SOCIAL AND ECONOMIC ANALYSIS OF THE MINIMUM WAGE AND A LIVING WAGE IN THE CONTEXT OF REALIZATION OF THE SOCIAL FUNCTION OF THE STATE

Abstract

The wage’s function is to meet the material and intangible needs of employees while taking into account the interests of the employer. In the context of market mechanisms for regulating the economy, employees do not always have the opportunity to receive a fair remuneration for their work, which is conditioned by the existence of private interests of employers to maximize their income and a competitive entrepreneurial environment. In this case, a partial state regulation of the relationship between employees and employers is necessary. One of the possibilities of influence of the state on the level of remuneration in the sectors of production and non-productive sphere is the establishment of social guarantees regarding the remuneration of workers (minimum wage, living wage). Minimum wage is a major component of the state social guarantees system. The value of the minimum wage directly affects the amount and structure of the expenditures of the state and local budgets, since this amount is one of the basic elements for forming the payroll fund of budgetary institutions.

Comparison of nominal and real wages is the most objective feature of the level of remuneration. Despite the steady increase in wages in Ukraine, its real value is much lower than the rate of increase in nominal wage, and in 2014 and 2015 real wages had a negative trend altogether. Social policy in Ukraine is largely based on the use of the living wage as a basic standard for defining state social guarantees. The nominal cost of living wage is almost half less than the value of its actual size. Thereby, it can be argued that the nominal living wage established by the laws of Ukraine cannot provide citizens with the right to a sufficient standard of living, as well as meeting the basic social and cultural needs of the individual.

The system of state regulation of labor relations in Ukraine needs improvement in order to ensure the rights of workers with a salary that is adequate to the results of their work. The legislative framework governing the payment of the minimum wage and the subsistence minimum needs to be improved.