DEPENDENCE OF STANDARDS OF LIVING IN UKRAINE FROM POLITICAL CYCLES

Abstract

In the article, the authors examine the dependence of the living standards in Ukraine from political cycles. The authors found that the political cycles represented by presidential elections have the strongest influence in Ukraine. Thus, the growth of minimum wages and pensions in 2000s (except 2016) in Ukraine depended on the presidential election. The increase in social standards and social benefits in the pre-election period increases the deficit of the State Budget of Ukraine, stimulating the growth of inflation after the election period. The authors found that the government predominantly increases the minimum social standards the quarter right before the election or in the quarter of elections, which confirms the stake of politicians on the short-sightedness of voters. The greatest growth of social standards occurred in 2005 and 2010, despite the state of the economy, when the opposition was coming to power.
Such measures led to the growth of inflation in Ukraine in all the years following the elections, except in 2010 and 2012. In 2010, inflation was observed in the first half of the year. The growth of inflationary processes always led to a slowdown in economic development after the election period.
Independence of the employment rates from the actions of political cycles is an important peculiarity in the economy of Ukraine. The most of candidate programs include the points about the increase in household incomes rather than reducing unemployment.
During all election years there was an increase in incomes and real cash incomes of the population of Ukraine. However, the modeling of minimum wages and pensions dependence on elections in Ukraine showed a lack of citizens’ income. Governments do not use the state’s ability to develop and increase social guarantees. The timely growth of these indicators could have an impact on GDP growth and commodity turnover.
This leads to an increase in the level of the shadow economy of Ukraine, the growth of the dollarization level in the election years and the devaluation of the monetary unit after the election. After significant depreciation fluctuations in the 1990s and early 2000s, Ukraine’s population took into account the effects of political cycles on foreign currency before the elections.