Reforming the Payment of Employees of the Budget Sector in Ukraine
Authors: SHVETS PAVLO 
Published: July 2023

Socio-economic instability in Ukraine is accompanied by contradictions in payments to employees, which negatively affects work efficiency and motivation. Moreover, the issue of remuneration in the public sector is the most urgent for the country, since the principles of its financing mainly at the expense of the budget, and the imperfection of its formation mechanisms are the reasons for the lack of correlation between the qualifications of employees and the level of remuneration, the increase in poverty among employees, and other negative consequences. The above prioritizes the substantiation of the theoretical and methodological tasks of reforming the system of public employees remuneration. The purpose of the article is to identify deficiencies in the remuneration of public sector employees in Ukraine and to improve the system and mechanisms of employee remuneration in the public sector. The research was carried out using the following methods: analysis and synthesis, comparison, generalization, analogies. An abstract-logical approach was used to formulate the conclusions. It is stated that at present three systems of wages financing exist in the country for employees whose wages are paid with funds from the state budget (on the basis of YeTS [unified pay rate system], on the basis of the provisions of special laws and decrees as well as the combined system existing in the healthcare as a result of its reformation) which may create additional risks as relates to limitations of wage levels and therefore increased shadow employment in the private sector. Negative factors in relation to wages at the government-financed organizations are determined, namely no correlation between wages of most employees in this sphere and their performance and quality of services which they provide, continuous decrease in wages, disproportions in wage levels of employees with the same qualifications which all lead to risks of qualified personnel outflow into other sectors of economy and further limitation of provided services’ quality in the longer run. Risk minimization tools are proposed for the specific risks in the government-financed organizations wages system which are based on optimization of existing network of state budget funds recipients (streamlining and improvement first and foremost of the network of educational and medical institutions financed by the state) and transition toward a semi-autonomous model (which will allow government-financed organizations and institutions to independently attract additional funding and spend it on their own needs which would stimulate further development) as well as awarding to the government-financed organizations and institutions the right to place currently unused funds at commercial banks which would generate an additional revenue. Also the conceptual basis for creating a results-based wages system financed from the state budget is developed which includes tools and principles of its formation and formation of its elements, determines its functions and establishes a favourable motivational environment which will ensure adequate remuneration of government financed organizations’ employees for their work as well as actively stimulate them toward achieving better results of the work and fulfillment of the organizational goals.