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					Poverty in Ukraine

Professor Dr Andrei Revenko, Institute of Economic Forecasting, Ukrainian Academy
of Sciences.

A Report based on the Household Budget Survey of Goskomstat, Ukraine

Economic Background of Poverty and its Incidence

The Ukrainian economy has been in continuous decline since 1990. By the end of
1996 GDP had fallen by 43%, industrial production by 50%, agriculture by 59%,
residential construction (completions) by 37% and retail trade turnover by 32%.
Unemployment, both open and hidden, has grown steadily. Economic decline was
accompanied by hyper-inflation. Between 1990 and 1996 the consumer price index
increased by 165,000 times, while average wages increased only 56,000 times.

Not surprisingly, such a sharp economic collapse has led to a substantial decline in
living standards for the majority of the Ukrainian population. While an increasing
number of people need assistance and state support, the practical possibilities of
providing such assistance decline. This is why the problem of poverty and of the
provision of state assistance for the most unprotected strata of the population is
becoming not only a social but also a serious political problem. The problems of
arresting falling living standards and overcoming poverty can only be resolved by the
stabilisation of the economy and the beginning of real growth.

Soviet political and ideological concepts did not permit the mention of poor strata of
the population. Though in the post-war years, especially between the 1960s and
1980s, the scale of poverty was far less than today, nevertheless it existed, especially
in the Central Asian Republics, particularly Turkmenia and Tadjikistan, where
national income per head was about half the average for the Soviet Union. As a result,
the adequate analysis of living standards was not given proper attention in the Soviet
Union. Until 1989 a substantial proportion of statistical data, including the household
budget surveys, which contained a great deal of social information, were secret. The
existence of inflation and of hidden unemployment were equally denied. The social
policy of the USSR did not take account of regional variations but was applied to the
Soviet Union as a whole. There was no serious research or analysis of the living
standards of the population in the Republics of the Union. Attempts to conduct such
surveys were stopped and considered to be nationalistic propaganda.

The principal evidence for the decline of living standards of the majority of the
Ukrainian population and the inevitable formation of poor strata shows itself in the
following:

 The reduction of GDP per head, including the final consumption of families and
  households which comprise the main component of GDP.

 Increased differentiation of living standards: 5-10% of the Ukrainian population
  have begun to live better than in the Soviet period, but the living standards of the
  majority of the population have fallen, some groups more, some less.
Andrei Revenko                    Poverty in Ukraine                                   2

 The reduction of incomes has led to changes in the structure of household
  expenditure, with a considerable increase in the proportion of income spent on food
  and a reduction in the consumption of basic foodstuffs and a worsening structure of
  nutrition.

 Reduction of the share of other expenditure – on clothes, shoes, electrical and
  electronic goods, furniture and a substantial reduction in their consumption.

 Considerably increased production of agricultural products on individual subsidiary
  plots in the countryside; the urban population is also involved in the production of
  potatoes, vegetables and fruits in urban allotment cooperatives and acquire old
  houses with plots of land in the countryside.

 Sharply reduced house-building (up to 2/3 of the houses in the former USSR,
  particularly in the cities, were given to people free of charge); reduced provision of
  free health care, education, recreation (subsidised sanatoria, holiday resorts,
  children’s camps) and deterioration of public transport.

 In recent years a new and very unusual situation has arisen in which the average
  total income per head (money and natural) of the rural population has come to
  close to, and at some times exceeded, that of the urban population. This is the
  result of the increase of agricultural production in villages, which is enough to
  compensate for the higher cash incomes of the urban population. This raises
  considerable problems for the elaboration of a targeted state assistance programme
  for the poor strata of the population as it is much more difficult to take into account
  and to monitor non-cash incomes at the level of the individual household.

 Unemployment, particularly unregistered, is increasing and part-time employment
  is widespread.

 A new feature is the growing delays, often of many months, in the payment of
  wages, pensions and stipends.

 The almost complete devaluation of the population’s deposits in the savings banks,
  which hits those close to retirement the hardest of all, while millions of Ukrainians
  lost the money that they invested between 1993 and 1995 in trust funds.

 Fall in the birth rate, rise in the death rate and reduction in life expectancy. The
  population of Ukraine declined by one million between 1990 and 1996. Another
  new phenomenon has been the decline of the urban population and some increase
  in the proportion living in the countryside.

It is important to note that it is not possible analytically to draw a clear demarcation
line between the poor and the not-poor strata of the population: a considerable
proportion of the population belongs to marginal strata. Poverty can be analysed from
a static point of view (for example, reviewing the situation in 1996), without
comparison with the living standards of other countries, or it can be analysed
dynamically, in comparison with past living standards. Other approaches are also
scientifically possible. However, it is important to recognise that strict criteria are
needed to support governmental decision-making in relation to the provision of
Andrei Revenko                    Poverty in Ukraine                                  3

assistance to the poor. The possibility of providing such support depends on the
economic situation: it necessarily reduces in conditions of economic decline, when the
proportion in poverty and those in need of support increases and it becomes bigger in
a stable and growing economy, when the necessity of such assistance relatively
reduces.

Statistical research on household budgets in Ukraine

There are two main sources of data regarding the living conditions of individual strata
of the Ukrainian population which are used for the elaboration of government policy
for the assistance to the poor: sociological surveys, conducted mainly by scientific
institutions and also by international economic organisations (in particular, the World
Bank), and the household budget survey conducted by state statistical bodies. The
majority of the relatively few analytical reports produced on this problem, including
that of the World Bank, are based on sociological surveys. The information potential
of the household budget survey conducted by the statistical bodies is still practically
unknown to the public or the mass media and is not sufficiently used by the state
institutions responsible for social policy.

The Ukrainian State Statistics Committee has conducted regular sample surveys of
household budgets for many years. The present sample comprises 16,400 households
containing almost 50,000 people – 0.1% of the Ukrainian population, which is large
enough to provide representative results for all the purposes served by such a survey.
The sample includes all the principal groups of the population, covering both rural and
urban households and the monetary and total incomes and expenditure of the whole
population. In common with most such surveys, the highest income households are
not properly represented, but this is not too serious a distortion when the focus of our
research is the poor. More serious is the under-representation of pensioners in the
sample, which creates problems for proper research into the position of this group.

The most interesting aspect for researching the problem of poverty is the grouping of
households by level of total income (in 13 groups) per 100 households and 100
household members. This group is based on a smaller sample of households since it
includes only those who have been studied over a whole year, excluding those for
which budget data is available for only part of the year. In 1996 this consisted of
14,647 households (42,1217 people), of which 7,765 households (20,506 individuals)
were urban and 6,882 households (21,621 individuals) were rural,

Despite some methodological shortcomings of the Ukrainian budget survey (out-dated
weights for the aggregation of rural and urban households to provide national
indicators, inadequate representation of older age groups and some other problems),
the budget survey data is an unique source for the analysis of living standards and of
the problem of poverty.

For the purposes of this report the data from the budget survey has been recomputed
from the 13 groups, each of which represents an income step of 30 hrivnas per head
per month, but which are of unequal size in terms of the number of households, into
the more usual grouping by deciles, each of which contains the same number of
households.
Andrei Revenko                   Poverty in Ukraine                                 4

Total income per head and poverty

In 1996 the total average income (including cash equivalent of income-in-kind), which
is the broadest indicator of the living standard of the population, came to 107.06
hryvnas ($58.52 at the 1996 exchange rate) per month. The average for the urban
population, which makes up 67.8% of the Ukrainian population, was 111.92 hribnas
and for the rural population (32.2% of the total) it was somewhat less, at 102.45
hribnas per month. According to the survey data, the population is divided by total
income per head into deciles as shown in Table One.

Comparison of the standard of living in Ukraine with Western countries and with
the pre-crisis period.

