Observation (CEACR) - adopted 2012, published 102nd ILC session (2013)

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

Article 12(1) of the Convention. Payment of wages at regular intervals – Wage arrears situation. The Committee notes that according to the Government’s report, the total amount of wage arrears as of 1 June 2012 stood at 999.9 million Ukrainian hryvna (UAH) (approximately €94 million), which represents a 42.5 per cent decrease from UAH1.79 billion in 2010. The total wage arrears owed to workers in economically active enterprises is UAH479.3 million (approximately €45 million), that is a 58.7 per cent decrease from March 2010, whereas UAH520.5 million (approximately €49 million) are owed to enterprises undergoing procedure to restore solvency or declare bankruptcy. Among economically active enterprises, the manufacturing sector has the highest amount of accumulated wage arrears representing approximately 61.4 per cent of the total amount. Other sectors experiencing serious problems of wage arrears include engineering, construction, transport and communications. Between March 2010 and June 2012, wage arrears declined by 48.3 per cent in the coal mining industry and currently represent 10 per cent of the total wage arrears in economically active enterprises. The Committee notes, in this respect, the comments of the Confederation of Free Trade Unions of Ukraine (KVPU) received on 31 August 2012 describing outstanding wage arrears in coal companies.

Monitoring of the situation – Collection of data. Further to its previous observation, in which the Committee noted that the State Statistics Committee excluded enterprises with less than 50 employees and that there was a lack of confidentiality in the process of collecting reports from enterprises, the Committee notes the Government’s indication that the State Statistics Committee now collects data concerning enterprises with more than ten employees and that, pursuant to section 22 of the Act on State statistics, amended on 13 January 2011, the statistics bodies are prohibited from sharing information aside from certain exceptions, including statistical information on levels of wage arrears.

Activities of labour inspection services. According to the statistical information provided by the Government, in 2011, 7,312 inspections were carried out at 4,997 enterprises experiencing wage arrears problems, and as a result, 1,794 fines were issued for a total amount of UAH3.8 million (approximately €360,000) and 299,000 employees received the money they were owed. Similarly, in the first six months of 2012, 2,651 inspections were conducted at 2,029 enterprises, following which 882 fines were imposed amounting to UAH488,200 (approximately €46,250) and 116,500 employees received some or all of the money they were owed.

Bankruptcy proceedings. Further to its previous observation, the Committee notes the Government’s statement that it is engaged in ongoing legislative work aimed at ensuring first-rank priority for wage claims in the context of insolvency or bankruptcy proceedings. The Government indicates that a law amending the Act on restoring the solvency of the debtor or declaring it bankrupt, adopted in December 2011 and taking effect in January 2013, will make it possible to reduce wage arrears in bankrupt enterprises. The Committee notes, in this respect, section 241(5) of the new draft Labour Code, which provides that workers’ wage claims in insolvency or bankruptcy proceedings are priority debts ranking higher than all other claims, including secured claims, and claims of State social insurance institutions and tax authorities. The Committee further notes the Government’s indication that it has established a special working group with the participation of representatives of employers’ and workers’ organizations and academics to examine the possibility of setting up a wage guarantee fund.

Other measures. The Committee notes that several initiatives have been taken to follow up on the recommendations of the ILO technical assistance mission of May 2011. In this respect, the Government’s report outlines various activities, including conferences among high-level government representatives, a sectoral conference and conferences involving the social partners and central and local authorities. Within enterprises, members of management are responsible for conducting weekly wage arrears reports which are then communicated to relevant commissions and local executive authorities. Similarly, interim commissions operate throughout the administrative regions to hear reports from directors of enterprises that have wage arrears and, between March 2010 and June 2012, those interim commissions held 25,701 separate sessions, cautioned 76,005 directors with disciplinary charges, terminated 487 contracts and took 20,480 other measures putting pressure on enterprises.

The Committee is encouraged that the Government continues to address the issue of wage arrears as a matter of priority in full awareness of the scale and complexity of the problem. The Committee is also encouraged that according to official statistics the overall amount of wage arrears continues to be on a decreasing trend. Moreover, the Committee notes that the Deputy Minister of Social Policy and the social partners in meetings they had with ILO officials in July 2012 confirmed the positive results and the new measures taken to resolve the issue of wage arrears. The Committee hopes that the Government will pursue its efforts in a sustained and resolute manner in order to deliver large parts of the national economy from the vicious circle of wage arrears. The Committee also hopes that Government action will focus, among others, on the revision of bankruptcy law, the establishment of a wage guarantee institution, the eradication of the practice of “envelope wages”, the improvement of data collection and the reinforcement of the human resources of the labour inspectorate. The Committee accordingly requests the Government to keep the Office informed of any progress made in these matters.