No. 131 (minimum wage) and Conventions Nos 95 and 173 (protection of wages) together. The Committee takes note of the observations of the Confederation of Free Trade Unions of Ukraine (KVPU) on the application of Conventions Nos 95 and 131 received on 29 August 2019. It also notes the observation of the International Trade Union Confederation (ITUC) regarding the application of Convention No. 131 received on 1 September 2019.

Legislative developments

In its last comments, the Committee noted that the draft Labour Code would replace both the Labour Code of 1971 and the Wages Act of 1995, which were the main pieces of legislation giving effect to the ratified Conventions on wages. It requested the Government to provide information on the progress made towards the adoption of the new legislation. Noting that the draft Labour Code has not yet been adopted, the Committee requests the Government to provide information on the finalization of the labour law reform.

Minimum wage

Article 3 of Convention No. 131. Criteria for determining the level of the minimum wage. The Committee notes that in their 2019 observations, the ITUC and the KVPU indicate that the minimum wage does not adequately take into account the needs of workers and their families and the cost of living. According to the ITUC, the minimum wage established for 2019 is 12 per cent lower than the subsistence minimum calculated by the Ministry of Social Policy, a benchmark which is not even adequate given that it does not factor in a number of household expenses. The KVPU also states that the Government has not considered the trade unions’ suggestion to introduce a system of indexation to ensure that the minimum wage would not lose its value due to the rising inflation during the year. In addition, the KVPU notes that in setting the minimum wage the Government does not consider the overall level of wages in the country, leading to a significant gap between the minimum wage and the average wage. The Committee requests the Government to provide its comments in this respect.

Article 4(2). Full consultation with employers’ and workers’ organizations. The Committee notes that the KVPU indicates that the negotiations on the determination of the minimum wage were not conducted in accordance with the procedure established by the applicable General Agreement. The KVPU also states that neither the Government nor the Parliament formally heard the position of the trade unions and that consequently the minimum wage results from a unilateral decision of the Government. The Committee requests the Government to provide its comments in this respect.

Article 5. Enforcement. The Committee notes the KVPU’s indication that proper inspections are not carried out due to the moratorium on inspections, and due to the lack of an appropriate number of inspectors. The Committee requests the Government to provide its comments in this respect. It also refers to its comments on the application of the Labour Inspection Convention, 1947 (No. 81), and the Labour Inspection (Agriculture) Convention, 1969 (No. 129).

Protection of wages

Article 12 of Convention No. 95. Wage arrears situation in the country. In its last comments, the Committee examined the situation of wage arrears in the country, a situation which was particularly prevalent in state-owned coal-mining enterprises. Further to these comments, the Committee notes the information provided by the Government in its 2019 report, including regarding the measures taken between 2017 and May 2019 for the payment of wages and wage arrears in state-owned coal-mining enterprises. On the other hand, the Committee notes with concern that, according to the information provided by the Government, the amount of wage arrears in the coal-mining industry has been increasing in the first months of 2019. It also notes that the 2019 observations from the KVPU refer to the continued wage arrears situation. The KVPU also reiterates that, as a result of lasting and systematic wage arrears, social tensions remain in the mining communities. The Committee wishes to emphasize once again that a situation in which part of the workforce is systematically denied the fruits of its labour cannot be prolonged and that priority action is therefore needed to put an end to such practices. The Committee recalls once again that the application of Article 12 in practice comprises three essential elements: (1) efficient control and supervision; (2) appropriate sanctions; and (3) the means to redress the injury caused, including fair compensation for the losses incurred by the delayed payment (see 2003 General Survey on the protection of wages, paragraph 368).

With regard to efficient control and supervision, the Committee notes that the Government indicates that since the beginning of 2019, labour inspectors have carried out inspection visits to determine compliance with labour legislation in eight enterprises in the coal industry. In six of these enterprises, 24 violations of legislation on labour, employment and compulsory state social insurance were discovered, some of which related to the payment of wages. On the other hand, the Committee notes that the KVPU reiterates its previous concerns indicating that the state bodies that control and supervise the application of the relevant legislation do not substantively address the issue of wage arrears. The Committee requests the Government to take the necessary measures to ensure efficient control and supervision of the regular payment of wages in the country. It requests the Government to provide information in this regard and refers to its comments on the application of labour inspection Conventions Nos 81 and 129.