Above we noted that it is impossible to draw a clear dividing line which will define
the poor strata of the population. Living standards in Ukraine are very low in
comparison with other European countries. The UN comparison of European GDP
for 1993, published in 1997, shows the real buying power of the GDP per head in
Ukraine at that time to have been 7.35 times lower than that of the United States, 5.2
times lower than in the 15 countries of the European Union and 1.8 times lower than
its neighbour Poland (International Comparison of Gross Domestic Product in Europe,
1993. Results of the European Comparative Programme. UN Statistical Commission
and Economic Commission for Europe. United Nations, New York and Geneva, 1997,
141 pp.). In conditions of continuing economic crisis, between 1993 and 1996 the real
GDP per head fell a further 1.6 times and by 1996 amounted to only 8-9% of the US
GDP per head, 12% of the EU average and 30-35% of that of its Polish neighbour.
According to World Bank estimates, which probably underestimate the relative level
of GDP in Ukraine, this indicator, deflated by the real purchasing power of the
currency, was lower than that of China (by 18%), Sri Lanka (by 26%), of Indonesia
(by 37% and even 1% lower than Papua-New Guinea (World Bank Atlas, 1997. The
World Bank, Washington, 1997, pp. 36–7).

If we compare living standards according to the data of the budget surveys of 1996
and 1990, the total income per capita for 1990 was reported as 172 roubles per month
(Budgets of Workers, Employees, Collective Farmers and Pensioners. Ministry of
Statistics. Kyiv, 1991, p. 4) and in 1996, using the State Statistics Committee’s
weights for determining the average for the population, it amounted to 107.06
hryvnas, a nominal increase of 62.2 thousand times. But the index of consumer prices
for goods and services increased over the same period by 165,000 times (Ukraine in
Figures for 1996. Ministry of Statistics, Kyiv, 1997, p. 33). Comparing these two
figures, and acknowledging that this is only a very approximate indicator, we see that
the average per capita income has fallen 2.65 times, to approximately 65 roubles at
1990 prices.

In 1990, according to the household budget survey, when the average income per head
was 172 roubles per month, 2.7% of the population had an income of less than 75
roubles (the lowest income group reported), or 42% of the average income, while
8.6% of the population had incomes between 75.1 and 100 roubles per month, or 42-
58% of the average (National Economy of the Ukrainian SSSR in 1990. Ministry of
Statistics, Kyiv, 1991, p. 83). Even if we assumed that the current average income per
Andrei Revenko                   Poverty in Ukraine                                  5

head amounted not to 65 but to 100 roubles per month, then only 11.3% of the
Ukrainian population, those who were considered poor at that time, had incomes in
1990 corresponding to what is the average income in 1996, while the remaining
88.7% of the population had incomes then which exceed the average in 1996. If we
took the poverty line of 1990 as our indicator we would concluded that 85-90% of the
population of Ukraine are poor today. This conclusion may be disputable, but a
similar conclusion is supported by a whole set of other indices which are presented in
the full version of the research.

Possible approaches to the definition of poverty

On a static definition of poverty we would not refer to international comparisons or to
the country’s own past, but could use a number of alternative approaches. According
to the relative estimation of poverty, the poor are defined as those whose income per
head is less than 40-60% of the average income per head of the given country. Under
this approach those with incomes per head of less than 65.4 hryvnas can be considered
poor (with less than 60% of the average income). The 40% mark can hardly be
considered an acceptable definition since fewer than 10% of the population fall below
the 40% mark of 43.6 hryvnas, the upper boundary of the first decile being 45.62
hryvnas a month. The threshold of 65.6 hryvnas identifies 28% of the Ukrainian
population as being poor, which amounts to around 13 million people. This would
seem to be the most acceptable definition which corresponds to the at present
extremely limited capacity of the government to give targeted help to the poor strata
of the population.

In late 1996 the Ministry of Labour together with the Ministry of Statistics elaborated
a methodology and calculations for defining the poverty line which were presented to
the Ukrainian Cabinet of Ministers. This defined the poverty line at 47-50% of the
average income per head. According to the household budget survey, the 47% mark
would identify 7.2 million people (14.1% of the population) as being poor, the 50%
mark would raise this to 8.4 million people (16.5% of the population).

The legally defined level of low income is close to or a bit more than this figure, at
70.9 hryvnas per month. But one cannot consider this as a threshold indicator for
poverty because is it calculated only for those people who do not work and it includes
consumption norms which are close to and in some cases in excess of the actual
average levels of consumption. This indicator would identify about 31.5% of the
population as poor, about 16 million people.

It is important to remember once again that we are discussing indicators of the total
income, and not only the money income, of the population. Whereas the monetary
income which, in the case of official salaries and transfers (pensions, stipends,
compensation payments) can be quite easily defined at the level of the individual
household, the other elements which enter into the total income can only be estimated
at the level of the individual household with considerable difficulty. And the use of
average parameters of total income as the criterion for rendering state financial
assistance to individual households is not effective for several reasons. To render
assistance on the basis of cash rather than total income does not solve the problem
because this would sharply increase the proportion of the population who would be
Andrei Revenko                     Poverty in Ukraine                                    6

eligible for such assistance. The average ‘registered’ cash income (that from salaries
and transfers) per head of the whole Ukrainian population in 1996 was 64.96 hryvnas
(on our corrected weights) or 55.88 hryvnas (on the weights of the State Statistics
Committee). If we took 50% of average income, or 32.48 hvarnas per head per month,
as the threshold then we would find that over half the rural population, whose average
cash income was 31.68 hryvnas (as opposed to 80.75 for the city dwellers), would be
eligible for assistance.

This example only serves to highlight the extremely complicated character of the
elaboration of a mechanism for rendering assistance which both is acceptable to the
state and at the same time meets the particular needs of individual households. It also
demonstrates that the demands of the state bodies responsible for working out such a
mechanism that there is a need for deeper research into this problem are fully justified.
And more extensive analysis of household budgets enables us to broaden our
understanding of the problem of poverty and increase the effectiveness and soundness
of state policy in this field. In particular, the material from the budget survey has to be
broken down for analysis by rural and urban households, by age group (the older age
groups are under-represented and the economically active are over-represented in the
sample), the size and structure of households, the presence of children, the structure of
expenditure on principal items of consumption (food, consumer goods, services), the
existence of durable goods and housing conditions. Alongside this, the methodology
for the conduct of sample surveys must be analysed and recommendations for its
improvement in Ukraine elaborated. The methodology has a considerable impact on
the representativeness and the qualitative and quantitative indicators of the data
obtained.

Structure of aggregate household incomes.

In order to analyse living conditions and poverty in Ukraine we have to use not only
indicators of household income per capita, but also analyse their structure component
by component. From the budget surveys we can identify five or six of the fifteen
components as the most important, including work income, transfers, income from the
sale of agriculture production, other cash income and natural income, including
natural produce from subsidiary agriculture. Analysis by decile groups shows that,
except for the 10th decile group, the structure of incomes does not vary much. Thus
cash incomes constitute the main income source of urban households, and in decile
groups 1-9 fluctuates from 84.6% to 87.6%, with an average of 85.9%. In rural
households in decile groups 1-9 the share of cash incomes is 1.85 times less. They
constitute only 46.1% of aggregate incomes (with slight fluctuations from 45.6% to
47.9%). The average share of natural income in rural households in decile groups 1-9
is 53.2% (from 46.3% in the first to 57.3% in the ninth group). Income from
subsidiary agriculture in urban households of decile groups 1-9 fluctuates between
2.6% and 4.4% with an average of 3.6%.

In comparison with living standards in Ukraine in 1990 (the short-term historical
approach), 9 of the 10 decile groups of households can be considered poor in the
conditions of 1996. We should mention one more time that this is rather a
"maximalist" approach, but differences in per capita incomes between decile groups
are slight. Incomes per capita in rural and urban households are very close (1996):
Andrei Revenko                                   Poverty in Ukraine                                                                 7

Table 1: Distribution of Aggregate Per Capita Incomes by Decile Groups

Decile group      Urban households                          Rural households                     All households


                  hryvnas per month as a % of average       hryvnas         per as a %         of hryvnas per as a %           of
                                                            month               average           month       average




1 dec             39.60               35.40                 37.69              36.80             38.99       35.80
2 dec             55.38               49.50                 56.21              54.90             55.64       51.00
3 dec             64.18               57.30                 65.44              63.90             64.58       59.20
4 dec             74.42               66.50                 75.08              73.30             74.63       68.50
5 dec             84.38               75.40                 84.80              82.80             84.51       77.50
6 dec             96.18               85.90                 93.98              91.70             95.47       87.50
7 dec             110.76              99.00                 106.80             104.20            109.49      100.40
8 dec             129.79              116.00                121.40             118.60            127.09      116.60
9 dec             161.05              143.90                144.94             141.50            155.87      143.00
10 dec            305.81              273.20                238.09             232.40            283.94      260.50
Average           111.92              100.00                102.45             100.00            109.00      100.00
group 9 as a % 406.60                 406.60                384.60             384.60            399.80      399.80
of group 1




The difference between urban and rural households is to be found not so much in the level as in the structure of their incomes
(see table 2):


Table 2: Amount and Structure of aggregate incomes of households surveyed, 1996,
percent.


