According to the Concept of Family Policy, approved in 1999, “Family is a key indicator of social development, reflecting the moral state of society and playing a critical role in the formation of demographic potential” [1]. The Ukrainian government has introduced a range of policies aimed at supporting families and promoting the well-being of children, including measures to increase access to healthcare, education, and childcare, as well as support for maternity and paternity leave.
The family policy shall be considered a component of the social safety net system (SSN). The system envisages many benefits, but is not without its weaknesses. It is often based on categorical principles and is meant to support disadvantaged individuals in society. Almost half of Ukraine’s population is enrolled in some form of social protection program. According to the World Bank, SSN budget spending for social assistance accounted for 3% of GDP prior to 2022, which is above the average for the Eastern European and Central Asian region of 1.7%[2]. This does not include high spending within the pay-as-you-go pension system and payments in the framework of other social security spending.
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Overall, there are numerous programs available to families and individuals in the SSN system, such as payments to individuals with disabilities, foster families, large families, and the elderly. Some programs (like the childbirth grant) are not means-tested. At the same time, the low-income family allowances program, or guaranteed minimum income (GMI) program, is efficient in targeting the poor, but has low coverage. Housing and utility subsidies (HUS) aim to keep people from poverty at times of high energy costs. The eligibility for HUS depends on the level of household income and the share of income spent on housing and utilities.
The need for efficient family and social policies has recently increased during the ongoing full-scale war of Russia against Ukraine. According to the United Nations (UN), up to 8 million Ukrainians, predominantly women with children, were forced to leave Ukraine and move to safer countries because of the war[3]. Poverty and unemployment increased, while the number of internally displaced people (IDPs) reached 8 million in May, reduced to almost 6 million in December and further to 5.4 million in the end of January 2023[4].
Therefore, the war of Russia against Ukraine aggravated previous challenges that existed in the framework of family and social policies. Their list includes aging and reducing population and budget constraints, as well as high unemployment and a large number of IDPs and emigrants.
Substantial Social Fiscal Spending
In Ukraine, the social safety network system is rather complex. It is comprised of the social security system, which is financed by social security funds primarily at the expense of a single social contribution (payroll), and the social welfare (assistance) system financed from state and local budgets.
The state social security system in Ukraine consists of three types of mandatory state social insurance: PAYG (pay-as-you-go) pension system, unemployment insurance and insurance in case of temporary loss of working ability, working accidents, and occupational disease. The single social contribution (SSC) is a key source to finance the system. Its rate is set at 22% (payroll) and is mandatory to be paid for all employees as well as private entrepreneurs of the simplified taxation system (the latter pay SSC from minimum wage). The social security system, however, except for the pension system, is not discussed here[5].
The social welfare system envisages numerous payments to individuals and families. Many of them are provided on the categorial basis without considering income level, while there are several means-tested programs.
[1] Verkhovna Rada of Ukraine (1999) Parliament Resolution No.1063-XIV from September 17. Available [online]: https://zakon.rada.gov.ua/laws/show/1063-14#Text [in Ukrainian]
[2] The World Bank, Report No. PAD5127, August 1, 2022, available [online]: https://documents1.worldbank.org/curated/en/099105408022290169/pdf/P179456044b242050b5ed0b8ae55bfe32f.pdf
[3] UNHCR data is available [online]: https://data.unhcr.org/en/situations/ukraine
[4] Ukraine Internal Displacement Report, IOM, Round 12, January 23, 2023, available [online]: https://dtm.iom.int/reports/ukraine-internal-displacement-report-general-population-survey-round-12-16-23-january-2023
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