Observation (CEACR) - adopted 2019, published 109th ILC session (2021)

Ukraine

Protection of Wages Convention, 1949 (No. 95) (Ratification: 1961)
Minimum Wage Fixing Convention, 1970 (No. 131) (Ratification: 2006)
Protection of Workers' Claims (Employer's Insolvency) Convention, 1992 (No. 173) (Ratification: 2006)

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.]