Decile groups All            Total (%)        of which: %
of households aggregate
              incomes
              (hryvnas,
              copecs)
                                              cash     including:                                  natural        including:

                                                       working transfers sale of        other                 from country other
                                                                         products                             plot
                                                                         and
                                                                         animals
Urban           111.92       100.00           77.30    58.20        9.40     0.90       8.80       22.70      8.50                  14.20
households
including:
1 - 9 dec       90.38        100.00           85.90    64.50        10.50    1.10       9.80       14.10      4.30                  9.80

10 dec          305.91       100.00           54.40    41.40        6.60     0.80       6.10       45.60      19.80                 25.80
Rural           102.45       100.00           44.30    21.80        7.40     11.10      4.00       55.70      54.30                 1.40
households
including:
1 - 9 dec       87.38        100.00           46.10    23.70        7.90     10.90      3.60       53.90      53.20                 0.70

10 dec          238.09       100.00           38.50    15.70        5.70     11.60      5.50       61.50      58.00                 3.50
Andrei Revenko                     Poverty in Ukraine                                   8


Analysis of aggregate incomes of the population of Ukraine leads to the following
conclusions:

First: there are not large income differences in the first nine decile groups, either
between neighbouring groups, or between urban and rural households. This makes it
especially difficult to draw a well-grounded (not mechanical) "demarcation mark"
between poor and non-poor households.

Second: there are striking differences in income structure between urban and rural
households. Although it is easier to formulate programmes of state assistance for poor
households which are based only on the assessment of money income, a different
approach to criteria of assistance to the rural and urban population seems to be more
reasonable. But this is not the best solution from a social and political point of view.
Moreover, it is hard to draw a border between the structure of incomes in smaller
towns (which, unlike in most foreign surveys, are not differentiated in Ukrainian
budget surveys) and villages. Living conditions and structure of income and
expenditure in smaller towns are much closer to those of rural households than to
households who live in the cities.

Third: in the current conditions of low wages, pensions and other transfers, the main
"compensational" source of income is natural incomes from country plots, and large
scale free "transfers" of agricultural products from the villages to urban relatives. They
are different and it is almost impossible to precisely calculate their value at the
individual household level (which is important for rendering state assistance).

Fourthly: it would be worthwhile on the part of governmental bodies at all levels
actively to explain that because the level of wages and pensions is significantly less in
rural areas (in which one third of the Ukrainian population lives) than in urban areas,
the state should remove the established strict limitation on private plots in order to
alleviate the difficulties connected with low wages in rural areas and should also
facilitate the development of urban households' country plots. These measures would
alleviate the situation, in the first place in the villages. These are the same
bureaucratic obstacles which impede the development of small and medium
enterprises, including farms.

As for the 10th decile group, those with the highest incomes, which cannot be
considered as belonging within the poor or middle class strata, evidently, owe their
position not simply to higher wages or pensions, but because of higher income from
private plots, free assistance from rural relatives (in the case of urban households) and
one more component, which is not directly defined in the budget survey: income from
informal activities and shadow businesses (although we should reiterate that
households with the highest incomes are not adequately represented in budget
surveys).

It should be noted in characterising the level and structure of Ukrainian household
incomes that there is a tendency to the over-estimation of the income levels of all
population groups. This is connected, firstly, to the different understanding of incomes
in Western (European) and Ukrainian household surveys. Western statistics use the
category of disposable or net income, not including taxes paid by households.
Andrei Revenko                       Poverty in Ukraine                              9

Ukrainian statistics use gross incomes, including earnings, agricultural income, tax
and other obligatory payments, the latter constituting in 1996 3.8% of household gross
income. Secondly, individual incomes include three components which are in fact the
expenditure of other households. These are: 1) cash assistance of relatives (to
children, students or pensioner parents), who are not members of the given household
2) free transfers of agricultural products from households (mainly rural) to others
(usually to children or other relatives in the cities 3) alimony. These constitute the
following percentages of aggregate incomes:


                                         Population       City         Countryside
cash assistance of relatives             3.56             4.23         2.14
agricultural products of relatives       3.47             4.97         0.32
alimony                                  0.39             0.53         0.08


Patterns of household expenditure

The stratification of the population by income appears more dramatically when
analysed against household expenditure patterns. The Ukrainian budget survey
includes data on the consumption of approximately 80 basic food products (cost,
amounts, average prices) and more than 100 groups of non-food products and
services, the availability of durable goods, output of agricultural produce on personal
plots, and a number of other important analytical data.

What catches the eye is the high share of expenditure on food: 56.2% of the gross
incomes of urban and 66.6% of rural households. We can see that all but the three top
deciles of urban households spend more than half their total income (including
income-in-kind) on food and can accordingly be referred to as poor households. We
can similarly see the extremely low share of expenditure on meals outside the home
(cafes, canteens. restaurants), where prices are much higher than it costs to prepare
meals at home, apart from the top urban decile group..

It is quite probable that not all incomes were taken into sufficient account in the
lowest two decile groups, since it is unlikely that expenditure could constantly exceed
income by more than 1-2% in households which are unlikely to have savings. It
should be pointed out that such disparities are common for household budget surveys
in other countries as well.

A comparison between household spending in Ukraine and foreign countries shows
the immense difference. Judging from the results of GDP comparisons of 15 EU
countries for 1993, expenditures on food in the total consumer spending of households
(including alcoholic beverages, but without spending on meals outside the home)
amounted to 14.8%, including: 12.4% in Germany, 14.7% in France, 10.9% in the
United Kingdom, 16.2% in Italy, and in the poorer European countries: 27.5% in
Turkey, 31.9% in Greece, and 37.5% in Portugal (in the USA the ratio was only 9.4%
and in Canada 10.7%), while for our western neighbours it was 29.9% in Poland,
25.8% in Slovakia, 22.0% in Hungary, and 48.5% in Romania (International
Comparison of Gross Domestic Product in Europe, 1993, pp.127, 128, 137). Among
the other countries whose data is published by the UN Statistics Division (for most of
the developing nations the ratio is not calculated) expenditure on food in 1992-1993
Andrei Revenko                   Poverty in Ukraine                                 10

amounted to 33.5% in Cyprus, 43.2% in Colombia, 33.3% in Mexico, while for such
Asian countries as the Philippines it was 57.8%, 55.5% in Sri Lanka, 30.5% in
Thailand, and 53.5% in India (National Accounts Statistics: Main Aggregates and
Detailed Tables, 1993. Parts I and II. United Nations, New York, 1996, pp.240, 278,
632-633, 899-900, IO89-1090, 1225, 1304). Relative as these comparisons might be,
they clearly determine Ukraine's current place in the world's economic co-ordinates as
far as living standards are concerned.

For all the relevance of international comparisons, it is more important for us to
identify the trends in the changes of the patterns of expenditure in Ukraine. The
decline in living standards is clearly observed in the growth of the share of
expenditure for food after 1990. In Ukraine before 1990 this share was dropping in
relation to aggregate spending, while spending on non-food products was growing as
were the households' savings. This is reflected in the trend of the general growth of
living standards. The figures after 1990 show just as clear a general decline in living
standards, which implies the growing share of poor households. After 1994 a slight
decrease in the share of expenditure on food was caused by the more rapid growth in
charges for rent and utilities, on which it was practically impossible to economise.
Andrei Revenko                               Poverty in Ukraine                                                   11


Table 3: Pattern of use of gross incomes of surveyed households, 1996, percent.