With regard to the imposition of appropriate sanctions, the Committee notes the information provided by the Government, including the indication that in order to systematically resolve the problem of arrears in the payment of wages, the Ministry of Social Policy prepared draft amendments to the existing legislation with the aim of strengthening the protection of workers’ rights to the timely payment of wages, including by increasing the amount of compensation to be paid in case of delayed payment of wages. The Committee notes that the KVPU indicates that at times employers pay a portion of the wage arrears to avoid administrative and criminal liability. The Committee requests the Government to provide information on any progress made in the adoption of measures to ensure that sanctions in case of non-payment or irregular payment of wages are appropriate.

With regard to the means to redress the injury, the Committee notes the information provided by the Government, including the indication that according to the Court Fee Act, complaints submitted by physical persons for the recovery of wages are exempted from the payment of court fees. On the other hand, the Committee notes that the KVPU reiterates that workers have difficulties exercising legal remedies due to their poor legal awareness and to the cost of legal representation. The KVPU also states that most of the court decisions on the recovering of wage arrears have not been implemented. The Committee requests the Government to provide its comments in this respect. Moreover, noting that the Government indicates that the above-mentioned draft amendments prepared by the Ministry of Social Policy included the establishment of a mechanism to guarantee the payment of wages in arrears in cases of the employer’s insolvency, the Committee requests the Government to provide information on the progress made in this regard.

The practice of “envelope wages”. In its last comments, the Committee requested the Government to provide information on the measures taken to eliminate the practice according to which workers are forced to agree to the undeclared payment of wages “in envelopes”, resulting in the non-payment of the corresponding social contributions. The Committee notes that the Government indicates that the Ministry of Social Policy developed draft amendments to the existing legislation with the aim of counteracting the use of undeclared labour, taking into account successful international practices. The Committee requests the Government to provide information on the progress made in this regard.

Articles 5 to 8 of Convention No. 173. Workers’ claims protected by a privilege. Further to its previous comments, the Committee notes that section 64 of the 2018 Code of Bankruptcy Procedure provides that workers’ claims arising out of the employment relationship shall be protected by a privilege and shall be satisfied on a first priority basis. Noting that section 2(4) of the Code of Bankruptcy Procedure excludes state-owned enterprises from its application, the Committee requests the Government to clarify how workers’ claims are protected in the case of state-owned enterprises.

ILO technical assistance

The Committee notes that the country is receiving technical assistance from the Office on the issues raised in the present comments. The Committee hopes that the Government will be in a position to report concrete progress towards full and effective implementation of the ratified Conventions on wages in its next report.

[The Government is asked to reply in full to the present comments in 2021.]

In order to provide a comprehensive view of the issues relating to the application of the ratified Conventions on wages, the Committee considers it appropriate to examine Convention No. 131 (minimum wage) and Conventions Nos 95 and 173 (protection of wages) together. The Committee takes note of the observations of the Confederation of Free Trade Unions of Ukraine (KVPU) on the application of Conventions Nos 95 and 131 received on 29 August 2019. It also notes the observation of the International Trade Union Confederation (ITUC) regarding the application of Convention No. 131 received on 1 September 2019.

Legislative developments

In its last comments, the Committee noted that the draft Labour Code would replace both the Labour Code of 1971 and the Wages Act of 1995, which were the main pieces of legislation giving effect to the ratified Conventions on wages. It requested the Government to provide information on the progress made towards the adoption of the new legislation. Noting that the draft Labour Code has not yet been adopted, the Committee requests the Government to provide information on the finalization of the labour law reform.

Minimum wage

Article 3 of Convention No. 131. Criteria for determining the level of the minimum wage. The Committee notes that in their observations, the ITUC and the KVPU indicate that the minimum wage does not adequately take into account the needs of workers and their families and the cost of living. According to the ITUC, the minimum wage established for 2019 is 12 per cent lower than the subsistence minimum calculated by the Ministry of Social Policy, a benchmark which is not even adequate given that it does not factor in a number of household expenses. The KVPU also states that the Government has not considered the trade unions’ suggestion to introduce a system of indexation to ensure that the minimum wage would not lose its value due to the rising inflation during the year. In addition, the KVPU notes that in setting the minimum wage the Government does not consider the overall level of wages in the country, leading to a significant gap between the minimum wage and the average wage. The Committee requests the Government to provide its comments in this respect.

Article 4(2). Full consultation with employers’ and workers’ organizations. The Committee notes that the KVPU indicates that the negotiations on the determination of the minimum wage were not conducted in accordance with the procedure established by the applicable General Agreement. The KVPU also states that neither the Government nor the Parliament formally heard the position of the trade unions and that consequently the minimum wage results from a unilateral decision of the Government. The Committee requests the Government to provide its comments in this respect.

