Observation (CEACR) - adopted 2003, published 92nd ILC session (2004)

Protection of Wages Convention, 1949 (No. 95) - Ukraine (Ratification: 1961)

The Committee notes the discussion of the Conference Committee which took place during the 91st Session of the Conference (June 2003). It also notes the information provided in the Government’s report and the observations communicated by the Workers’ Union of the Coalmine Nikanor-Novaya.

According to the allegations of the Workers’ Union of the Coalmine Nikanor-Novaya, the workers of the state-owned coalmine in Nikanor-Novaya are not paid on a regular basis and as a result the accumulated payroll debt of the enterprise amounts to some 5 million grivnas. It is also alleged that the wage rates applied at the enterprise are much lower than the minimum pay rates provided for in the national legislation depriving the entire population of the town of Zorinsk of an acceptable level of living. The organization further indicates that the entire working team of the enterprise has decided to halt and suspend all works at the mine until the repayment of all wage debts and the introduction of new pay rates and salary scales. The Committee asks the Government to provide detailed information on the above observations and to indicate the measures it intends to take for the prompt settlement of any outstanding wage debts in the Nikanor-Novaya coalmine.

The present situation with respect to wage arrears

1. According to the latest information provided by the Government, as compared to May 2001, the total amount of wage arrears was reduced by 48.1 per cent to 2.3 billion grivnas, i.e. half the average national monthly wage bill. In 2001, this figure was nearly 4.6 billion grivnas, or one-and-a-half times the monthly wage bill. The number of workers concerned decreased by 3.3 million persons, or 58 per cent. At present, they number 2.1 million persons, or 17.9 per cent of the total workforce, compared to 5.4 million or 41.8 per cent of the workforce in April 2001. Half of these workers are owed less than three months’ wages. By way of comparison, at the end of 2001 the number of workers who were not paid their wages on time was over 30 per cent of the workforce.

2. Moreover, the Government indicates that wage arrears were reduced in virtually all types of economic and industrial activity, and in all territorial units. The most marked changes took place in the state budget-financed sector where arrears were reduced by two-thirds and now amount to 1.5 per cent of the total amount of arrears (35.8 million grivnas). In the non-state sector, the most substantial reductions in arrears were registered in agriculture where they were cut by 71.3 per cent and now total 423.2 million grivnas. As regards the payment of wages in kind, the Government states that the amount of wages paid in kind from January to March 2003 was reduced by 59.5 per cent compared to the figure for the same period in 2001 and now represents 11 million grivnas. The proportion of the total wage bill paid in kind amounted to 2.3 per cent in the first quarter of this year, compared to 5.2 per cent in the same period of 2001.

3. The Committee takes note of the latest statistical data which show a clear improvement of the situation both in respect of accumulated wage arrears and the amount of wages paid in kind. It also notes, however, that the decrease of wage arrears has been much slower in certain sectors such as coalmining while half of the workers affected by wage arrears continue to suffer delays in the payment of wages of more than three months. Under the circumstances, the Committee can only echo the observations of the Conference Committee emphasizing that the payment of wages in full and at regular intervals is a fundamental right of workers and an absolute prerequisite for healthy employment relations, economic progress and social welfare. The Committee therefore urges the Government to continue to mobilize its assets and energy in the ongoing endeavour to resolve the wage crisis and to report fully and objectively on the evolution of the situation.

4. As regards the situation at the Voltex plant in Lutsk, the Government states that in January 2003 bankruptcy proceedings were initiated against the Voltex enterprise and that the register of creditors’ claims includes wage arrears owed to employees totalling 2.2 million grivnas. The Government further indicates that following the decision of the creditors’ committee to reorganize the company under a restructuring plan approved by the Volyn Regional Economic Council in April 2003, the wage arrears owed to Voltex employees are expected to be settled according to the reorganization plan. The Committee requests the Government to specify the exact conditions under which the settlement of wage arrears is intended to proceed according to the reorganization plan and to continue to provide detailed particulars on the situation until the total repayment of the wages due to the workers of the Voltex company.

Enforcing the legislation relating to the payment of wages

5. With respect to supervision and punishment of offences relating to the payment of wages, the Government indicates that, in 2002, 1,044 managers of enterprises in arrears in their wage payments were subjected to disciplinary proceedings initiated by the state labour inspectors, including 278 whose employment contracts were terminated, or a 36 per cent increase compared to the 2001 figure of the total number of managers sanctioned. In addition, in 2002, administrative proceedings were brought by state labour inspectors against 19,629 managers of enterprises, accounting for 77.8 per cent of the enterprises in arrears which were inspected. Finally, in 2002, criminal proceedings were instituted against 485 managers of enterprises in arrears, which is over two-and-a-half times higher than the figure for the same period last year. While noting these largely positive inspection results, the Committee requests the Government to maintain its tight scrutiny over any practices which might be violating the workers’ wage rights and to continue to communicate detailed statistical information in this regard.

Legislative developments

6. The Committee notes with interest the Government’s indication that a number of draft laws has been prepared with a view to facilitating the settlement of wage arrears by giving them priority over other payments and considering them as privileged debts in the event of judicial liquidation of an enterprise. The Government adds that the creation of a wage guarantee institution, in accordance with the Protection of Workers’ Claims (Employer’s Insolvency) Convention, 1992 (No. 173) is also under consideration, while the transformation of the labour inspection system has allowed the introduction to the Supreme Council of Ukraine of draft laws on the ratification of the Labour Inspection Convention, 1947 (No. 81) and the Labour Inspection (Agriculture) Convention, 1969 (No. 129).

7. In this connection, the Committee finds particularly encouraging the letter of the Minister of Labour and Social Policy, dated 4 August 2003, by which the Government requested the technical assistance of the Office principally for the purpose of drafting legislation to give priority to the payment of wages over other mandatory payments, studying other countries’ experience in setting up wage guarantee funds for the payment of wages in the event of insolvency, and counselling on measures to increase the effectiveness of labour inspection in supervising the timely payment of wages. The Committee firmly trusts that the Government will not fail to draw on the Office’s technical support and expert advice and that it will soon be in a position to report concrete progress in enacting new legislation in these matters.

[The Government is asked to report in detail in 2004.]