Decile      Total income including expenses for
groups
                          food      including alcoholic non-food services   other      taxes   losses   savings
                                    food      beverages items               expenses
                                    outside
                                    home
Total population
1 dec       100.0         71.1      0.6       0.8       12.8     13.2       3.7        3.4     0.3      -5.3
2 dec       100.0         69.8      0.6       0.8       12.9     13.0       3.8        3.5     0.3      -4.1
3 dec       100.0         62.7      0.7       1.0       14.5     13.2       4.6        4.3     0.2      -0.5
4 dec       100.0         62.3      0.7       1.0       14.6     13.2       4.7        4.4     0.2      -0.4
5 dec       100.0         62.1      0.7       1.0       14.8     13.0       4.7        4.5     0.2      -0.3
6 dec       100.0         57.4      0.7       1.0       16.1     13.1       5.8        4.9     0.2      1.5
7 dec       100.0         57.1      0.7       1.0       16.2     13.1       5.8        5.0     0.2      1.6
8 dec       100.0         52.7      0.8       1.1       16.6     13.5       6.8        5.7     0.2      3.4
9 dec       100.0         52.3      0.7       1.0       16.5     12.9       7.6        5.8     0.2      3.7
10 dec      100.0         47.7      1.0       1.2       25.1     9.1        8.1        4.2     0.4      4.2
Total       100.0         59.6      0.7       0.9       14.8     11.6       6.4        4.7     0.2      1.8
Urban
1 dec       100.0         67.3      0.8       0.8       11.4     16.3       2.9        4.7     0.1      -3.5
2 dec       100.0         65.S      0.9       0.8       11.7     16.4       3.0        4.8     0.1      -2.6
3 dec       100.0         58.5      1.0       1.0       14.1     16.6       4.0        5.9     0.1      -0.2
4 dec        100.0        58.1      1.0           1.0   14.2      16.7      4.0        6.0     0.1      -0.1
5 dec        100.0        58.0      1.0           1.0   14.3      16.4      4.1        6.1     0.1      0.0
6 dec        100.0        53.0      1.0           1.0   16.2      16.4      5.0        6.8     0.1      1.5
7 dec        100.0        52.8      1.0           1.0   16.3      16.4      4.9        6.9     0.1      1.6
8 dec        100.0        47.4      1.1           1.1   17.0      16.9      5.8        8.0     0.1      3.7
9 dec        100.0        47.8      1.0           1.0   17.2      15.9      6.1        8.1     0.1      3.8
10 dec       100.0        41.1      1.4           1.3   31.3      11.1      5.0        5.7     0.3      4.2
Total        100.0        56.2      0.9           0.9   14.9      14.3      5.0        6.5     0.1      2.1
Rural
1 dec        100.0        79.7      0.9           0.9   15.7      6.3       5.5        0.8     0.6      -9.5
2 dec        100.0        78.3      0.9           0.9   15.2      6.0       5.4        0.8     0.6      -7.2
3 dec        100.0        71.5      0.9           0.9   15.4      6.0       5.9        0.9     0.5      -1.1
4 dec        100.0        71.0      0.9           0.9   15.5      6.0       6.1        1.0     0.5      -1.0
5 dec        100.0        70.8      0.9           0.9   15.6      6.0       6.1        1.0     0.5      -0.9
6 dec        100.0        66.8      1.0           1.0   15.6      6.2       7.5        1.0     0.4      1.5
7 dec        100.0        66.2      1.0           1.0   15.6      6.3       7.6        1.1     0.4      1.8
8 dec        100.0        64.0      1.0           1.0   15.5      6.3       9.1        1.0     0.5      2.6
9 dec        100.0        61.9      1.0           1.0   14.8      6.2       10.9       1.1     0.5      3.6
10 dec       100.0        61.6      0.9           0.9   12.1      4.9       14.9       0.9     0.5      4.2
Total        100.0        66.6      0.9           0.9   14.6      5.9       9.4        1.0     0.5      1.1
Andrei Revenko                                      Poverty in Ukraine                                                              12

Table 4. Gross income use of surveyed households, 1980-1996 (%)


                    1980       1985        1990       1991        1992        1993       1994      1995     1996       including:
                                                                              (4th Q.)
                                                                                                                       city         country
                                                                                                                                    side
Total income        100.0      100.0       100.0      100.0       100.0       100.0      100.0     100.0    100.0      100.0        100.0
use
including:
food                39.9       36.6        32.8       39.2        40.4        57.4       64.7      57.0     61.3       56.1         66.5
alcoholic           2.8        2.6         2.7        2.1         2.0         2.5        1.3       1.3      0.9        0.9          0.9
beverages
non-food goods      29.9       29.6        31.4       32.2        31.8        20.1       19.1      16.7     14.8       14.9         147.0
services            8.8        8.3         8.0        6.8         4.6         6.0        5.2       8.8      10.1       14.3         5.1
including:
payment for         3.0        2.9         2.6        1.6         0.8         2.1        1.4       4.1      5.8        7.6          4.1
apartment,
communal
services,
maintenance of
private house
other expenses      6.5        7.8         6.5        5.5         4.0         3.5        8.9       8.8      7.1        5.0          9.4
taxes, obligatory   6.9        6.8         7.2        5.1         6.4         5.5        3.5       3.8      3.8        6.5          1.0
payments
savings             5.2        8.3         11.4       9.6         10.8        5.0        -2.7      4.1      1.7        2.2          1.1

Note: Totals come to over 100% as ‘losses’ have been omitted.

*National Economy of Ukraine in 1991. Statistical Yearbook. Ministry of Statistics of Ukraine, Kiev 1992, p. 110. National
Economy of Ukraine in 1992, Kiev, 1993, p. 43; Statistical Yearbook of Ukraine for 1995, Kiev, 1996, p.390: Household
Budgets Grouped by Average Per Capita Gross Income and Other Socio-Economic Attributes. State Committee for Statistics of
Ukraine, Kiev, 1997, p.24.

Remark: the figures presented in this table for the entire population (urban and rural) differ slightly for similar indicators cited in
this paper due to different weights used for obtaining data for the entire population.


The current share of expenditure for food in gross incomes is more similar to the
indicators of the 1950s-1960s. In those decades budgetary surveys covered households
of industrial workers and collective farms and did not include workers engaged in
other sectors of the economy, office workers and pensioners who had lower per capita
gross incomes and a much higher share of expenditures for food:

                                       Share of expenditures for food in gross incomes (%)


                                       1953             1960               1967
Industrial workers                     45.7             42.9               41.3
Collective farmers                     66.4             63.8               48.9


*Economic Group of Household Budgets of Workers and Collective Farmers. Collection of Statistics. Central
Statistical Directorate of the Ukrainian SSR, Kiev, 1967, p.7.

Consumption of food products

The extremely high percentage of expenditure for food calls for a more attentive
analysis of the consumption of basic food products in kind. Such an analysis might
provide a better bearing for singling out groups of poor households. To this end two
approaches are possible. The first is related to a general assessment of the level of
Andrei Revenko                    Poverty in Ukraine                                  13

consumption of food products, their concentration in calories and adequacy of actual
consumption to standard requirements. The second could be used to reveal
"transitional" decile groups, in which per capita consumption begins to go down as
regards the most inexpensive food products, primarily bread, flour products and groats
as well as potatoes. In groups with much higher per capita incomes one might expect a
decrease in the consumption of such products and a preference for more valuable (in
terms of balanced nutrition) and, simultaneously, more expensive food products.

But in Ukraine such a trend is not observed when analysing these products by decile
groups. Per capita consumption grows from the lowest first to the highest tenth decile
group. although the difference in levels of consumption between the tenth and first
groups is lower than for the other groups of products (Table 5).

Apart from the 10 conventional groups of products, this table also includes the
consumption of relatively inexpensive soft drinks which a consumer can very well
exclude from his or her diet. Such drinks have an extremely low annual level of
consumption of only 1.7 litres (a little more than one standard 1.5-litre plastic bottle)
per capita. Interestingly, even in the 10th decile group of the urban population the
consumption of soft drinks amounts only to 3.8 litres. The consumer is forced to
economise even on water as it were.