Article 5. Enforcement. The Committee notes the KVPU’s indication that proper inspections are not carried out due to the moratorium on inspections, and due to the lack of an appropriate number of inspectors. The Committee requests the Government to provide its comments in this respect. It also refers to its comments on the application of the Labour Inspection Convention, 1947 (No. 81), and the Labour Inspection (Agriculture) Convention, 1969 (No. 129).

Protection of wages

Article 12 of Convention No. 95. Wage arrears situation in the country. In its last comments, the Committee examined the situation of wage arrears in the country, a situation which was particularly prevalent in state-owned coal-mining enterprises. Further to these comments, the Committee notes the information provided by the Government in its report, including regarding the measures taken between 2017 and May 2019 for the payment of wages and wage arrears in state-owned coal-mining enterprises. On the other hand, the Committee notes with concern that, according to the information provided by the Government, the amount of wage arrears in the coal-mining industry has been increasing in the first months of 2019. It also notes that the latest observations from the KVPU refer to the continued wage arrears situation. The KVPU also reiterates that, as a result of lasting and systematic wage arrears, social tensions remain in the mining communities. The Committee wishes to emphasize once again that a situation in which part of the workforce is systematically denied the fruits of its labour cannot be prolonged and that priority action is therefore needed to put an end to such practices. The Committee recalls once again that the application of Article 12 in practice comprises three essential elements: (1) efficient control and supervision; (2) appropriate sanctions; and (3) the means to redress the injury caused, including fair compensation for the losses incurred by the delayed payment (see 2003 General Survey on the protection of wages, paragraph 368).

With regard to efficient control and supervision, the Committee notes that the Government indicates that since the beginning of 2019, labour inspectors have carried out inspection visits to determine compliance with labour legislation in eight enterprises in the coal industry. In six of these enterprises, 24 violations of legislation on labour, employment and compulsory state social insurance were discovered, some of which related to the payment of wages. On the other hand, the Committee notes that the KVPU reiterates its previous concerns indicating that the state bodies that control and supervise the application of the relevant legislation do not substantively address the issue of wage arrears. The Committee requests the Government to take the necessary measures to ensure efficient control and supervision of the regular payment of wages in the country. It requests the Government to provide information in this regard and refers to its comments on the application of labour inspection Conventions Nos 81 and 129.

With regard to the imposition of appropriate sanctions, the Committee notes the information provided by the Government, including the indication that in order to systematically resolve the problem of arrears in the payment of wages, the Ministry of Social Policy prepared draft amendments to the existing legislation with the aim of strengthening the protection of workers’ rights to the timely payment of wages, including by increasing the amount of compensation to be paid in case of delayed payment of wages. The Committee notes that the KVPU indicates that at times employers pay a portion of the wage arrears to avoid administrative and criminal liability. The Committee requests the Government to provide information on any progress made in the adoption of measures to ensure that sanctions in case of non-payment or irregular payment of wages are appropriate.

With regard to the means to redress the injury, the Committee notes the information provided by the Government, including the indication that according to the Court Fee Act, complaints submitted by physical persons for the recovery of wages are exempted from the payment of court fees. On the other hand, the Committee notes that the KVPU reiterates that workers have difficulties exercising legal remedies due to their poor legal awareness and to the cost of legal representation. The KVPU also states that most of the court decisions on the recovering of wage arrears have not been implemented. The Committee requests the Government to provide its comments in this respect. Moreover, noting that the Government indicates that the above-mentioned draft amendments prepared by the Ministry of Social Policy included the establishment of a mechanism to guarantee the payment of wages in arrears in cases of the employer’s insolvency, the Committee requests the Government to provide information on the progress made in this regard.

The practice of “envelope wages”. In its last comments, the Committee requested the Government to provide information on the measures taken to eliminate the practice according to which workers are forced to agree to the undeclared payment of wages “in envelopes”, resulting in the non-payment of the corresponding social contributions. The Committee notes that the Government indicates that the Ministry of Social Policy developed draft amendments to the existing legislation with the aim of counteracting the use of undeclared labour, taking into account successful international practices. The Committee requests the Government to provide information on the progress made in this regard.

Articles 5 to 8 of Convention No. 173. Workers’ claims protected by a privilege. Further to its previous comments, the Committee notes that section 64 of the 2018 Code of Bankruptcy Procedure provides that workers’ claims arising out of the employment relationship shall be protected by a privilege and shall be satisfied on a first priority basis. Noting that section 2(4) of the Code of Bankruptcy Procedure excludes state-owned enterprises from its application, the Committee requests the Government to clarify how workers’ claims are protected in the case of state-owned enterprises.

ILO technical assistance

The Committee notes that the country is receiving technical assistance from the Office on the issues raised in the present comments. The Committee hopes that the Government will be in a position to report concrete progress towards full and effective implementation of the ratified Conventions on wages in its next report.

