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Poverty in Ukraine: War and Economic Crisis Delay Progress

As Ukraine delves deeper into political and economic turmoil, poverty in Ukraine is expected to rise. According to the Millennium Development Goals published in 2015, about one-quarter of Ukrainians currently live at or below the poverty line.

Although the number of people living in poverty in Ukraine has been reduced to 1.9 percent from 11.9 percent in 2000, political instability and an ongoing economic crisis hints at an increase in Ukraine’s poverty rate, if left unaddressed.

In 2014, Ukraine garnered international attention after a three-month occupation of Ukraine’s capital, Kiev, in protest of former President Viktor Yanukovych’s backtracking on an EU trade agreement. This resulted in a Ukraine divided by pro-Russian separatists and anti-government protesters. Although Yanukovych fled the country in 2014, the conflict subsequently led to the ongoing War in Donbass, Ukraine after the Russian annexation of Crimea.

The War in Donbass is currently costing Ukraine 5 million dollars per day according to the International Business Times. The conflict in the eastern region of Ukraine exploits the country’s vulnerable economic situation and undermines the Millennium Development Goals (MDG) which serve as a poverty-reduction guide for Ukraine.

While the Millennium Development Goals for Ukraine encompass an array of issues including climate change and gender equality reforms, the first goal of the MDG is to eradicate poverty in Ukraine. The MDG points to low wage standards, child development resources and outdated social assistance and infrastructure as the leading obstacles in improving the living conditions of impoverished Ukrainians.

According to the MDG, the most vulnerable demographics in poverty are working families who have children. Every third family with children in the Ukraine, about 33.6 percent, lives below or at the poverty line. In order to alleviate the burden placed on working families in the Ukraine, the MDG believes it’s necessary to direct social policy toward ensuring higher standards of living in addition to modernizing social assistance programs.

In a note released by the World Bank in conjunction with the Ukraine Economic Update, Ukraine’s current pension system is also under review as the benefits provided are inadequate and too many people rely on pension benefits. Currently, the Ukraine has 12.3 million pension beneficiaries while 14 million are categorized as “contributors” to the labor market. The World Bank suggests a restructuring of the benefits package and different eligibility requirements to receive pension compensation.

However, economic support for the proposed reforms as outlined by the MDG and the World Bank are threatened by the political uncertainty in Ukraine. According to the World Bank, Ukraine’s GDP declined by almost 10 percent at the height of the War in Donbass in 2015.

The damage of the war and economic crisis also caused Ukraine’s national currency to collapse, with the value of the average monthly salary currently at $197, according to Trading Economics. With the average rent in Ukraine in the range of $118 and $250 for a one-bedroom apartment outside of the city center, that leaves Ukrainians earning exactly the average monthly salary with, at best, $2.62 per day.

Evident by the tragic effect of war and political instability on Ukraine’s citizens, it’s vital for the Ukrainian government to redirect its attention toward stabilizing their economic infrastructure. If Ukrainians begin rebuilding a stable economic and political foundation for the war-torn country, the world may see drastic improvements in the living conditions of those living in poverty in Ukraine in the upcoming years.

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