A comparison of the indicators after 1990 with the data for 1960-1990 (Table 6)
shows that per capita consumption dropped for all 10 food product groups between
1990 and 1996 (with 1996 consumption an unweighted mean of 69% of that of 1990)
and the current level of consumption is closer to the 1960 level (1996 consumption
was an unweighted mean of 96% of that of 1960). This also confirms the thesis that
compared with 1990, the first nine decile groups can all be considered poor in 1996,
and only the highest decile group does not fall into this category. It should be pointed
out that the figures in this table are based on the balance calculations of the
Directorate for Statistics of the Agri-Industrial Complex, of the State Committee for
Statistics (production, stock at beginning and end of the year, export/import, use of
seeds, fodder, losses, consumption funds of the population). They are somewhat
different (to a greater or lesser extent) from the selective data on households surveyed
by the Department of Household Budgets based on information from households. On
the whole such disparities are inevitable when applying methodologically different
comparisons.
Andrei Revenko                                 Poverty in Ukraine                                              14

Table 5. Consumption of food products by decile groups of surveyed households (kg
per capita per annum)


           Bread &       Potatoes Vegetabl Fruits    Meat       Dairy     Vegetable Sugar*   Eggs     Fish     Soft
           other flour            es and   and       products   products* oil and                     products drinks
           products               gourds   berries                        margarine                            (litres)
Entire population
1 dec      89.9          89.6     64.8     21.3      23.7       170.1    6.0        17.2      133.0   2.9       0.6
2 dec      91.3          96.9     67.7     22.4      24.9       174.0    6.3        18.1      136.0   3.1       0.7
3 dec      100.6         108.6    86.1     30.7      33.1       219.5    7.3        22.8      175.0   4.1       1.1
4 dec      103.4         111.8    88.4     31.6      34.1       225.9    7.5        23.2      180.0   4.2       1.2
5 dec      106.2         115.2    90.9     32.5      35.0       232.5    7.7        24.1      186.0   4.3       1.4
6 dec      109.4         123.3    104.5    37.8      38.8       263.3    8.3        26.8      209.0   5.4       1.8
7 dec      113.5         127.4    109.1    39.5      40.8       275.9    8.7        27.9      219.0   5.6       2.0
8 dec      120.0         133.8    119.6    43.3      48.0       302.3    9.5        31.7     241.0    6.9       2.4
9 dec      126.4         143.2    133.1    47.9      53.5       333.1    10.2       34.3     266.0    7.7       2.7
10 dec     140.3         163.0    153.6    55.5      61.9       371.2    11.7       39.7     291.0    8.7       3.2
Total      110.6         184.4    102.5    36.5      40.1       258.3    8.4        26.7     205.0    5.3       1.7
10 dec/1   1.56          1.82     2.37     2.61      2.61       2.18     1.95       2.31     2.19     3.00      5.33
dec
(times)
Urban
1 dec      87.6          69.2     56.9     17.8      21.3       137.5    6.8        15.9     108.0    3.4       0.7
2 dec      89.1          72.3     60.5     19.4      22.8       144.2    7.1        16.8     112.0    3.7       0.8
3 dec      96.9          82.6     77.9     26.8      29.5       173.9    8.2        21.1     139.0    4.9       1.5
4 dec      98.9          84.2     79.4     27.3      30.1       177.4    8.4        21.5     142.0    5.0       1.5
5 dec      100.6         85.9     81.0     27.9      30.7       180.9    8.4        22.0     144.0    5.1       1.5
6 dec      103.2         90.8     93.5     32.9      32.8       202.1    9.3        24.2     166.0    6.4       2.4
7 dec      106.3         93.5     96.4     33.9      33.7       208.2    9.6        24.9     173.0    6.6       2.4
8 dec      112.4         97.8     104.2    37.3      41.4       226.2    10.5       28.9     190.0    8.2       3.0
9 dec      116.3         103.0    114.8    40.9      45.3       240.1    11.3       30.4     205.0    9.0       3.5
10 dec     125.3         112.2    126.7    45.5      48.3       229.7    12.4       33.5     206.0    9.8       3.8
Total      104.1         41.1     83.6     31.3      34.4       192.5    9.2        24.0     158.0    6.2       2.1
10 dec/1 1.43            1.62     2.23     2.56      2.27       1.67     1.82       2.11     1.91     2.88      5.43
dec
(times)
Country
Side
1 dec      94.9          151.3    81.5     28.7      28.7       238.6    4.4        20.0     185.0    1.7       0.3
2 dec      96.1          148.9    82.9     28.7      29.4       236.8    4.6        20.7     187.0    1.9       0.3
3 dec      108.5         163.5    103.3    39.0      40.7       315.5    5.5        26.4     252.0    2.4       0.5
4 dec      112.8         170.2    107.5    40.5      42.4       328.1    5.7        27.5     262.0    2.5       0.5
5 dec      117.4         176.8    111.8    42.2      44.1       341.2    5.9        28.6     272.0    2.7       0.6
6 dec      122.5         188.6    127.6    48.0      52.0       392.3    6.4        32.1     297.0    3.3       0.9
7 dec      128.7         198.9    136.0    51.2      55.7       418.6    6.8        34.1     315.0    3.5       1.0
8 dec      136.0         209.6    152.0    55.9      62.0       462.5    7.4        37.8     349.0    4.1       1.0
9 dec      147.7         227.9    171.6    62.4      70.9       529.0    8.1        42.5     395.0    4.9       1.2
10 dec     171.7         270.2    210.2    76.4      90.4       669.0    10.1       52.8     471.0    6.4       1.9
Total      124.4         191.8    129.6    47.9      47.9       396.9    6.6        32.5     301.0    3.4       0.8
10 dec/1 1.81            1.79     2.58     2.66      3.15       2.80     2.30       2.64     2.55     3.76      6.33
dec
(tunes)

* Bread products (bread and pasta in terms of flour, groats, legumes); vegetables and gourds, including canned
vegetables in terms of fresh vegetables; fruits, berries and grapes (without processing into wines), including
canned fruits and berries in terms of fresh fruits and berries; meat and meat products (including fatback, by-
products and raw fats, canned meat) in terms of meat; milk and dairy products (including butter, cheeses, canned
milk) in terms of milk; sugar, confectionery products, preserves and jams in terms of sugar: fish and fish products
(including canned fish) in terms of fresh fish.
Andrei Revenko                            Poverty in Ukraine                                              15


Table 6. Per capita consumption of basic food products in 1990-1996, kg per annum*
(by balance calculations)


                   1960    1970    1980     1990    1991    1992    1993    1994    1995    1996   1996        1996
                                                                                                   as %        as %
                                                                                                   of          of
                                                                                                   1990        1960
Meat and meat      42.0    49.0    61.0     68.0    65.6    53.4    46.4    43.5    38.9    37.1   55.0        88.0
products**
Milk and dairy     230.0   311.0   331.0    373.0   345.5   284.6   264.2   256.2   243.5   230.2 62.0         lOO.0
products**
Eggs (pieces)      137.0   156.0   239.0    272.0   256.0   227.0   206.0   183.0   171.0   161.0 59.0         118.0
Fish and fish      9.7     15.9    16.7     17.5    12.2    7.3     37      3.5     3.6     4.3   25.0         44.0
products**
Bread products**   163.0   155.0   146.0    141.0   142.5   142.5   144.5   134.8   128.4   123.5 88.0         76.0
Potatoes           174.0   156.0   133.0    131.0   115.5   132.9   150.0   135.8   123.7   127.9 98.0         74.0
Vegetables         S9.0    103.0   115.0    102.0   102.5   88.9    90.1    83.7    96.6    91.9 90.0          103.0
and gourds**
Fruits and                         40.0     50.0    47.0    37.9    40.4    26.8    33.4    34.8   70.0
Berries**
Sugar**            26.9    41.4    46.0     50.0    50.0    45.4    39.0    33.0    31.6    32.6   65.0        121.0
Vegetable oil      6.0     7.4     10.0     11.6    11.2    10.6    10.0    S.7     S.2     8.6    7.1.0       i.n.o
and margarine

