core sector communique

IMF Resident Representative in Ukraine Meets with Trade Unions

October 27, 2009

The International Monetary Fund (IMF) Resident Representative in Ukraine, Mr. Max Alier, met today with six union leaders from Ukraine. The trade union delegation was headed by Mr. Hrygoriy Osovyi, Deputy Head of the Federation of Trade Union of Ukraine (FTUU), and included representatives from the trade union of the workers of the communal utilities, local industries and enterprises for personal services, the trade union of the fishery industry, the trade union of the city branch of the automobile transportation, as well as other members of the FTUU. The meeting was held at the IMF Resident Representative Office in Kyiv.

The discussions focused on issues of mutual interest to the IMF and the unions in Ukraine. It was established that we share a common goal in terms of macroeconomic stability and creating the conditions for a sustained improvement in the living standards of the population, with a particular emphasis on the most vulnerable groups in the society. The trade union representatives expressed their support for the financial assistance provided by the IMF to Ukraine, but expressed concerns that the policy conditionality in the IMF-supported program may be contributing to the deterioration in living standards of the population. They conveyed their view that the policies under the program put an excessive burden of the adjustment on labor.

Mr. Alier explained that a key element of the program with Ukraine is to protect the purchasing power of wages and pensions, and underscored that a sizable part of the IMF resources provided to Ukraine have been directed to the state budget to ensure timely payment of wages and pensions by the government. He also noted that under the program public wages and pensions would increase in line with inflation—which implies an increase of about 10 percent. Going beyond the inflation rate, however, would place an unsustainable burden on public finances. Mr. Alier also underscored the importance of a fair burden sharing of the adjustment between the different sectors of the society—particularly protecting the most vulnerable of groups. He noted the importance that the IMF attaches to fighting the shadow economy and tax evasion, adding that the IMF has provided technical assistance this year in these areas and has made recommendations to the government.

It was agreed that it would be mutually beneficial to continue a regular dialogue between union representatives and the IMF.