[The Government is asked to reply in full to the present comments in 2021.]

The Committee takes note of the observations submitted by the Federation of Trade Unions of Ukraine (FPU) on the application of Convention No. 131 (minimum wage), and of the response of the Government, both received in 2016. It also notes the observations from the Confederation of Free Trade Unions of Ukraine (KVPU), received in October 2017, concerning the labour law reform. In order to provide a comprehensive view of the issues relating to the application of the ratified Conventions on wages, the Committee considers it appropriate to examine Convention No. 131 (minimum wage) and Conventions No. 95 and 173 (protection of wages) together.

Legislative reforms. In its last comments, the Committee requested the Government to provide information on the finalization of the reform of the Labour Code. The Committee notes the Government’s indication, in its report, that: (i) the Parliament Committee on Social Policy, Employment and Pensions set up a working group to review the draft Labour Code before its second reading; (ii) the working group held around 40 meetings in 2015 and 2016; (iii) the working group paid particular attention to the Memorandum of technical comments prepared by the ILO in 2016 on the draft Labour Code; (iv) in April 2017, the Parliament Committee considered that the revised draft Labour Code was ready for its second reading. The Committee notes that, while the Government did not provide a copy of the revised draft Labour Code, the KVPU submitted observations on that draft legislation. The Committee notes in particular that the revised draft Labour Code would replace both the Labour Code of 1971 and the Wages Act of 1995, which were the main pieces of legislation giving effect to the ratified Conventions on wages. In this context, the Committee requests the Government to provide information on the finalization of the labour law reform, and to report in detail on how effect will be given to ratified Conventions on wages in the new legislative framework.

Moreover, the Committee notes the Government’s indication in its report that the Ministry of Social Policy established a working group with representatives of national workers’ and employers’ organizations to develop legislative initiatives on the satisfaction of workers’ claims in case of the employer’s insolvency. It notes in this regard that on 18 October 2018, the Parliament adopted a Code on Bankruptcy Procedures. The Committee requests the Government to provide detailed information on how this new Code affects the application of Convention No. 173.

Article 2 of the Convention. Binding force of the minimum wage. Further to its previous observation regarding the situation at the Nikanor-Nova mine, in particular as regards compliance with the applicable minimum wage for the mine sector and the results of inspection visits, the Committee notes the Government’s latest information that the wage scales at the mine have been established based on a minimum wage of 1,004 Ukranian hryvnia (UAH) (approximately €95), in accordance with the provisions of section 14 of the Act on wages. This stipulates that the payment of wages below the rate determined by an applicable collective agreement, but not lower than the statutory minimum wage rate may be used for a period not exceeding six months in order to overcome financial difficulties.

The Government further indicates that enterprises in the coal sector are currently taking steps to seek out additional funding to transfer workers to a wage scale based on a minimum wage of UAH1,073 (approximately €101). The Committee observes, however, that the current minimum wage is UAH1,118 (approximately €106) from 1 October 2012 and that, as of 1 December, the minimum monthly wage will be UAH1,134 (approximately €107).

Noting therefore that even if the current minimum wage was eventually raised for workers in the coal sector to UAH1,073, this amount would still be considerably below the minimum pay rates fixed for October and December 2012, the Committee requests the Government to indicate how it intends to ensure that the minimum wage for workers in this sector will be brought back to the level set out in the mine sector collective agreement (i.e. not less than 120 per cent of the legal minimum wage).

Article 3. Socio-economic criteria for determining the minimum wage. Further to its previous comment, the Committee notes the Government’s explanations regarding the term “minimum consumer budget” as defined by Act No. 1284 of 3 July 1991. This is stated to be the range of food and non-food goods and services, determined in physical and monetary terms, that meet basic human physical and socio-cultural needs. The term “minimum subsistence level” is defined by Act No. 966 of 15 July 1999, to be the monetary value of a range of foodstuffs adequate to provide for the normal functioning of the human body and the maintenance of health, plus a minimum range of non-food items and a minimum range of services required to meet basic social and cultural needs.

The Government indicates that the minimum subsistence level is determined pursuant to Order No. 656 of the Cabinet of Ministers, dated 14 April 2000, using a standard costing method for one month and for one person and is calculated differently for each of the basic social and demographic groups in the population on a basis of food and non-food products and services.