*National Economy of the Ukrainian SSSR in 1995. Statistical Yearbook. Central Statistical
Directorate of the UKrSSR. Kiev. 1986, p.285; Statistical Yearbook of Ukraine for 1995, Ministry of
Statistics of Ukraine, Kiev, 1996, p. 409; Agriculture of Ukraine, Statistical Yearbook, State
Committee for Statistics of Ukraine. Kiev. I997.p.52

** see remark** in the preceding table.

The nutritional value of the Ukrainian diet by decile groups can be shown by the
figures shown in Table 7 (a particularly interesting and absolutely new presentation
for Ukraine).
Andrei Revenko                                 Poverty in Ukraine                                                        16


Table 7. Consumption of food products on the basis of food substances, in kilo-
calories in surveyed households in 1996 (Per capita average daily)

           Consumption of food substances                     Kilo       of which                 Cost of of which:
                                                              calories                            1000 kilo in products



           protein of animal     fats (gr.) of     carbo-                in products   % of all   calories   of           of animal
           s (gr.) origin                   animal hydrates              of animal     kilo-                 vegetable    origin
                                            origin                       origin        calories              origin
Entire population
1 dec      43.7     17.5         57.7       37.3    268.9     1775       459           25.9       0.60       0.45         0.99
2 dec      44.7     18.0         59.8       39.0    174.9     1826       477           26.1       0.63       0.47         1.04
3 dec      53.5     23.5         75.4       50.9    317.7     2174       621           28.5       0.68       0.51         1.08
4 dec      55.0     24.2         77.5       52.4    326.5     2262       642           28.4       0.70       0.52         1.11
5 dec      56.6     24.9         79.7       54.0    335.7     2274       668           29.2       0.71       0.53         1.12
6 dec      62.2     29.0         89.5       61.7    357.6     2497       758           30.3       0.75       0.56         1.13
7 dec      64.9     30.4         93.5       64.5    372.0     2602       794           30.5       0.77       0.59         1.16
8 dec      70.1     33.5         102.9      70.7    400.0     2816       871           30.9       0.79       0.59         1.19
9 dec      76.3     37.2         112.4      78.6    429.4     3052       970           31.8       0.87       0.66         1.21
10 dec     86.2     42.3         127.5      87.3    486.0     3482       1099          31.6       1.17       0.69         1.71
Total      61.7     28.3         88.1       60.2    358.8     2489       741           29.8       0.77       0.58         1.13
Urban
1 dec      37..S    13.3         52.2       30.2    242.0     1596       353           22.1       0.64       0.47         1.11
2 dec      39..2    14.1         54.9       32.2    249.7     1658       374           22.6       0.65       0.48         1.14
3 dec      45.9     17.9         66.8       40.2    285.8     1938       465           24.0       0.72       0.53         1.19
4 dec      46.S     18.3         68.2       41.0    291.2     1976       479           24.2       0.73       0.54         1.22
5 dec      47.7     18.6         69.6       41.8    297.4     2016       492           24.4       0.74       0.55         1.24
6 dec      52.2     21.8         78.0       48.0    314.4     2179       561           25.7       0.79       0.59         1.25
7 dec      53.7     22.4         80.4       49.4    323.8     2244       578           25.8       0.81       0.61         1.29
8 dec      57..S    24.6         88.6       53.8    348.4     2427       629           25.9       0.84       0.63         1.33
9 dec      61.5     26.6         94.2       58.4    367.4     2580       682           26.4       0.95       0.75         1.35
10 dec     64.7     26.5         99.3       57.2    398.5     2760       688           24.9       1.31       0.99         1.98
Total      51.0     20.5         75.5       45.6    313.2     2147       533           24.8       0.82       0.61         1.31
Rural
1 dec      56.3     26.2         68.4       52.1    325.6     2153       683           31.7       0.53       0.42         0.74
2 dec      56.3     26.2         70.2       53.3    328.0     2180       693           31.8       0.58       0.45         0.82
3 dec      69.5     35.2         93.5       73.6    385.0     2673       944           35.3       0.61       0.46         0.84
4 dec      72.2     36.6         97.3       76.5    400.4     2780       992           35.7       0.63       0.48         0.87
5 dec      75.1     38.0         101.2      79.6    416.4     2819       1026          36.4       0.65       0.49         0.88
6 dec      83.3     44.1         113.2      90.5    448.2     3167       1178          37.0       0.66       0.51         0.89
7 dec      88.4     47.2         121.0      96.4    473.6     3355       1250          37.3       0.67       0.51         0.90
8 dec      96.1     52.3         133.0      106.4   508.5     3635       1382          38.0       0.68       0.52         0.91
9 dec      107.4    59.8         150.7      121.1   560.2     4048       1576          38.9       0.69       0.53         0.92
10 dec     131.5    75.6         187.1      150.8   670.5     5004       1965          39.3       0.88       0.68         1.15
Total      84.3     44.6         114.7      90.9    455.0     3206       1179          36.8       0.68       0.52         0.93


Just as with the consumption of food products in kind, the Directorate for Statistics of
the Agri-Industrial Complex, of the State Committee for Statistics of Ukraine makes
parallel calculations of the consumption of food products in calories as well as 11
basic macro- and microelements (protein, fats, calcium, iron, retinol, thiamin,
riboflavin, ascorbic acid, etc.). These data on caloric content differ somewhat from the
budgetary calculations (in 1996 they were 4.1% higher than in Table 7). The data
presented also confirms the substantial decrease in the caloric content of food
products consumed between 1990 and by 28.0%, including products of vegetable
origin by 21.8% and products of animal origin by 43.5% (kilo-calories):
Andrei Revenko                                   Poverty in Ukraine                                                        17



                                        Total            Products of vegetable             Products of animal
                                                         origin                            origin
         1990                           3597             2572                              1025
         1991                           3445             2490                              955
         1992                           3151             2377                              774
         1993                           3031             2341                              690
         1994                           2765             2108                              657
         1995                           2640             2032                              608
         1996                           2581             2012                              579
         1996/1990 (%)                  72.0             78.2                              56.5

*Consumption of Basic Food Products by Ukraine's Population. Collection of Statistics. Ministry of Statistics of Ukraine, Kiev,
1995, p.8; Agriculture of Ukraine. Collection of Statistics. State Committee for Statistics, Kiev, 1997. p.54.


In the data presented in Table 7 the following circumstances merit attention:

• Rural households consume more calories (by 49%) than urban households. Part of
  the reason is probably that in the countryside much more physical effort goes into
  working personal land plots.

• The share of products of animal origin in calories consumed by rural residents is
  much higher (36.8% against 24.8% in the urban areas). At their personal farms
  rural dwellers keep livestock and fowl, the products of which are not bought in the
  market at all. In cities the purchase of these products calls for greater expenditure
  compared with products of vegetable origin.

• The substantial difference in the cost of kilo-calories of products of vegetable and
  animal origin: the latter are 1.95 times more expensive than the former for the
  entire population: 2.15 times more expensive in cities and 1.8 times more
  expensive in the countryside. This explains the difference in the composition of
  expenditure for products consumed.

• The average cost of kilo-calories of consumed products grows from the lowest to
  the highest decile income groups. The greatest difference is observed in the highest
  group (as compared with the ninth group). The difference between the other groups
  is negligible.

• A qualified assessment of the nutritional structure of the urban and rural population
  by calories and items and also by different groups of products could be given by
  specialists of the Institute of Nutrition of the Ministry of Health of Ukraine which
  will allow us to identify the poor strata of the population in terms of diet.

• It would be very useful to conduct a more precise analysis of the consumption of
  the main nutritional items and their caloric content taking into account the
  composition of households by age and sex for which the necessary statistical data
  can be found in the household budget surveys.

It is interesting to compare this data with analytical evidence for other countries. The
FAO publishes (roughly every five years) a special statistical edition "Food Balance
Sheets". But Ukraine uses its own methodology so that the data requires
Andrei Revenko                      Poverty in Ukraine                                    18

supplementary analysis and aadjustments in order to arrive at comparable data.