The Committee notes, in this regard, the concluding observations of the United Nations Committee on Economic, Social and Cultural Rights (E/C.12/UKR/CO/5), in which that Committee noted with concern that, notwithstanding efforts to raise the legal minimum wage to the minimum subsistence level, the minimum wage did not provide an adequate standard of living for workers and their families. It also notes that according to data published by the Department of Statistics, 23 per cent of Ukrainians in urban areas and 38 per cent in rural areas receive incomes lower than the minimum subsistence level. The Committee requests the Government to provide more detailed information on the manner in which the minimum subsistence level is calculated, including copies of any official surveys prepared for this purpose, and indicate whether the selection of food and non-food items and services included in this indicator has ever been revised since the adoption of Order No. 656 in April 2000.

Article 4. Full consultations with the social partners. The Committee notes that section 219(3) of the new draft Labour Code, as it read in April 2012, provides that the minimum wage is set by the Parliament upon recommendation of the Cabinet of Ministers, and after consultations with the National Tripartite Social and Economic Council. The Committee also notes that under draft section 333(2) of the Code, the National Tripartite Social and Economic Council is composed of an equal number (20) of workers’ and employers’ representatives. The Committee requests the Government to keep the Office informed of further developments concerning the finalization of the new draft Labour Code.

Articles 2 and 3 of the Convention. Binding force of the minimum wage and periodic review of minimum wages. Further to its previous observation, the Committee notes the Government’s reply to the comments made by the Independent Trade Union of Miners (ITUM) of the Nikanor-Nova coalmine and the National Forum of Trade Unions of Ukraine (NFTU) concerning the application of the Convention.

With respect to the observations of the ITUM, the Committee notes the Government’s indication that, based on the branch collective agreement for the mine sector, in cases where an enterprise is, for objective financial and economic reasons, unable to implement the minimum pay rate provided for in the applicable collective agreement (i.e. not less than 120 per cent of the legal minimum wage), a lower minimum wage rate may be applied for a period not exceeding six months. This wage rate, however, may not be lower than the legal minimum wage rate, and must be brought back to the rate set out in the mine sector collective agreement at the end of the six-month period. The Government further indicates that the State Inspectorate conducted 35 inspections during the period 2009–10 at various divisions of the state enterprise “Luganskugol”, in particular four inspections at the Nikanor-Nova mine. These inspections identified a number of violations of the labour legislation, including section 95 of the Labour Code concerning minimum wage and section 3 of the Act concerning measures to enhance the prestige of mine work, which provides that employees working underground on a full-time basis must be paid at least 630 Ukrainian hryvnia (UAH) (approximately €54) plus 30 per cent increment per month. The Director of the mine, who was ordered twice to take remedial action, has been prosecuted in accordance with section 188-6 of the Administrative Offences Code. The Director of “Luganskugol” was also ordered to rectify certain contraventions and has since been prosecuted. The Committee requests the Government to keep the Office informed of the evolution of the situation at the Nikanor-Nova mine, in particular as regards compliance with the applicable minimum wage for the mine sector and the results of any new inspection visits. The Committee also requests the Government to refer to its comments made under the Protection of Wages Convention, 1949 (No. 95).

Concerning the comments made by the NFTU, the Committee notes the Government’s explanations concerning various provisions of the draft Labour Code, in particular section 208 which provides that the conditions and rate of remuneration of public legal entities must be determined by the Cabinet of Ministers in consultation with the trade unions concerned, and sections 209 and 213 that provide that self-financed enterprises must determine the conditions and rate of remuneration through collective bargaining. The Committee requests the Government to transmit a copy of the draft Labour Code and explain how the Convention is given effect under the draft Code, in particular Article 4 of the Convention (full and genuine consultations with, and direct participation of, employers’ and workers’ organizations in the establishment, operation and periodic review of the minimum wage fixing machinery).

In this connection, the Committee understands that the Government intends to introduce in the new labour legislation a “guaranteed salary” for eight categories of workers based on the level of qualifications, the “guaranteed salary” of the first category being equal to the legal minimum wage rate. The Committee also understands that, as from 1 April 2011, the monthly minimum wage was raised to UAH960, and was further increased to UAH985 on 1 October, and to UAH1,004 (approximately €88) on 1 December. The Committee further understands that despite this increase, the national minimum wage remains largely insufficient to cover workers’ basic subsistence needs which are estimated to be in the neighbourhood of UAH2,000 per month. The Committee would be grateful if the Government would provide additional explanations as to how the “minimum consumer budget” and the “poverty line”, to which reference is made in the Wages Act of 1995, are defined in practice and also how social criteria, such as the relative living standards of different social groups, are considered when determining minimum wage levels.

Minimum Wage Fixing Convention, 1970 (No. 131) - Ukraine (RATIFICATION: 2006)

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Legislative developments

Minimum wage

Protection of wages

ILO technical assistance

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Legislative developments

Minimum wage

Protection of wages

ILO technical assistance

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