To calculate per capita indices of nutrient consumption it is best to cite data in the so-
called "required units", taking into account the fact that calorie requirements depend
on gender and age, as is done in most countries. Several years ago similar calculations
were made for a working household budget in Ukraine and were necessarily based on
the household structure, but regrettably they were terminated.

Expenditure on non-food items, durables, dwellings and public utilities

We will not explore these items in depth, but will look at a selection of large items
which have both cost and qualitative characteristics. The sharp fall in living standards
has obviously markedly reduced expenditure on non-food items. The following table
shows purchases per 100 urban and rural households of a series of items (a rural
household has an average 3.14 members, an urban household an average of 2.64)


                                        Urban Households       Rural Households
Coat, Short Coat                        6.2                    4.1
Winter                                  2.9                    2.3
Spring/Autumn                           3.3                    1.7
Raincoats                               4.1                    2.3
Jackets                                 38.1                   54.3
Dresses/dress suits                     31.7                   32.1
Suits (men's)                           14.6                   15.8
Pants                                   57.1                   72.2
Skirts                                  19.5                   19.2
Shirts/blouses                          105.3                  100.7
Fur clothing                            1.2                    0.2
Knit dresses                            16.1                   8.3
Stockinps/socks (pair)                  670.0                  546.4
Fabric (metres) -                       65.6                   74.3
cotton                                  34.6                   51.9
Shoes, all -                            310.4                  391.3

indoor (slippers)                       55.8                   80.1
Black and white televisions             0.42                   0.41
Colour televisions                      1.08                   0.62
VCRs                                    0.42                   0.16
Stereo/radios                           2.13                   2.23
Refriperators/freezers                  0.85                   0.70
Washing machines                        0.56                   0.47
Electric vacuum cleaners                0.33                   0.20
Automobiles                             0.20                   0.50
Gasoline (litre)                        2346                   1615


The data presented here is not simply supplementary to those cited according to decile
group. Very few households have a high per capita income. The purchase of 2.5 coats
per 100 people in the cities and 1.3 in the villages, less than a pair of pants, skirt, shirt
and blouse per person in a year, a pair of shoes (if we rule out house slippers), 2.5
pairs of stockings and socks (mainly ladies' pantyhose) in the cities and 1.7 pairs in the
villages, and a quarter metre of fabric per person – that is the current level of average
consumption of the main manufactured products in Ukraine.
Andrei Revenko                    Poverty in Ukraine                                 19

The figures characterising the purchase of television and radio appliances and
electrical appliances are still lower, practically approaching zero, although it may be
that the survey misses the purchases by the highest income households who always
tend to escape the net of household budget surveys, but the figures certainly give an
accurate picture of the purchases of the mass of the population. The purchase of 23
litres of gasoline for the average household (of course, this includes those households
who do not have automobiles) in the cities and 16 litres in the villages is between half
and a quarter of the capacity of a full tank in a car. Naturally, with the average
monetary income for one member of the household (with calculation for children) in
1996 at 86.3 hryvnas per month in the cities and 45.6 hryvnas per month in the
villages, it is hardly possible to purchase a colour television, which costs around 500
hryvnas, or even a small refrigerator at 300-350 hryvnas. And an automobile once
purchased must be maintained, so with the average price of a household's purchases in
the city at 3960 hryvnas and 1320 hryvnas in the villages, it is not possible to acquire
a new car. Therefore, apart from the small proportion of the population with high
incomes, the mass of the population use antiquated domestic electrical appliances and
automobiles acquired mainly between 1975 and 1990. Budgetary investigations
demonstrating this are presented in Table 8.

In Western countries with a market economy the possession of a home would be an
important criterion for identifying the poor. But in our conditions this approach is
inappropriate. Up until recent times dwellings in the cities were in most cases
provided free of charge, and apartment rents were merely symbolic. In the villages,
dwellings were mainly constructed by the population at their own expense, living
standards were uniform, and never far from what the income levels allowed.
Therefore, it would be quite misleading to analyse household living standards on the
basis, for example, of the average living space for each member of the household. For
example, many widowed pensioners with fixed incomes live in villages, where they
occupy spacious homes in which rarely more than a few people live.

In the last 2–3 years rents and the cost of public utilities have risen faster than the
general index of consumer prices as budget subsidies have been reduced. A significant
proportion of households receive subsidies for their housing costs, but unfortunately
the household budget survey does not distinguish these components from other
compensation payments. Obviously it is necessary to account for these subsidies
separately from calculations of the monetary and aggregate incomes of the
investigated households.
Andrei Revenko                                  Poverty in Ukraine                                                     20


Table 8: Electrical Domestic Appliances and Automobiles in Surveyed Households
in 1996 (per 100 households)

                              At the       At the       With         With         With         With         With         Number
                              beginning    end of       service      service      service      service      service      of
                              of           the year     period       period       period       period       period       households
                              the year                  up to, 5     6-10         11-15        16-20        more         according
                                                        years        years        years        years        than 20      to data
                                                                                                            years        at the
                                                                                                                         end of
                                                                                                                         the year
Automobile
      Urban                   12           13           2            5            4            1            1            12
      Rural                   15           15           2            6            4            2            1            15
Wireless Radio
       Urban                  50           50           7            19           14           7            7            48
       Rural                  37           37           3            12           11           7            4            36

Black and white televisions
       Urban                  30           30           5            10           8            5            2            29
       Rural                  67           67           6            27           24           8            2            65
Colour televisions
       Urban                  82.          83           21           43           15           3            1            78
       Rural                  37           38           11           19           7            1            -            37
VCR
       Urban                  4            4            3            1            -            -            -            4
       Rural                  1            1            1            -            -            -            -            1
Musical instruments
        Urban                 10           10           1            2            3            2            2            9
        Rural                 4            4            1            1            i            1            -            4
Refrigerator
        Urban                 98           99           13           34           31           14           7            94
        Rural                 82           82           9            34           28           9            1            80
Washing machine
        Urban                 84           84           13           29           25           12           5            80
        Rural                 75           75           10           31           23           9            2            73
Electric vacuum cleaner
        Urban                 66           66           11           27           18           7            3            65
        Rural                 26           26           6            12           7            1            -            26
Sewing machine
        Urban                 46           46           3            9            11           12           11           44
        Rural                 33           33           2            5            7            7            12           35
Telephone
        Urban                 39           40           13           17           7            2            1            37
        Rural                 16           17           8            6            2            '            -            16



* The difference between the second column (availability of products at the end of the year) and the last column (number of
households owning these products at the end of the year) appears in the instance when households have more than one item of
the given type.


Pensioners

In Ukraine at the beginning of 1997 there were 14.5 million people receiving pensions
(28.5% of the population), of whom 10.6 million people have old-age pensions (the
pension age in Ukraine is lower than in most Western countries – 60 years for men
and 55 years for women – and some groups of workers have the right to retire 5 or 10
years earlier). At the beginning of 1997, 2.1 million pensioners (19.7%) had retired
Andrei Revenko                    Poverty in Ukraine                                  21

early.

Considering that the majority of pensioners receive a reduced pension, it is clear why
this group is worried about its reduced ability to cope and has become a stratum of the
population which requires state support. The average pension in Ukraine at the
beginning of 1997 amounted to 51.87 hryvnas per month (the pension during 1996
had been twice as high), and the average wage in December 1996 was 163.69 hryvnas
a month so that the average pension amounts to around 31.7% of the average wage.
The average pension in cities (59.3% of pensioners) is 53.05 hryvnas, and in the
villages (40.7% of pensioners) is 47.67 hryvnas a month.

There has been no serious research into the standard of living of pensioners in
Ukraine. Pensioners are under-represented in the household budget survey – of 16.4
thousand households in the investigation (1996), only 706 were households composed
purely of pensioners of which 277 households (average size 1.32 persons) are urban
and 429 households (average size 1.33 persons) are rural. This is only 4.3% of all
households surveyed, the majority of them being widows and single women. With
fewer than one thousand pensioners (937 persons) there is no point in regrouping them
in decile groups so the data is presented using the traditional Goskomstat income steps
of 30 hryvnas per household member. For the last 3-4 years Goskomstat has
discontinued publication of data on budgets of pensioners, so the data cited below is
the first to throw light on the position of pensioners for some time and, most likely, it
will be somewhat unexpected.

The data of urban household budgets of pensioners shows that their domestic
aggregate (but not monetary) incomes are only slightly lower than the average for all
surveyed households (93%). and in rural areas are even one-third higher (Table 9).

The percentage of pension income in the pensioner households surveyed comprised
41.9% of the aggregate income of urban households and only 22.9% of that of rural
households. In urban pensioner households the second largest component of aggregate
incomes (24.8%) is income from subsidiary production (for urban households this is
mainly garden-orchards and dacha co-operatives). And in rural areas the incomes
from personal subsidiary production (60.8%) dominates all other income components,
amounting to 2.65 times more than the pension income. And in households of
pensioners with incomes of more than 180 hryvnas a month, the portion of income
from subsidiary production is 69.9% in urban areas (and pensions only 6.6%) and in
rural households the figures are 64.7% and 12.2% respectively.
Andrei Revenko                          Poverty in Ukraine                                           22


Table 9: Size and Structure of Domestic Incomes of Surveyed Pensioner Households in 1996


                                                                           Including (%)
                                                                                All    Monetary of which:                                        Natural       of which
Households grouped Househol Individua   Average    All         Pension                       Labour   Pensions   Compensa Sale of     Other                From       Other
by household income ds      ls          number     househol    income                                            tions    produce                          personal
per head (hryvnas,                      of         d incomes   (hry vnas                                                  and                              subsidiary
kopecks)                                househol   (hry vnas   kope cks,                                                  livestock                        productio
                                        d          kope cks,   per                                                                                         n
                                        members    per         month)
                                                   month)
Urban families,        277   366        1.32       103.79      43.54       100    60.5      1.2       41.9       5.8       0.9        10.7    39.5         24.8      4.7
including:
up to 60.0             88    118        1.34       50.08       36.45       100    91.8      1.5       72.9       7.6       0.3        12.7    8.2          0.9       7.3
60.1-90.0              104   136        1.31       74.10       45.07       100    84.9      1.3       60.8       8.7       1.4        17.6    15.1         4.4       10.7
90.1-120.0             46    58         1.26       103.52      51.29       100    79.2      2.3       49.5       8.7       1.1        4.4     20.7         4.4       16.3
120.1-150.0            20    26         1.30       132.49      57.28       100    70.9      2.8       43.2       4.0       1.2        19.7    29.3         11.5      17.8
150.1-180.0            3     4          1.33       167.38      59.73       100    61.0      -         35.7       2.7       0.1        22.5    39.0         -         39.0
above 180.1            16    24         1.50       492.78      32.69       100    10.1      -         6.6        0.5       0.6        2.4     89.9         69.9      20.0
of which above 300.1   10    14         1.40       680.59      32.80       100    6.8       -         4.8        0.3       0.7        1.0     93.2         82.3      10.9
Rural families,        429   571        1.33       136.68      31.36       100    36.6      0.2       22.9       2.2       5.1        6.2     63.4         60.8      2.6
including:
up to 60.0             25    35         1.40       47.24       28.68       100    70.8      0.4       60.7       3.0       1.4        5.3     29.2         22.2      7.0
60.1-90.0              76    108        1.42       76.68       28.55       100    47.6      0.0       37.2       3.S       2.1        4.5     52.4         46.1      6.3
90.1-120.0             97    142        1.46       103.68      30.47       100    41.5      0.5       29.4       3.5       5.4        2.7     58.5         57.8      0.7
120.1-150.0            101   133        1.32       135.38      31.37       100    34.9      0.4       23.2       2.1       5.4        3.8     65.1         64.6      0.5
150.1-180.0            62    74         1.19       165.38      33.36       100    33.3      0.1       20.4       2.2       5.2        5.4     66.4                   0.3
above 180.1            68    79         1.16       294.47      32.69       100    30.1      0.1       12.2       0.9       5.8        11.1    69.9         64.7      5.2
of which above 300.1   9     10         1.11       822.77      34.76       100    32.5      -         4.2        0.2       2.6        25.5    67.5         56.0      11.5
              Andrei Revenko                              Poverty in Ukraine                                               23


              According to comparable data from other countries, in Poland pensioners' households’
              expenditure per capita in 1996 was 9.3% higher than in workers' households and in
              Slovakia they amounted to 77.3% and in the Czech Republic 70.5% more than the
              average per capita expenditure of workers (CIESTAT- Statistical Bulletin No. 4,
              1996., -Warsaw, 1997, pp. 58, 64, 73). Of course we have only a small sample and in
              several income groups there are fewer than ten households, so it is enough for one
              person to sell an inherited house or a cow to have a big impact on the data of the
              group. Nevertheless, the structure of use of aggregate income in pensioner households
              in general is similar to all surveyed households. First of all, there is a very high
              portion of expenditure for beverages, and reduced portion for taxes and obligatory
              payments (pensions in Ukraine are not taxable).

              Table 10 The Structure of Use of Aggregate Income of Surveyed Pensioner
              Households in 1996


Households Total income   including expenses for
grouped by
household
income per
head
(hryvnas,
kopecks)
                          food        including    alcoholic   non-food   services   other      taxes   losses   savings
                                      food         beverages   items                 expenses
                                      outside
                                      home
Urban         103.73      63.4        0.0          0.5         10.4       17.4       3.9        0.2     0.7      3.5
families,
including:
up to 60.0    50.08       76.8        0.0          0.4         5.7        18.3       2.4        0.1     -        -3.7
60.1-90.0     74.10       68.5        0.1          0.6         8.2        22.3       2.1        0.3     0.1      -2.1
90.1-120.0    103.52      64.9        0.0          0.6         8.6        18.0       5.9        0.3     0.0      1.7
120.1-150.0   132.49      71.3        0.0          0.9         11.2       13.5       4.3        0.3     -        -1.5
150.1-180.0   167.38      68.0        -            0.4         12.8       12.2       2.8        0.2     -        3.6
above 180.1   492.78      61.2        -            0.4         12.5       16.5       4.1        0.1     1.0      4.2
of which      680.59      59.8        -            0.3         13.4       16.3       4.3        0.1     1.2      4.6
above 300.1
Rural         136.68      68.9        0.0          0.9         8.9        4.3        14.9       0.0     0.8      1.3
families,
including:
up to 60.0    47.24       78.5        0.0          1.1         17.3       11.8       12.9       0.0     0.5      -22.1
60.1-90.0     76.68       76.7        0.0          0.8         13.3       5.1        11.8       0.1     0.9      -8.7
90.1-120.0    103.68      74.8        0.0          0.9         10.4       5.5        12.0       0.1     0.7      -4.4
120.1-150.0   135.38      68.7        0.0          1.0         8.1        4.0        14.7       0.0     1.3      2.2
150.1-180.0   165.38      59.7        0.0          1.1         9.0        4.9        21.3       0.0     0.9      3.1
above 180.1   294.47      66.7        -            0.7         6.2        2.7        14.8       0.0     0.4      8.5
of which      822.77      67.3        -            0.5         5.2        0.9        9.9        0.0     0.1      16.1
above 300.1




              In this sense, the budget data of aggregate income and expenditure of pensioners
              shows that their living standards and the spread of poverty corresponds roughly to
Andrei Revenko                    Poverty in Ukraine                                  24

these characteristics for the whole population of Ukraine.

To conduct proper research into the living standards of pensioners it is necessary
significantly to enlarge the proportion of pensioner households in the budget survey.
In Poland 11.0 thousand pensioner households were surveyed, compared to 31.9
thousand households in total, a proportion of 34.5%. ("Budzety gospodarstw
domowych w 1996 g.", p. 1).

It is also possible that the high per capita aggregate income of pensioner households in
comparison to all investigated households is a result of the general under
representation of old-age pensioners, and also invalids, for whom it is already difficult
to engage in subsidiary production and for whom pensions represent the main source
of income. To check this, Goskomstat would have to make a supplementary collection
of data on the age of pensioners in investigated households and compare the sample
with the entire elderly population of Ukraine.

In conclusion, there is one final observation, which is that much more research on
poverty in Ukraine is urgently required, a recommendation also made by the World
Bank’s poverty assessment.

				
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